Assam gets off the block with GST registration

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The BJP-ruled Assam, the first state to ratify the GST Amendment Bill, has started the process for providing registration to taxpayers in the new indirect tax regime that is slated to kick in from April next year.

The state tax department has started collecting mobile numbers and e-mail IDs of registered dealers or taxpayers under VAT, CST, entry tax, luxury tax and entertainment tax to provide Goods and Services Taxpayers Identification Number (GSTIN) on a provisional basis.

In order to facilitate communication of GST registration number to the existing registered entities, the Assam tax department has asked them to furnish the mobile number and email ID on or before November 5, 2016.

“If such mobile numbers and e-mails IDs are not furnished on or before November 5, 2016, GST registration number will not be generated.

Moreover, such dealers will be disabled to upload their tax returns and apply for statutory forms under the existing Acts,” it said. It has asked the taxpayers to log into the tax department website of the Assam government and after feeding the mobile number, PAN and e-mail ID, the provisional GSTIN will be sent.

The government plans to roll out GST, which will subsume excise, service tax and other local levies, from April 2017. In the run-up to the biggest indirect tax reform, the states have to get their taxpayers registered with the pan-India GST Network, which will help in seamless movement of goods and services throughout the country.

After the GST Constitutional Amendment Bill was passed by Parliament on August 8, Assam was the first state to ratify it on August 12.

A constitution Amendment requires ratification by 50 per cent of state Assemblies before presidential assent.

With the President approving it last month, GST is now a law and the GST Council, chaired by Union Finance Minister Arun Jaitley, will decide on the crucial tax rate in its three-day meeting beginning tomorrow.

Source: http://www.moneycontrol.com/news/economy/assam-gets-offblockgst-registration_7635021.html

IPO fund-raising in India highest since 2011

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Fund raising through initial public offerings (IPOs) has crossed $2.9 billion in 2016 and another $2.9 billion is to be raised through these offerings this year, according to a research report by Baker & McKenzie.

Around 22 companies are waiting to tap the markets bringing the year-end estimated total deal value to $ 5.8 billion, more than double last year’s $2.18 billion from 71 listings, and also the highest since 2011, the report said.

The report further said that 16 companies are in the pipeline to be listed domestically in 2017, raising as much as $5.86 billion, including Vodafone’s highly anticipated $3 billion IPO, which could potentially surpass the state-run Coal India’s IPO in 2010 to become India’s biggest IPO.

The report said the momentum in India’s IPO market continues to build, boosted by the central government’s push to ease of doing business in India.

The report added that Goods & Services Tax (GST) Bill which will take effect on 1 April 2017 will have a positive effect on the market.

“The GST Bill will not only bring about the immediate benefit of widening the country’s tax base and improving the revenue productivity of domestic indirect taxes, but more importantly, it sends the message to the people of India and the rest of the world that the Indian government is committed to the country’s economic reform, further bolstering India’s attractiveness as an investment destination,” said Ashok Lalwani, head of Baker & McKenzie’s India Practice.

The report said dual listing on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India accounted for 98.8% of Indian companies’ listings by value in 2016 year to date, raising a total of $ 2.9 billion from 19 IPOs, including ICICI Prudential Life Insurance’s $909 million IPO, which is the country’s biggest IPO this year.

A total of 33 companies are expected to dual list on both the BSE and the NSE by the end of 2016, raising a total of $4.62 billion. Improved business confidence is also driving Indian companies to look at growth and market expansion opportunities overseas by way of cross-border IPOs, the report said.

Among the 22 IPOs in the 2016 pipeline is Strand Life Sciences’ listing on NASDAQ, which if it goes ahead, will be India’s first cross-border IPO since early 2015 when Videocon d2h got listed, the report added.

Source: http://www.financialexpress.com/industry/companies/ipo-fund-raising-in-india-highest-since-2011/415830/

GST lends more weight to India’s 8% growth projection: S&P

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Calling GST as the most important structural reform till date by the Modi government, S&P Global Ratings today said the passage of the indirect tax law gives it additional conviction of India clocking 8 per cent growth in the next few years.

“India’s GST passage gives us additional conviction around our 8%-ish GDP growth forecast over the next few years,” it said in a report titled ‘Asia-Pacific steadies while China goes silent’.

The rating agency had last month projected India to clock a “steroid-free” growth of 8 per cent in coming years. “The GST passage is arguably the most important structural reform to date by the Modi government and will improve efficiency, cross-state trade and tax buoyancy,” it said today.

It saw a reasonably firm pick-up in Asia-Pacific’s macro momentum indicators, with pick-up in retail sales offering the clearest sign in most of the region’s economies. This, it said, stems from rising income, which in turn is part of the region’s evolving growth dynamics, with consumption playing a larger role.

S&P said China has been nudged up as it raised the GDP growth forecast by about a quarter percentage point in 2016 and 2017 to 6.6 per cent and 6.4 per cent, respectively, and has kept its 2018 forecast roughly unchanged at 6.1 per cent.

Japan’s second-quarter out turn was weaker than expected, it said, adding that its 0.7 per cent GDP growth forecast for 2016 looked like “a mild stretch at this point”.

In its ‘APAC Economic Snapshots — September 2016’ report, it had stated that India’s structural reforms agenda had maintained strong momentum and, most recently with the GST passage, should propel growth higher. “For India, we are still forecasting GDP growth at about 8 per cent over the next few years. Moreover, this is relatively high quality, steroid—free growth backed by a broadening consumption base,” S&P had said.

“Inflation remains a risk, given the large weights on food, fuel, and other volatile items in the Reserve Bank of India’s target basket,” S&P had said.

The latest gross domestic production (GDP) figures showed that India’s growth slowed to 7.1 per cent in the April-June quarter, from 7.9 per cent in January-March.

RBI has also said the near-term growth outlook for India seems brighter than last fiscal’s and the economy is likely to expand at 7.6 per cent in 2016-17.

Source: http://www.thehindubusinessline.com/economy/gst-lends-more-weight-to-indias-8-growth-projection-sp/article9208148.ece

Rotation of auditors and its side effects

by | posted in: Accounting Standards, Audit, Due Diligence, Corporate Updates, Economy, Business Updates, Corporate Affairs, India & International - Corporate updates | 0

The Companies Act, 2013, has introduced important audit reforms. One of the important reforms is rotation of the auditor.

Important provisions under this reform

  • All listed companies; unlisted public limited companies having paid-up share capital of Rs 10 crore or more; all private limited companies having paid-up share capital of Rs 20 crore or more, and all companies having public borrowings from financial institutions, banks or public deposit of Rs 50 crore or more are required to rotate their auditor.
  • An individual cannot continue as an auditor for more than one term of five years and an audit firm cannot continue as an auditor for more than two terms of five years
  • The cooling off period is five years.
  • The provision must be complied by April 1, 2017.

Benefits of this reform

  • This is expected to improve audit quality, resulting in improved financial reporting.
  • Would give local auditors more leverage, if implemented properly along with some other measures.

Local auditors v/s the Big Four

  • Local firms dominate the Indian audit market. However, the presence of the Big Four audit firms (Deloitte, PWC, E&Y and KPMG) cannot be ignored.
  • The Big Four are the largest professional service network in the world. They provide audit, assurance, tax, consulting, advisory, actuarial, corporate finance and advisory services. In India, they cannot provide audit services directly.
    • It is alleged that they flout rules while providing audit and assurance services. Many foreign investors put a condition that the auditor of their choice should be appointed. This helps the Big Four audit firms to grow in India.
    • There is an apprehension that many companies that get their accounts audited by local firms will appoint one of the Big Four or another large international professional service network as auditors.
    • Hence, the Ministry of Corporate Affairs had notified the constitution of a three-member expert group to look into the complaint that the Big Four are circumventing rules and to find ways to help local firms.

Should the government intervene?

  • Local auditors are mostly present in tier 2 and tier 3 cities and audit 62 % of the companies listed on BSE 500.
  • They provide a variety of services to small companies. They lack aspiration to become big.
  • Therefore, it is debatable whether there is a case for government’s intervention to protect local audit firms

Way ahead and Conclusion

Chartered accountants are prohibited from soliciting professional work through advertisement or otherwise. But they can respond to tenders.

  • The practice of issuing a tender for the appointment of internal auditors is quite common among public enterprises. Such a practice is not common among private-sector companies.
  • Tendering is the right method to search for the right audit firm. This increases choice and reduces auditing cost through competition.
  • Companies should not limit their choice to the Big Four and other international firms or a few large local audit firms.
  • There are local firms that have capabilities to audit large and complex transactions. Search through tendering process would help to identify such firms.

It will be interesting to see how the new rules regarding rotation of auditors will actually impact the auditing profession.

 

Source: http://www.business-standard.com/article/opinion/rotation-of-auditors-and-its-side-effects-116100900736_1.html

Sebi deems share transfer by promoters by way of gift as sale

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Any inter-se transfer of shares by a promoter to his wife will be considered as sale even if it is in the form of a gift where no monetary transaction is involved, Sebi said.

According to guidelines, the promoters are not eligible for preferential allotment of shares or warrants if there has been any inter-se transfer of shares among promoter group firms in the last six months.
Giving its views on an application filed by KJMC Financial Services, the watchdog said that as envisaged in the Sebi ICDR (issue of capital and disclosure requirements) regulations, any transfer of shares in the form of gift will be considered as sale.
As per Sebi’s ICDR regulations, if any person belonging to the promoter or promoter group in the issuer company has sold his equity shares during the six months preceding the relevant date, such entity will be ineligible for allotment of specified securities on a preferential basis.
KJMC Financial Services had sought an interpretative letter from Sebi on whether transfer of shares by its promoter to his wife by way of gift will be considered as sale under the Sebi’s ICDR regulations.
“Our view is that the inter-se transfer by way of gift will be considered as sale as envisaged… in the Sebi ICDR regulations,” Sebi said, adding that its response is based on the information given in the company’s letter. Referring to the ICDR regulations, the regulator said: “The primary intention of the regulation was not with respect to consideration, but with change in ownership of equity shares.” It added: “Different facts or conditions might lead to a different result.

Further, this letter does not express a decision of the board on the questions referred.” The watchdog also said its views are expressed with respect to the clarification sought in terms of Sebi ICDR norms and is not applicable to any other Sebi regulations.

Source: http://www.moneycontrol.com/news/economy/sebi-deems-share-transfer-by-promoters-by-waygift-as-sale_7454721.html?utm_source=ref_article

 

Company Incorporation in India made simpler and more versatile

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate & Business Advisory Services, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0
MCA has taken another bold initiative in Government Process Re-engineering (GPR) and launched Simplified proforma for Incorporating Company Electronically (SPICe) e-Form.

Ministry of Corporate Affairs (MCA) has introduced a bold initiative in Company Incorporation so that registering a company and starting business, in India, is made simpler and speedier that your business can be started within the stipulated time frame, in line with international best practices.

 

MCA has launched SPICE (Simplified Proforma for Incorporating Company Electronically) w.e.f. 02.10.2016 for registering companies  in completely online form, vide Form INC-32.

 

This would be processed speedier as the e-MOA and e-AOA would have a faster review, by the approving authorities through the back office set up in this regard.

 

This would make setting up of business, in India, fairly simpler and more versatile, making way for “ease of doing business”.

The highlights of SPICE are:

  1. Simplified and completely Digital Form for Company Incorporation – Form INC-32
  1. Standard format of e-Memorandum of Association as per Companies Act, 2013 – Form INC 33
  1. Standard format of e-Articles of Association as per Companies Act, 2013 – Form INC 34
  1. Memorandum and Articles will now be filed as linked e-forms, except for Section 8  (not-for-profit companies)
  1. Provision to apply for Company Incorporation with a pre-approved Company Name vide INC -1, as well
  1. Mandatory DSCs of Subscribers and Witnesses in SPICe MOA and SPICe AOA 

7. Back Office productivity gains due to faster review of e-MOA and e-AOA by approving authorities.

As part of the initiative of ease of doing business in India, the Ministry of Corporate Affairs had earlier introduced e-filing of single Form INC-29 as alternative to INC 7, so that incorporating a company in India does not take too long a time. As further simplification of the process of registering companies, SPICE Form INC-32 is intended to make the whole process versatile for a new company to be registered on-line in India, under the Companies Act, 2013.

e-Filing of single Form INC-32

  • This form can be filed even after approval of name vide INC-1. This facility was not provided in INC-29.
  • Memorandum of Association (MOA) has been provided in Electronic Mode INC-33.
  • Article of Association (AOA) has been provided in Electronic Mode INC-34.
  • By new e-MOA & e-AOA, no need for physical signatures of Subscribers; Instead, Digital Signature Certificate (DSC) of Subscribers can be affixed on MOA & AOA.
  • By the new e-MOA & e-AOA, no need for physical signatures of Witness; Instead, Digital Signature Certificate (DSC) of Witness can be affixed on MOA & AOA.
  • Existing INC-29 and INC-7 will be phased out and SPICe will be the single, simplified versatile form to be filed on-line for incorporation of a company in India.

Read earlier posts:

Integrated e-Form INC-29 for Company Incorporation and Ease of doing business

Incorporation of Companies under Companies Act, 2013 – Procedure

Source: http://www.mca.gov.in/Ministry/pdf/SPICEPress%20Release_03102016.pdf

FPI inflows top Rs. 20,000 cr in Sept, at 11-month high

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Foreign investors pumped in more than Rs. 20,000 crore into the capital market in September, making it the highest net inflow in 11 months.

This also marks the third consecutive month of positive inflows (equity and debt).

The trend is likely to continue in the coming weeks as regulator SEBI has decided to offer well-regulated foreign investors direct entry to invest in corporate bonds, say experts.

They attributed the latest flurry of capital to factors such as sound progress in roll-out of GST, better corporate earnings and the US Fed’s decision not to lift interest rates.

Sentiment turned better after the current account deficit (CAD) narrowed sharply to just $300 million, or 0.1 per cent of GDP, in the June quarter and domestic passenger vehicle sales grew for the 14th straight month in August, they added.

According to depositors’ data, net investment by FPIs stood at Rs. 10,443 crore in equities last month while the same for debt was Rs. 9,789 crore, taking the total inflow to Rs. 20,233 crore ($3 billion).

This was the highest net inflow in the capital markets since October 2015 when FPIs had infused Rs. 22,350 crore.

The latest inflow has taken the FPI investment tally in equities to Rs. 51,293 crore in 2016 while the same for the debt market stands at Rs. 2,441 crore, resulting in a net inflow of Rs. 53,734 crore.

Source: http://www.thehindubusinessline.com/economy/fpi-inflows-surpass-rs-20000-cr-in-sept-at-11month-high/article9176139.ece