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IACC flags points to streamline GST roll-out

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New Delhi, July 17: The Indo-American Chamber of Commerce (IACC) flagged points for the smooth transition of the Goods and Services Tax (GST) into a full-fledged tax structure.

Upon the suggestion list of the IACC is the need to bring alcohol and petroleum products within the ambit of the Central GST, said the apex bilateral Chamber synergizing India-US economic engagement.

This should be done in a calibrated manner since more than 60 per cent of the revenues were mobilised through tax realisations from these goods, IACC’s National Vice President Vasant Subramanyan said.

There is a strong pitch by the states not to give up the taxation of these sectors as the revenues from them constitute a major chunk of their resource mobilisation, the IACC said in a statement.

“A pragmatic approach to counter this will be citizens’ pressure for assigning this right to the Centre,” the statement released on Monday added.

Next in the order of importance, according to the IACC, is pruning up the number of slabs in the GST.

World over, GST or similar clone of a comprehensive indirect tax, would either have one slab or at best two.

In India, in effect, there are five slabs — zero per cent, five per cent, 12 or cent, 18 per cent and 28 per cent — which would make the tax structure complicated and difficult to comply with.

“We have to draw up a roadmap for further pruning the number of rates in a time-bound manner,” IACC’s Finance Committee Chairman S.K. Sarkar said.

“In the given situation, it is prudent to do away with highest slab/s and amalgamate it/them with the next lower slab,” Sarkar said.

The conceptual ambiguity in the GST structure was another important issue that has to be addressed, the Chamber said.

The manufacturing states feel that their interests have been jeopardised under the GST, which is a destination based tax, the IACC noted.

It is important to evolve pragmatic schemes that should address the genuine concerns of manufacturing states in order to shore up their faith in the dispensation, it said.

Small businesses in the manufacturing sector would not have it easy in the GST regime.

Under the excise laws, only manufacturing business with a turnover exceeding Rs 1.50 crore had to pay excise duty.

Under the GST, the turnover limit has been reduced to Rs 20 lakh, increasing the tax burden for many manufacturing Small and Medium Enterprises (SMEs).

Many of the SMEs would find compliance tough and even if they comply with the GST norms, it would be at an additional cost.

Most businesses use accounting software or ERPs for filing tax returns, which have excise, VAT and service tax already incorporated in them.

“The transition to GST will require businesses to change their ERPs either by upgrading the software or by purchasing new GST-compliant software. This will lead to increased costs of buying new software and training employees on how to use it,” Sarkar said.

Another anomaly in the GST structure is in the form of taxing branding packaged edible items if the brand name is registered under the Trade Marks Act. If it is not registered under the act, tax is not levied.

Introduction of the GST is seemingly affecting the textile industry at least in the short run.

It is expected that the tax rate under the GST would be higher than the earlier tax rate for the textile industry. Natural fibres (cotton, wool) which were exempted from tax, would be taxed under the GST.

A significant portion of the textile industry is in the unorganised sector or composition scheme. This creates a gap in the flow of input tax credit since tax credit is not allowed if the registered taxpayers procure the inputs from the unorganised sector.

Also, Composition scheme (turnover up to Rs 75 lakh) for traders, manufacturers and hotels may be done away with since this scheme militates against the GST principle of getting input credit across the supply chain.

In any case, this scheme does not appear to have too many takers, the IACC said.

On the export front, it is important to align two main export promotion schemes in India — the Merchandise Exports from India Scheme (MEIS) and the Services Exports from India Scheme (SEIS) with the GST.

Under these schemes, exporters with a certain amount of turnover are provided with duty credit scrips.

These scrips allow for the exemption of duties paid on the import of raw materials.

Under the duty drawback scheme, the exporters are provided with a refund of the customs and excise duties paid on the imported inputs.

The GST legislation has a provision on a duty drawback for these inputs. This implies a refund of the taxes paid on both imported as well as domestic inputs.

The duty drawback scheme helps those exporters who produce goods that are not being taxed but still have to pay taxes on the inputs used in their manufacture.

Due to a higher rate of tax under the GST, exporters might face a cash crunch due to the blockage of working capital.

“In order to address this issue, the Finance Ministry should evolve schemes to fast track process of refund within a stipulated time of say five days,” Subramanyan said.

IANS

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Key Indian equity indices trade flat in morning session

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Sensex Nifty Equity

Mumbai, July 16: The key Indian equity indices was trading flat-to-negative on Monday soon after opening.

The 30-scrip Sensitive Index (Sensex), was trading 15.79 points or 0.04 per cent lower soon after opening.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 23.30 points or 0.21 per cent lower at 10,995.70 points.

The Sensex of the BSE, which opened at 36,658.71 points, was trading at 36,525.84 points (at 9.30 a.m.), lower 15.79 points or 0.04 per cent from the previous day’s close at 36,541.63 points.

The Sensex touched a high of 36,658.71 points and a low of 36,496.65 points in the trade so far.

IANS

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With Q1 earnings, WPI data scheduled equity indices await eventful week ahead

Market is expecting 19 per cent growth in PAT (profit after tax) for Sensex index stocks and 14.7 per cent for Nifty50 index stocks in Q1, FY19 compared to a washout in last quarter.

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Mumbai, July 15 : After reaching new landmarks in the last couple of trading sessions, the key Indian equity indices are likely to witness another eventful week (June 16-20), with major quarterly earnings and a key macro-economic data point, the Wholesale Price Index, due in the next few days.

According to market observers, further developments in the ongoing trade tensions between the US and China also would set the cues for the global markets.

“The markets next week would look forward to the earnings season as larger companies such as HUL (Hindustan Unilever), Bajaj group of companies will come out with their results,” said Devendra Nevgi, founder and Principal Partner at Delta Global Partners.

According to Geojit Financial Services’ Head of Research, Vinod Nair: “Market is expecting 19 per cent growth in PAT (profit after tax) for Sensex index stocks and 14.7 per cent for Nifty50 index stocks in Q1, FY19 compared to a washout in last quarter.”

“From here on market trend will largely depend on progress of results season,” he said.

Gaurav Jain, Director of Hem Securities said: “We will continue to see stock-specific approach as heavyweights like HDFC Bank, Hindustan Unilever, Ashok Leyland, Zee Entertainment, Ultratech Cement, MindTree, Bajaj Finance, and Kotak Mahindra Bank are scheduled to report their quarterly earnings.”

On the macro front, the government will announce wholesale price inflation (WPI) for June 2018 on Monday, July 16, Jain added.

Further, on the global side, markets would be hoping for easing of trade related issues between the US and China, said Sanjeev Zarbade, Vice President for Research at Kotak Securities.

Noting the significance of oil prices, Zarbade said: “Crude oil prices have corrected a bit and further softening in prices would be positive for global markets”.

In the week ended Friday, fall in crude oil prices was a major factor for the positive trend in the global and domestic equity markets.

As per Delta Global Partners’ Nevgi, the fall in crude prices and weaker US dollar would help the sentiments in the rupee market.

On Friday, the Indian rupee closed at 68.53, strengthening by 35 paise from its previous week’s close of 68.88 per greenback.

Talking on the investor sentiments in the Indian equity market, Nevgi told IANS,the support comes from domestic investors as foreign ones continue to be net sellers.

In the week gone by, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 1,801.65 crore, while the domestic institutional investors purchased stocks worth Rs 2,288.08 crore.

During the upcoming week, Deepak Jasani, Head of Retail Research at HDFC Securities feels, “further upsides are likely, once the immediate resistance band of 11,078-11,171 (Nifty50) is taken out.”

The level of 10,893 points would be a crucial support for the Nifty50 on the National Stock Exchange, he added.

On Friday, the Nifty50 closed at 11,018.90 points — up 246.25 points or 2.29 per cent — from its previous week’s close.
The Sensex on BSE rose by 883.77 points or 2.48 per cent to close at 36,541.63 points on a weekly basis.
On Thursday, the barometer 30-scrip Sensex touched a record high of 36,699.53 points, only to surpass the level the very next day and set a fresh all-time high of 36,740.07 points.

It had also set a new closing high of 36,548.41 points on Thursday.

With another eventful week expected to follow, these instances of fresh benchmarks and landmarks, may not end here.

(Rituraj Baruah can be contacted at [email protected] )

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Market Review: Equity indices surged over 2% this week; Sensex touched new high

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Mumbai, July 14: Supportive global cues and a healthy start to the earnings season lifted the key Indian equity indices over 2 percent in the week ended Friday, with the BSE Sensex setting fresh benchmarks and the NSE Nifty50 closing over the 11,000-mark.

On Thursday, the barometer 30-scrip Sensex touched a record high of 36,699.53 points, only to surpass the level the very next day and set a fresh all-time high of 36,740.07 points.

It had also set a new closing high of 36,548.41 points on Thursday.

Globally, investors’ sentiments were strengthened after reports on Wednesday said China and the US may hold talks to resolve the ongoing trade tensions. Easing crude oil prices was also welcomed by the markets.

However, in the domestic market, weak macro-economic data released on Thursday trimmed the gains.

Index-wise, the wider Nifty50 of the National Stock Exchange closed the week’s trade at 11,018.90 points — up 246.25 points or 2.29 per cent — from its previous week’s close.

The Sensex on BSE rose by 883.77 points or 2.48 per cent to close at 36,541.63 points on a weekly basis.

Market breadth, however, was negative in three out of the five trading sessions of the week, said Deepak Jasani, head of Retail Research at HDFC Securities.

Prateek Jain, Director of Hem Securities said: “Traders and investors seem impressed by the healthy start to the earnings season and easing crude oil prices. But towards the fag end of the week, profit-booking set on concerns of macro indicators.”

Retail inflation grew 5 per cent in June to a five-month high while industrial production slowed down to 3.2 per cent in May on weak manufacturing sector output, Jain said.

According to Equity99’s Senior Research Analyst, Rahul Sharma: “The stock-specific action continued last week with IT major TCS (Tata Consultancy Services) beating market estimates, while IndusInd Bank was in line (with expectation).”

On the currency front, rupee closed at 68.53, strengthening by 35 paise from its previous week’s close of 68.88 per greenback.

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 1,801.65 crore, while the domestic institutional investors purchased stocks worth Rs 2,288.08 crore in the week bygone.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested Rs 1,540.59 crore, or $224.27 million from the equities segment on stock exchanges during the week ended on July 13.

Sector-wise, oil and gas, IT and capital goods ended on a positive note, while metals and auto were among the major losers, Jasani told IANS.

Scrip-wise, Reliance Industries gained the most on the Sensex and in a major development its market capitalisation (m-cap) crossed the $100 billion mark this week.

On Friday, the m-cap of the company at closing was Rs 694,944.56 crore or $101.40 billion.

The top weekly Sensex gainers were Reliance Industries (up 12.31 per cent at Rs 1,096.75); Yes Bank (up 6.81 per cent at Rs 376.40); Wipro (up 6.73 per cent at Rs 280.70); Hindustan Unilever (up 3.70 per cent at Rs 1,741.15); and Bajaj Auto (up 3.66 per cent at Rs 3,134 per share).

The major losers were Hero MotoCorp (down 4.84 per cent at Rs 3,460.60); Tata Motors (DVR) (down 4.18 per cent at Rs 150.30); Vedanta (down 4.05 per cent at Rs 210.60); Tata Motors (down 2.58 per cent at Rs 264.15); and IndusInd Bank (down 1.81 per cent at Rs 1,923.45 per share).

IANS

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