With GST on its way, India rises to second spot on global biz optimism index

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High business optimism was also complimented by the rise of employment expectations. India regained its top position on this parameter

India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon, says a survey.

According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter (July-September 2016).Indonesia took the top spot, with the Philippines coming in third.

India was ranked third during the April-June period after being on top for two consecutive quarters.

“The improvement in the optimism ranking in the recent past clearly reflects that the reform agenda of the government and its efforts on improving the climate for doing business are having an impact,” Grant Thornton India LLP Partner – India Leadership Team Harish H V said.

 

High business optimism was also complimented by the rise of employment expectations. India regained its top position on this parameter, from second position in the April-June period, while profitability expectations also moved up.

“…all the programs and initiatives of the government as well as its focus on building relationships with all major economic powers has made India a bright spot in the global economy,” Harish said, adding the recent push for GST augurs well and should give a further boost to business optimism.

While India continues to be amongst the top five countries citing regulations and red tape as a constraint on growth, for the first time in the year, the country’s ranking on this parameter has dropped from second to fourth.

As per the survey, 59 per cent of the respondents have quoted this as an impediment in the growth prospects compared to 64 per cent in the previous quarter.

The report is prepared on the basis of a quarterly conducted global business survey of 2,500 businesses across 36 economies.

Meanwhile, in terms of revenue expectations, India slipped to third position from top in the previous quarter.

In spite of the downturn, India is much ahead of China where only 30 per cent respondents expect an increase in revenue, whereas in India, 85 per cent respondents have voted in favour of increasing revenue.

The survey further noted that 68 per cent of respondents have voted for an upsurge in selling prices. On this parameter too, China lags India with only 10 per cent of respondents expecting an upsurge in selling prices. The global average is 19 per cent.

Globally, business optimism stands at net 33 per cent, rising 1 percentage point from the previous quarter but falling 11 percentage points over the year.

“Political events such as Brexit and the US presidential election understandably rattle the global economy and test the resilience and elasticity of businesses worldwide. In general, businesses do not like uncertainty, and that is what is happening,” Grant Thornton Global CEO Ed Nusbaum said

Source: http://economictimes.indiatimes.com/articleshow/55277143.cms

 

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

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

GST Council: Tax exemption threshold fixed at Rs 20 lakh

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The first session of the GST Council that concluded here on Friday made good progress in ironing out some of the contentious issues between the Centre and states: The exemption threshold for the goods and services tax (GST) has been fixed at Rs 20 lakh for all states except the northeastern ones and the three hill states of Jammu and Kashmir, Uttarakhand and Himachal Pradesh, in whose case this limit would be Rs 10 lakh; states will have the assessment powers for units with annual turnover up to Rs 1.5 crore while in the case of bigger businesses too, the one-taxpayer-one-authority principle will be retained and either the Centre or the state concerned will be accorded the assessing power based on risk profiling.

Importantly, the Centre agreed to the states’ demand for including the proceeds from sundry cesses levied by them in the definition of “revenue”, a step that could increase its compensation payouts. This would also mean that the states would cease to levy the cesses, the proceeds from which stood at close to Rs 40,000 crore in FY16.

The council decided to take 2015-16 as the base year to compute compensation to states for any future revenue loss, but left open the question of projecting the business-as-usual rate of increase in revenue, crucial for quantifying compensation. Finance minister Arun Jaitley said three options were under consideration for projecting the revenue growth rate: A mutually agreed-upon fixed rate; the average of the three best (high-growth) years in the past five years; and the average of median three of the last five years. States had earlier turned down the Centre’s proposal for taking the average of the last three years for projecting future revenue growth, saying these years haven’t been particularly good due to the economic slowdown.

Jaitley said the Centre will continue to assess the 11 lakh service tax assessees (even those below Rs 1.5 crore) but added that states will be given training to assess them and once they acquire competence, the future addition to this taxpayer base will be shared with them for the purpose of assessment.

Regardless of whether the Centre or the state has control on an assessee, the tax proceeds will be shared between the two — the central GST component will go to the Centre and the states will appropriate the state GST, which could be slightly higher than central GST. As far as integrated GST — to be levied on interstate transactions and imports — is concerned, the place of supply rules will decide who the appropriating authority will be; of course, the basic principle is that tax needs to be paid where the consumption takes place.

The council, Jaitley said, would meet again on September 30 to finalise the draft rules on the council’s functioning and the exemption thresholds and decide how the grandfathering of tax sops (like the area-based excise exemptions) will be carried out. The crucial question of the GST slab structure, the revenue-neutral rate (RNR) and actual GST rates would be discussed by the council between October 17 and 19. The Arvind Subramanian panel that had estimated a RNR of 15-15.5% had said if the standard rate is 17%, it could comprise central GST of 8% and state GST of 9%.

Tax experts welcomed the outcome of the first meeting of the council. Harishanker Subramaniam, national leader, indirect tax, EY India, said: “It is interesting is that for GST on services, the Centre will have administrative control irrespective of threshold at least in the initial years till states are trained to handle services. This may be a good news for industry as many were worried as to how states will handle complexity of services.”

According to Pratik P Jain, leader, indirect tax, PwC India, enhancing the annual turnover for exemption to Rs 20 lakh from Rs 10 lakh contemplated earlier would be administratively easier for the government as several small businesses would be out of the GST ambit. “Industry would also welcome the move to have a single assessing authority, instead of having a dual system of assessment and scrutiny, which was a major concern for businesses,” he said.

Source: http://www.financialexpress.com/economy/threshold-for-gst-fixed-at-rs-20-lakh/389350/

FPIs infuses $1 billion in capital markets in September

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Foreign investors have pumped in nearly Rs 6,800 crore (USD 1 billion) into the country’s capital markets so far this month, driven by global and domestic factors.

The latest infusion comes on top of a whopping inflow of Rs 25,904 in the preceding two months (July-August). Prior to that, foreign portfolio investors (FPIs) had pulled out a total of Rs 4,373 crore from the capital markets (equity and debt) in June and July.

Experts attributed the latest flurry in inflow to factors including good and widespread monsoon, better corporate earnings, sound progress on rollout progress of the Goods and Services Tax (GST) and positive data coming from the US economy.

Sentiments also rode high after 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 3,178 crore in equities during September 1-9, while the same for debt markets was at Rs 3,617 crore, taking the total inflow to Rs 6,795 crore (USD 1.02 billion).

So far this year, FPIs have invested Rs 44,028 crore in equities while withdrawing Rs 3,730 crore from the debt market. This resulted in a net flow of Rs 40,297 crore.

Source: http://www.financialexpress.com/economy/fpis-infuses-1-billion-in-capital-markets-in-september/373416/