10 Aug 2017

10 days to go; GSTN set for last minute rush on slow pace of returns filing

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With barely 10 days left for goods and services tax (GST) assessees to file summarised interim returns, the GST Network (GSTN), the IT back end for the indirect tax regime, hasn’t yet started witnessing high-frequency traffic, indicating a possible last-minute rush. Till August 5, nearly 87 lakh taxpayers had registered on the GSTN portal as taxpayers under GST.

With barely 10 days left for goods and services tax (GST) assessees to file summarised interim returns, the GST Network (GSTN), the IT back end for the indirect tax regime, hasn’t yet started witnessing high-frequency traffic, indicating a possible last-minute rush. “We have just 16,000 returns till August 8 while there are 87 lakh businesses registered with us,” GSTN chairman Navin Kumar told FE on Wednesday. However, he added that the back end was equipped to handle even a last-minute rush. “Half of the people might come on the last day,” he said, attributing the low traffic on the portal so far to assessees’ behaviour pattern.

Only a little over half of the registrants on GSTN have so far completed the process by filling up part B of the registration form.

The interim return, GSTR 3B, requires taxpayers to provide a summary of outward sales, purchases, input tax credit demand and tax liability. The window for filing these returns commenced on August 5 and it will remain open till August 20. The GST Council had earlier postponed the requirement for filing full-fledged returns to September, and allowed the taxpayers to file interim return for July and August, in a bid to reduce their initial hassles.

Kumar, however, told FE that not all of the 16,000 taxpayers had completed the return filing process as many are yet to pay the tax. “The taxpayers have come to the site and saved the relevant data on the portal but not submitted it as they need to first pay the tax before submission, which hasn’t happened,” Kumar said .

He admitted that the the traffic on the portal had been slow thus far, and urged the assessees to not wait for the last day to file returns. However, he assured that the GSTN system was robust enough to handle the heavy traffic it might experience closer to the last date.

“We have designed the system keeping the possible deluge of taxpayers in the final hours as our study suggests that a very large number of taxpayers sign up on the last two days of the deadline,” Kumar said.

Additionally, businesses have the option of filing return with the help of GST suvidha providers (GSPs). GSTN has authorised 34 such firms to upload data onto the portal on behalf of taxpayers. However, only 18 such GSPs have been able to connect to the GSTN servers for filing the interim returns.

“I have been urging them to speed up their work,” Kumar said about GSPs that are yet to go live.

Till August 5, nearly 87 lakh taxpayers had registered on the GSTN portal as taxpayers under GST. Of this, nearly 71 lakh businesses have migrated from earlier VAT or central excise or service tax regime while 16 lakh new taxpayers too have registered with the portal. What could further compound the problem is the incomplete registrations submitted by the registrants. GSTN had earlier said that over 30% of the firm registered on the portal had not completed the second form. This would prevent these businesses from filing returns.

Source: Financial Express

10 Aug 2017

Millions of firms not ready to file returns under GST: Kumar

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Millions of companies are still not ready to file their first returns under the new GST ahead of an 20 August deadline, says Navin Kumar. Photo: Bloomberg

Millions of companies in India are still not ready to file their first returns under the new goods and services tax (GST) ahead of an 20 August deadline, a top official told Reuters, urging them not to leave things to the eleventh hour.

Navin Kumar, chairman of the GST Network, also said barely half of the 34 service providers accredited to help firms bulk-file invoices online had received approval to go live.

Yet he gave an assurance that the huge IT back end that is designed to crunch up to 3 billion invoices a month and calculate companies’ taxes would be stable, even if there is a last-minute rush to file.

“It will not crash,” he told Reuters in an interview. “We are working on the assumption that 50% of the people will come on the last day.”

Billed as India’s biggest-ever tax reform, the GST has replaced a slew of federal and state levies. It has also cleared barriers between India’s 29 states, uniting its 1.3 billion people into a common market for the first time.

Yet the complexity of the tax — which has main rates of 5, 12, 18 and 28% and multiple exceptions — has raised concerns that companies will struggle to comply and file their monthly returns on time.

Even before the GST filings kick in, business surveys showed both the services and manufacturing sectors contracting at their fastest rate in years, heralding a likely dip in indirect tax revenues.

The government has allowed firms to file simplified, self-assessed GST returns by 20 August for the month of July, when the tax was launched.

They will have to file complete returns in early September that itemise and reconcile every single sales invoice under a regime that, by comparison with other countries, is labour- and data-intensive.

More than 7 million existing taxpayers have activated accounts on the GST’s portal — although around a third have yet to complete the form-filling required to file a full tax return, Kumar said.

Another 1.3 million new firms have registered to pay GST.

He waved away concerns that companies would not be able to cope, saying that those used to paying value-added tax —now abolished — were used to online filing.

Although companies can upload invoices directly into the GST portal, big businesses will rely on a new breed of service provider whose applications can format, reconcile and upload invoices in bulk.

Of a first batch of 34 services providers that have been accredited, only 18 have received permission to go live. “I have been urging them to speed up their work,” Kumar said.

Source: http://www.livemint.com

9 Aug 2017

Narendra Modi government identifies 5 ports to boost cruise tourism

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Union minister for shipping Nitin Gadkari on Tuesday announced that the government has identified five major ports — Mumbai, Mormugao, Mangalore, Chennai and Cochin — to boost cruise tourism in India.

While the number of Indians who took a cruise in 2016-17 was 2 lakh, the number could go up to 40 lakh, according to a report prepared by consultants Bermelo & Ajamil jointly with Ernst & Young. Of this, 80% or 32 lakh passengers are expected to take cruises from the Mumbai port alone.

However, Gadkari added that the cruise tourism industry is facing challenges on many issues and that he would make a representation to the finance ministry to waive the goods and services tax (GST), levied at 5% currently on all cruise ships, as well as establish a zero income tax regime.

While the largest cruise line operator, Carnival PLC, is looking to increase the number of cruise liners in India, David Dingle, the company’s chairman told FE that the country must create a domestic cruising tax regime competitive with tax regimes elsewhere in the world.

“In principle, the cruise industry will not come to a part of the world where it has to pay GST on the ticket price and on the sales made on board. We will not bring our ships here in any significant numbers all the while that cruising attracts any GST,” he said. Moreover, Dingle added that international cruise companies have to have the right to repatriate their profits through double tax treaties.

Carnival PLC sold 181,000 cruises in India in 2016, registering a compounded annual growth rate of 31%.

Current estimates are that over 120,000 Indians book a cruise each year with over 90% of them travelling to Singapore to board a cruise liner. To cater to this growing market, the Indian government wants to increase the number of cruise liners that come to India, eliminating the need for cruise seekers to fly abroad to board a ship.

The Indian coastline saw 150 cruise ship visits in 2016 and the government is aiming to increase this to about 955 in the next few years.

Source: http://www.financialexpress.com/industry/narendra-modi-government-identifies-5-ports-to-boost-cruise-tourism/799965/

9 Aug 2017

SEBI crackdown on trading in 331 shell companies blocks investors’ Rs 9,000 cr

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The government crackdown against 331 “suspected shell companies” has hit several investors, including mutual funds and small investors, who hold shares worth nearly Rs 9,000 crore in these companies.

 

In a late circular on Monday, market regulator Securities and Exchange Board of India (Sebi) directed stock exchanges to immediately restrict trading in 331 companies identified as “shell companies” by the Ministry of Corporate Affairs in consultation with the Serious Fraud Investigation Office (SFIO) and the income-tax (I-T) department.

 

While, by definition, a shell company is one without any business operations or assets, several companies with active business dealings too were part of the  list with 331 names. At least five companies in the list have market capitalisation (m-cap) of over Rs 500 crore each, with diverse shareholding from institutional as well as retail investors.

 

These companies have been placed in the so-called graded surveillance measure (GSM) stage VI, where trading in the security is allowed only once a month with “surveillance deposit” of three times the trade value.

 

Companies, including J Kumar Infraprojects (m-cap of Rs 2,150 crore), Prakash Industries (Rs 2,124 crore), Parsvnath Developers (Rs 1,036 crore), and multinational company SQS India BFSI (Rs 535 crore), termed the “shell company” classification as wrongful and urged Sebi and exchanges to reconsider the directions.

 

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“It is hereby clarified J Kumar is not a shell company and the suspicion of the regulator is uncalled for. Our company’s compliance track record, both with the exchanges and Registrar of Companies, has been impeccable,” said the Mumbai-based infra developer, highlighting the various projects it currently working on, including some government contracts.

 

Sebi sources said over three dozen companies in the list technically don’t fall under the definition of a shell company and the circular maybe revised to correct the nomenclature.  “The regulator is verifying the companies who have raised grievances. However, a rectification may take some time as the exchange needs to conduct an audit and submit a report to Sebi. If there is an all-clear given by the auditors and the regulatory authorities involved, Sebi can lift the ban,” said a source.
Another source said the Ministry of Corporate Affairs has widened the scope of shell companies. Those with cases against them in the SFIO or those that have evaded taxes are part of the list. A finance ministry official said concerns of investors in these companies will be looked into.
Several companies made detailed representations to Sebi and corporate affairs ministry, stating they can’t be termed as shell companies. “There could be a possibility that companies who are listed in the shell categories are genuine. In that case, they can always approach Sebi and stock exchanges to remove the ban. This is more of a preventive action and could be rectified if an entity is not found guilty,” said J N Gupta, managing director at Stakeholders Empowerment Services (SES).

 

Experts said the while all companies may not be shell companies, it is possible that the enforcement agencies may have found some dubious links and decided to take action.

 

“This is in continuation of strong messages being sent to corporate entities that frauds of any nature will face strong action. Greater vigil and networking of several databases would throw up more malpractices and stricter action,” said Prithvi Haldea, founder-chairman at Prime Database.

 

Government’s fight against market manipulation to evade LTCG

 

Several probes by the I-T department and Sebi have shown that listed shell companies were being used to launder money by using the stock exchange route. The typical modus operandi has been to buy shares of shell firms, jack up the prices and sell shares after a year to claim long-term capital gains (LTCG) exemption.

 

The government decided to crack down on such sham transactions after the Special investigation teams (SIT) on black money suggested a mechanism to detect shell companies and put in place checks and balances to curb stock market abuse.

 

In the last three years, the I-T department has identified over 1,155 shell companies which were used as conduits by over 22,000 beneficiaries. The amount involved in non-genuine transactions of such beneficiaries was over Rs 13,300 crore.  So far, the I-T department has launched criminal prosecution complaints against 47 persons. The SFIO, too, has undertaken the exercise of preparing comprehensive digital database of shell companies and their associates. Based on the SFIO report, the MCA has removed 162,618 companies from the Registrar of Companies.
8 Aug 2017

Income Tax Return Filings Grew 25%, Says Government

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Income tax collection showed a surge. The number of returns filed as on August 5, 2017, grew to 2.82 crore as compared to 2.26 crore last year, the government said.

The number of Income Tax Returns (ITRs) filed for 2016-17 year grew by 25 per cent to 2.82 crore, as increased number of individuals filed their tax returns post demonetisation, the tax department said today. The growth in ITRs filed by individuals is 25.3 per cent with over 2.79 crore returns having been received up to August 5 as against over 2.22 crore returns filed in the corresponding period last fiscal.

“As a result of demonetisation and Operation Clean Money, there is a substantial increase in the number of Income Tax Returns (ITRs) filed,” an official statement said. The total number of returns filed as on August 5 stands at over 2.82 crore as against over 2.26 crore filed during the corresponding period of 2016-17. This was an increase of 24.7 per cent compared to growth rate of 9.9 per cent in the previous year.

The last date for filing of income tax returns by individuals and HUFs, who need not get their accounts audited, was August 5.

The finance ministry said that the number of ITRs filed showed that substantial number of new tax payers have been brought into the tax net subsequent to demonetisation. The effect of demonetisation is also clearly visible in the growth in direct tax collections, it said.

Advance tax collections of personal income tax (other than Corporate Tax) as on August 5 showed a growth of about 41.79 per cent over the corresponding period in 2016-17. Personal Income Tax under Self Assessment Tax (SAT) grew at 34.25 per cent over the corresponding period in 2016-17.

“The above figures amply demonstrate the positive results of the government’s commitment to fight the menace of black money,” it added.

The Central Board of Direct Taxes (CBDT), which is the apex policy making body of the I-T department, is committed in its resolve to eradicate tax evasion in a non-intrusive manner and widening of tax base.

To fight the menace of black money, the government had on November 8, 2016, demonetised old 500 and 1000 rupee notes and asked holders of such notes to deposit in bank accounts. The I-T department had then launched operation clean money to clamp down on unaccounted money funnelled into bank accounts post demonetisation.

 

Source: http://www.ndtv.com/business/notes-ban-impact-income-tax-return-filings-grew-25-collections-jump-1734604

24 Jul 2017

GST Impact: Undue profit of over Rs 1 crore to come under authority’s lens

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It will take two-three months time to gauge whether the benefits of GST are being passed on to consumers. By then, the authority would be put in place

The proposed anti-profiteering authority under the new GST regime will take up for scrutiny only those cases that have mass impact and those where undue profit of more than Rs 1 crore has been earned, a senior government official said. A five member National Anti-Profiteering Authority, headed by a secretary-level officer, will be set up soon to keep a tab on businesses that have not passed on to consumers the benefit of lower tax rates under the Goods and Services Tax (GST) regime. “It will take two-three months time to gauge whether the benefits of GST are being passed on to consumers. By then, the authority would be put in place,” the official told PTI. As per the three tier structure — the GST Implementation Committee (GIC) will receive complaints and those which are state specific and involving smaller amounts will be transferred to the state screening committee.

Other cases will be referred to the Directorate General of Safeguards who will finish investigation within 3 months and send the findings to the anti-profiteering authority, which will pass an order in another 3-months time. “The issues which have a national or mass impact will be taken up by the authority. There may be many small cases which would be coming to the GIC, but only those cases where the financial implication is more than Rs 1 crore would be taken up by the authority. Rest would be transferred to the state screening committee,” the official said. ADG Safeguards will act as Secretary to the National Anti-Profiteering Authority and will coordinate between the authority and the DG Safeguards office, the official added.
The Central Board of Excise and Customs (CBEC) last week appointed Samanjasa Das as the Additional Director General (ADG) Safeguards in the Directorate General of Safeguards.

Das was ADG in the Directorate General of Central Excise Intelligence (DGCEI). In the three-tier structure for monitoring anti- profiteering, the GST implementation committee, including four officers each from the Centre and states and one officer from the GST Council, will first receive the complaints. Thereafter, DGS, which has the power to issue summons, will conduct investigation and give its findings to the authority. The anti-profiteering authority, if it finds that a company has not passed on the GST benefits, will either direct it to pass on the benefits to consumers or if the beneficiary cannot be identified will ask the company to transfer the amount to the ‘consumer welfare fund’ within a specified timeline. The authority will have the power to cancel registration of any entity or business if it fails to pass on to consumers the benefit of lower taxes under the GST regime, but it would probably be the last step against any violator.

According to the anti-profiteering rules, the authority will suggest return of the undue profit earned from not passing on the reduction in incidence of tax to consumers along with an 18 per cent interest, as also impose penalty. A five member committee, headed by Cabinet Secretary P K Sinha, comprising Revenue Secretary Hasmukh Adhia, CBEC Chairman Vanaja Sarna and chief secretaries from two states, will soon finalise the Chairman and members of the authority. It will be in existence for just two years unless the GST Council extends the tenure. The chairman will be paid a monthly salary of Rs 2.25 lakh plus other allowances and benefits, as are admissible to a central government officer holding posts carrying the same pay. Technical members will be paid a monthly salary of Rs 2,05,400. The chairman and members will hold office for a term of two years or until the age of 65-years, whichever is earlier.

Source: http://www.financialexpress.com/economy/undue-profit-of-over-rs-1-crore-to-come-under-gst-authoritys-lens/775391/

20 Jul 2017

Micro-finance rebound shows rural India recovering from demonetisation

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The micro-finance industry is rebounding, real rural incomes are rising and unemployment is falling, according to brokerage Motilal Oswal Securities and an Indian unit of HSBC Holdings in analysis that contrasts to the distress that’s swept the farming sector

India’s vast rural hinterland, which makes up 70% of the country’s population, is showing signs of recovery from last year’s cash crunch, boosting optimism that increased spending will help the broader economy regain its vigour.

The micro-finance industry is rebounding, real rural incomes are rising and unemployment is falling, according to brokerage Motilal Oswal Securities Ltd and an Indian unit of HSBC Holdings Plc in analysis that contrasts to the distress that’s swept the farming sector.

“We believe repayments and improved collection trends have increased the confidence of companies to start disbursing loans at a healthy pace again,” Mumbai-based Alpesh Mehta and colleagues wrote in a report from Motilal Oswal.

India’s micro-finance industry, which provides small loans to entrepreneurs and business owners who have little collateral, was slammed when the government withdrew high-denomination bank notes from circulation late last year in a bid to stamp out corruption. And while farmers have taken to the streets across India to protest plunging food prices, labourers who get paid a wage to work the land have actually seen their incomes rise after last year’s good monsoon, the HSBC economists wrote.

Loan collection rates in Uttar Pradesh, India’s largest and most populous state, are largely back at about 98% levels, up from less than 50% after demonetisation, Mehta, Piran Engineer, and Subham Banka said in their 3 July note. Other major states such as Karnataka are displaying “much improved collection trends,” they said.

Micro-finance disbursements, which grew 13% last year compared with 80% the prior year, are expected to return to pre-ban levels in three to six months, according to Motilal Oswal.

Gold loan company Manappuram Finance Ltd has risen 68% from its low after demonetisation in November and Bharat Financial Inclusion Ltd, India’s largest listed micro-finance firm, has rebounded 64% over the same time frame.

However, the state of Maharashtra, home to India’s financial capital, Mumbai, is lagging other states and continues to face delinquency pressures, with about 20% of loans unpaid 90 days past due, according to Motilal Oswal.

Interactions with micro-finance companies reveal no expectation of disruption from the rise of farm loan waivers in Indian states but instead a focus on the effects of demonetisation, the report said. Microfinance Institutions Network—India’s largest group of microfinance firms—reported that “demonetization severely impacted the micro-finance business in multiple ways including slowing down of growth due to non-availability of cash for a few months.”

Motilal intends to observe delinquency trends for a few more quarters before reaching conclusions over the impact of waivers on micro-finance. Maharashtra, Punjab, Uttar Pradesh have all announced, waiver programs.

The rise in credit growth at the micro-finance level is complemented by a rise in rural incomes and purchasing power, according to HSBC Securities and Capital Markets (India) Pvt. Ltd.

“Macro indicators have improved” in rural India, HSBC economists Pranjul Bhandari, Aayushi Chaudhury, and Dhiraj Nim said in their 10 July note. The plunge in inflation has helped boost annual real income growth to just under 4% from contracting levels a year ago while rural unemployment has sunk from about 9% last September to around 4%, according to HSBC.

Normal rains so far in 2017 and a bumper crop in 2016 after a two-year drought have generated more jobs for rural Indians who work the land—some 70% of rural households who are “landless, according to HSBC.

That’s help pushed up two-wheeler sales and the production of consumer non-durables in this segment, according to the HSBC report. Shares of companies with substantial rural customer bases are experiencing steady growth.

While falling farm prices have hit many rural Indians hard, they have also boosted purchasing power and consumption among the population which could help a broader recovery in the Indian economy that’s suffering from a slowdown in growth, soured loans and weaker manufacturing sector.

Source: http://www.livemint.com/Industry/CANuZ2YGAYheLS4lgPR4dO/Microfinance-rebound-shows-rural-India-recovering-from-demo.html