Government prepares to strike off registration of over 2 lakh companies

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Defunct or Inactive Companies - Fast Track Exit Scheme / Strike off of companies under Companies Act, 2013
Defunct or Inactive Companies – Fast Track Exit Scheme / Strike off of companies under Companies Act, 2013

The government plans to cancel the registration of more than two lakh companies that have not been carrying out business for a considerable period of time, amid stepped up efforts to tackle the black money menace.

More than two lakh companies, spread across various states, have been served with show cause notices as they have not been carrying out any operation or business activity for a prolonged time.

The Corporate Affairs Ministry’s move also comes against the backdrop of overall efforts by the authorities to crack the whip on shell companies, suspected to be used for money laundering activities.

The Registrars of Companies (RoCs) in various states and union territories have issued notices to more than two lakh firms under the Companies Act, 2013, according to information available with the Ministry.

These notices have been issued under Section 248 of the Act, which is implemented by the Ministry. This section pertains to striking off names of companies on certain grounds.

With the issuance of notices, the companies concerned have to explain their position and if the responses are not satisfactory, then their names would be struck off by the Ministry.

Data showed that RoC Mumbai has issued notices to more than 71,000 companies while RoC Delhi has served notices to over 53,000 firms, among others.

As per the regulations, an RoC can seek explanation from a company if the latter has not commenced business within one year of getting incorporated under the Act.

Notice is also issued if a particular company has not been carrying out business for at least two continuous financial years and has not applied for dormant status.

Such entities are given a time of 30 days to submit objections if any.

The Ministry has power to remove or strike off the names of such entities from the “register of companies” if the response is not satisfactory.

Earlier this month, the Ministry had amended the Companies (Removal of Names of Companies from the Register of Companies) Rules.

There are more than 15 lakh registered companies in the country.

 

Modi’s Win Sends Indian Stocks to Record, Rupee to 16-Month High

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– Nifty surpasses March 2015 peak, Sensex gains as much as 2.1%.
– Bigger-than-expected victory seen as endorsement of reforms

Indian equities rallied to a record and the rupee climbed the most since 2013 after Prime Minister Narendra Modi’s resounding victory in state elections boosted expectations for a continuation of his reform agenda.

The NSE Nifty 50 Index climbed 1.7 percent to 9,087, crossing its March 2015 record close, as the market reopened after a holiday. The India VIX Index, a gauge of expected stock-price swings, touched an all-time low. The rupee surged 1.2 percent to 65.8175 per dollar, the strongest level since November 2015. The central bank was seen buying dollars in early trade to cap gains but moved away later, Mumbai-based traders said.

“This win will give Modi the confidence to push ahead with more reforms and not pursue populist policies,” Sampath Reddy, chief investment officer at Bajaj Allianz Life Insurance Co., said by phone. The insurer, which oversees 480 billion rupees ($7.3 billion) of assets, is bullish on financial-services companies and metal producers, he said.

Modi’s Bharatiya Janata Party won 312 seats in the 403-member assembly of Uttar Pradesh, according to the Election Commission of India, up from 47 in 2012. The results in India’s largest state were seen as a litmus test of Modi’s popularity and reforms, including opening up the country to more foreign investment and seeking to introduce a goods and services tax, ahead of general elections in 2019.

While exit polls released last week suggested a large BJP victory was possible in Uttar Pradesh, the scale of the win was stark in a state that has long been divided along religious and caste lines. It is also a repudiation of political foes who assumed that Modi’s disruptive Nov. 8 move to junk high-value currency notes would be politically unpopular.

“Uttar Pradesh is a state where mandates have tended to be mostly divisive, so the result is a mandate for development, which has been sorely missing in the state,” Gautam Sinha Roy, a fund manager at Mumbai-based Motilal Oswal Asset Management Co., said by phone. “Markets will now start assigning higher probability to a BJP victory in the 2019 polls.”

India’s economic growth has been 7 percent or more in each of the last four quarters, which has helped lure $3.4 billion of foreign funds into local stocks and bonds this year. Mutual funds bought shares for seven months through February, including a record $2.1 billion in November. The S&P BSE Sensex has risen 11 percent in 2017, and the rupee is up 3.2 percent against the dollar.

“We expect the Reserve Bank of India to more actively cap further rupee gains given the sharp swing higher in the real effective exchange rate in recent months,” Divya Devesh, an Asia FX strategist at Standard Chartered Bank in Singapore, said by e-mail. He forecasts the rupee at 69 rupees to the dollar by year-end.

Pricey Valuations

The Nifty came off an intraday high of 9,122.75 as investor focus turned to a near-certain interest rate hike from the Federal Reserve this week and expected revival in corporate profitability. The Nifty and the Sensex are valued at about 21 times forward earnings, the highest level since April 2010.

“Valuations look stretched and investors are cautious with the Fed meeting round the corner,” said Sushant Kumar, a fund manager at RAAY Global Investments Pvt. in Mumbai. “Stocks have priced in the expected increase in rates. The focus is on Fed’s outlook.” The Nifty may reach 10,000 by March 2018, accompanied by as much as 14 percent expansion in earnings of its 50 members, he said.

Still, the scale of the BJP’s victory paves the way for further reforms and should lead to more inflows, supporting asset prices, according to Vikas Gupta, chief investment strategist at OmniScience Capital Pvt. in Mumbai.

“For international investors, India is one of the few emerging markets that has everything going for it: demographics, economics and politics,” he said. “With elections settled, it is clear that the federal government is now going to be fully in charge of the parliament.”

 

Source: https://www.bloomberg.com/news/articles/2017-03-14/modi-s-victory-sends-indian-stocks-to-record-rupee-advances

India will be home to 10,500 start-ups by 2020: Report

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India continues to harbour the third largest start-up base, marginally behind the U.K., according to a Nasscom-Zinnov start-up report.

The report, titled “Indian Start-up Ecosystem Maturing – 2016,” says that the ecosystem is poised to grow by an impressive 2.2X to reach more than 10,500 start-ups by the year 2020 despite the popular belief that the Indian start-up ecosystem is slowing down.

There is an increased interest from student entrepreneurs this year, according to the report. A remarkable growth of 25 per cent has been witnessed in 2016 with over 350 ventures founded by young students. The median age of start-up founders has reduced marginally from 32 years in 2015 to 31 years in 2016.

“Technology start-ups are creating a new identity for India and its technological prowess,” said R. Chandrashekhar, President of the IT industry body Nasscom, in a statement. “They are defining the way the world operates making life better and easier for people and businesses alike.”

Some of the notable findings of the report include; continued growth in the number of start-ups in 2016, with Bengaluru, the National Capital Region, and Mumbai continuing to lead as major start-up hubs for the nation.

In terms of vertical growth, investors are looking at the domains like health-tech, fin-tech, and edu-tech. With a total funding of approximately $4 billion, close to 650 young firms were funded signifying an aware and healthy growth of the ecosystem, according to the report.
The number of technology firms in India is expected to grow by 10-12 per cent to over 4,750 start-ups by the end of 2016, according to the report. Interestingly over 1400 new ventures have emerged in 2016 denoting that the ecosystem is becoming prudent with both investors and start-up founders focusing on profitability and optimising the overall spend.

With this impetus, India will become home to over 10,500 start-ups by 2020, employing over 210,000 people reveals the report.

“Today, India is brimming with new ideas which need the right guidance and funding to be scalable for the market,” said C.P. Gurnani, Chairman, Nasscom, in a statement.

Source: http://www.thehindu.com/business/Industry/india-will-be-home-to-10500-startups-by-2020-report/article9272293.ece

GST bringing realty shake-up

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Retailers, both of physical stores and e-commerce entities, fast moving consumer goods (FMCG) companies and those in consumer durables have started rejigging their warehouse strategy.

This is in preparation for the national goods and services tax (GST), with the government working to an April 2017 deadline. All this could mean a shake-up in real estate, say analysts. A rough calculation suggests these businesses could look at reducing their warehouse count to half, while stepping up the total space acquisition in select destinations, once GST comes into play. In the next two to three years, businesses could see significant cost reduction due to the revised strategy.

Hindustan Unilever, Nestle, Johnson & Johnson and Shoppers Stop are among those to have begun work on consolidating their warehouses, according to a source. These companies will take up mega space, in millions of square feet, to set up ‘mother warehouses’, he said. In the online space, top companies such as Flipkart and Amazon have been on an expansion spree for warehouses and fulfillment centres in the past two years, primarily to suit the complex tax structure through the country. Now, however, they won’t feel the need to have warehouses in every state and can strategise accordingly, Vijaya Ganesh Thangavel, managing director, Land & Industrial (India), Cushman & Wakefield, told this newspaper.

For instance, Max Fashion, a prominent retailer, has eight warehouses totaling 400,000 sq ft. The number is likely to come down to four after GST, says chief executive Vasanth Kumar. “The number will get firmed up once we know the full GST details and the implications such as the reverse logistics needs,’’ he said. Post GST, their warehouse count will be down but the total space covered could go up to around 600,000 sq ft by 2018 “to meet future business needs, as well our rate of growth at a 30-plus per cent CAGR (compounded annual rate)”.

If a typical e-commerce company was taking 300,000 to 400,000 sq ft in metros and tier-1 cities for warehouses, 100,000 sq ft in tier-2 and 40,000 to 50,000 sq ft in tier-3, the plan now will be to go for million sq ft space and more, away from big cities and in fewer locations, primarily where real estate cost won’t be prohibitive, says Thangavel of Cushman. Distribution centres, smaller in size in the range of 40,000 to 50,000 sq ft, could be set up closer to cities.

The biggest trend now is that prominent developers are getting into the warehouse space, which has mostly been a domain of local land owners till recently, according to Thangavel. Along with realtors, a new breed of advisors are coming up, only for warehouse planning. Also, warehouse parks are being set up for large structures. While the exercise of restructuring the warehouses will take a couple of years, he projects a cost reduction of at least 10 to 15 per cent by 2019-2020. Estimates are that big companies which have on an average one warehouse in every state, totaling to anything from 20 to 25, might look at eight to 10, pan-India post-GST.

“We understand that a few of the larger companies have started consolidating their warehousing requirements in strategic locations, in anticipation of GST, with a view to bringing efficiency into their supply chain,’’ said Rami Kaushal, managing director, Consulting and Valuations, CBRE South Asia.

Besides retailers and FMCG companies, even pharmaceutical companies would look at rationalising the number of operational warehouses and swap these for better quality and larger format ones, he said.

“Implementation of GST is expected to lead to rationalisation of warehousing demand, leading to lower logistics cost and reduced delivery time of manufactured goods,’’ Kaushal explained. The current complicated tax structure meant that choice in setting up inventory and distribution centres were based on the tax regime, rather than on operational efficiency, he said.

GST, when implemented, will free the decisions on warehousing and distribution from these tax considerations, according to Kaushal. ”This would enable occupiers to create larger hubs, servicing two or more states from a single location, which would help optimise inventory costs and increase efficiency.’’ This shift in operational planning would ultimately result in a hub and spoke model being adopted by many of the occupiers, he added.

Industrial warehousing space is estimated at approximately 800 million sq ft across the country and is expected to grow by nine to 10 per cent annually. A few sectors such as e-commerce, modern retailing and FMCG are expected to grow at about 20 per cent annually in the short term, according to CBRE.

A recent JLL report listed the National Capital Region, Mumbai, Pune, Bengaluru, Chennai, Hyderabad, Kolkata and Ahmedabad as top warehouse hubs. These eight city hubs together had a cumulative supply of organised Grade-A and Grade-B warehousing space of around 97 mn sq ft in 2015; this is expected to grow to around 116 mn sq ft by the end of 2016. It added that GST will result in emergence of new hubs such as Belgaum, Bhubaneswar, Coimbatore, Goa, Guwahati, Indore, Jaipur, Kolhapur, Lucknow/ Kanpur, Ludhiana, Nagpur, Patna, Raipur, Ranchi, Vapi and Vijayawada.

 

Source: http://www.business-standard.com/article/companies/gst-bringing-realty-shake-up-116090801173_1.html

India giving World Bank all evidence of improved ease of doing business

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India is providing detailed evidence to the World Bank on ease of doing business as it seeks to break into the top 100 countries on the bank’s index from its current rank of 130.

Officials said logs of construction permits, containerised cargo movement at ports and setting up of a company are being provided to World Bank as part of the Narendra Modi government’s efforts to ensure it does not miss any point to score to improve India’s rank.

World Bank officials had a few queries for the Department of Industrial Policy & Promotion (DIPP) when they met on August 1 after completing field inspection and verification of claims over the 14 parameters on ease of doing business.

While the World Bank does not share its findings, one observation made by its team was that people were carrying paperwork to the offices of the Employees’ Provident Fund Organisation even as registration was made free of all physical touch-points. “We clarified that it is only for claims that one needs to file the papers,” said a senior DIPP official, who did not wish to be identified.

Besides, DIPP is now gathering its own evidence for cases where it feels respondents have not have kept in mind the assumptions made by the World Bank study.

“In case of construction permits the study is limited to warehouses or buildings on the outskirts or setting up of a company parameter is only for domestic enterprises and not how long it takes for a foreign entity,” the official said.

DIPP is taking a proactive approach to provide evidence on its part even after the field investigations have been wrapped by the World Bank team. Final rankings will be announced in October. The ranking considers business environment in Delhi and Mumbai. India compares unfavourably even with countries such as Mexico, which is ranked 38, and Russia, which is at 51. Prime Minister Modi has set a target for India to be in the top 50 in three years.

Specific areas DIPP has targeted are starting business, insolvency procedures, construction permits, ease of trade across borders and electricity connections. According to the department, total number of days required to start a business has been reduced to 12 from 29 in the past year. A team of researchers spent two weeks in Delhi and Mumbai talking to actual users and stakeholders to study and verify implementation of reforms, officials said.

Source : http://economictimes.indiatimes.com/articleshow/53716006.cms

Paperless I-T assessment: CBDT plans to take project to more taxpayers

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After successfully completing over 1,000 scrutiny I-T assessments under a maiden taxpayer-friendly paperless inquiry system, CBDT is set to extend the initiative as it is mulling seeking taxpayers’ consent to opt for the scheme at ITR filing stage itself.

Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had launched a pilot project last year to reduce taxpayers’ visit to the tax office and their interface with the taxman.

Under the project, the first set of e-communications were decided to be mailed to the assessees in DELHI, Mumbai, Bengaluru, Ahmedabad and Chennai region.

As per official data accessed by PTI, the department in these five cities has completed scrutiny assessments in 1,001 cases till now, after a total of 6,481 assesses were contacted of which 1,812 responded positively.

A senior official said the biggest “challenge” in achieving better success in this new project was obtaining the consent of the taxpayers.

The Assessing Officers (AOs) found that while in some cases the taxpayer could not be reached as their personal email ids were with their CAs or authorised representatives, in a few other cases the assessee withdrew his consent to join the scheme, the official said.

“It is now being mulled if the I-T department can print a footnote on the Income Tax Return (ITR) or on the scrutiny notice itself that the taxpayer is invited to participate in the exercise over email in a paperless manner.

“The results are encouraging and the CBDT wants to make this an institutional system for scrutiny assessments henceforth,” the official said, adding the scheme is expected to be widened and rolled out with new features within this financial year.
The success of the project, initiated last year, is evident from the fact that CBDT recently added two more cities (Hyderabad and Kolkata), to the existing five metros, under the paperless assessment system exercise.

With this project, CBDT aims to end corruption and bring hassle-free experience for the taxpayers who undergo a time-consuming scrutiny assessment procedure which entails production of a number of documents and financial statements.

The department, however, says it brings only about 1 per cent of cases under the said procedure.

An official notification had been issued earlier which spells out the procedure, formats and standards for ensuring “secured transmission” of emails between the AO and the assessee stating all communication between the two sides will be done in PDF file format and over bonafide email ids.

This followed an amendment in the I-T Act in December last year, which allowed emails to become the new mode of interaction between the AO and the tax-paying individual.

Under the new procedure, the taxman will send emails, for issuing notices and summons, through the government registered ‘@incometax.gov.in’ email domain and the attached PDF document will have his or her designation and signature.

In response to such I-T notice, taxpayers will have to submit the details called for, in a Portable Document Format (PDF) through their email id registered with the department.

The notification states, “Any email, in response to the notice issued by the AO, received from the primary email address of the assessee, shall be considered as a valid response to the notice.”

In the same notification, CBDT had also mandated that the taxman will maintain an audit trail of all e-communication with a taxpayer in the IT department’s central database for future reference and as record management of the entire transaction.

The new directives also allow a taxpayer to physically submit a reply to such e-notices in case of a technical problem in their email. “This shall be treated as adequate compliance,” it had said.

The project was launched after CBDT had asked the I-T department to “initiate the concept of using emails for corresponding with taxpayers and sending through emails the questionnaire, notice etc at the time of scrutiny proceedings and getting responses from them”.

“This would eliminate the necessity of visiting the Income Tax offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence,” the order had said.

Source : http://economictimes.indiatimes.com/articleshow/53061801.cms

 

Tamil Nadu to get 4th major port

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The Cabinet on Tuesday approved the setting up of a major port at Enayam near Colachel in Tamil Nadu. This would be the country’s 13th major port.

Colachel is about 50 km north-west of Kanyakumari.

India has 12 major ports — Kandla, Mumbai, JNPT, Marmugao, New Mangalore, Cochin, Chennai, Ennore, V O Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia). These handle approximately 61 per cent of the country’s cargo.

A special purpose vehicle (SPV) would be formed for the development of Colachel port, with an initial equity investment from the three existing major ports in Tamil Nadu — V O Chidambaranar Port Trust, Chennai Port Trust, and Kamarajar Port. The SPV would develop the port infrastructure, including dredging and reclamation, construction of breakwater and ensuring connectivity links, a statement said.

Fishermen in the coastal villages of Tamil Nadu have been opposing construction of this port, fearing sea erosion and loss of livelihood.

India has few ports with sufficient draft to match global cargo handling efficiencies. All of India’s trans-shipment (transfer of shipment from one carrier to another during transit) traffic is handled in Colombo, Singapore and other international ports. Indian port industry loses up to Rs 1,500 crore of revenues each year, the official statement said.

This major port at Enayam will act as a major gateway container port for Indian cargo now trans-shipped outside the country. It would also reduce the logistics cost for exporters and importers in south India, who depend on trans-shipment in Colombo or other ports, incurring additional port handling charges.

Minister of Shipping Nitin Gadkari had in April said the government had plans to add eight major ports in the country — including at Wadhawan in Maharashtra, Sagar in West Bengal and Colachel in Tamil Nadu.

 

Source: http://www.business-standard.com/article/economy-policy/tamil-nadu-to-get-4th-major-port-116070501191_1.html