INDIAN ECONOMY: OVERVIEW, GROWTH & DEVELOPMENT
Auto industry unanimous on its demand for gst cut to 18pc
The auto industry says all stakeholders have unanimously sought a reduction in Goods and Services Tax (GST) to 18 percent from 28 percent due to a major slowdown in the sector. Rajan Wadhera, President, Society of Indian Automobile Manufacturers (SIAM), said there’s an urgent need for the GST reduction to 18 percent. “Need for an immediate reduction in the GST rates has been agreed unanimously by all automobile manufacturers, including the two-wheeler OEMs. This was also reiterated at a recent meeting with the finance minister where all OEMs (original equipment manufacturers) participated,” a SIAM statement said. Pawan Munjal, Hero MotoCorp Chairman, also apprised Finance Minister Nirmala Sitharaman about the urgent need to revive the sector, the statement added. SIAM, a non-profit body, represents all major vehicle and vehicular engine manufacturers in India.
What you must know about capital gains from stock market
Individuals are rushing to file Income Tax Returns (ITRs) for the financial year 2018-19 as August 31 deadline (after one-month extension given by the CBDT) nears. It is important to make correct disclosures in the ITR as incorrect disclosures may make your return defective. Investors are comfortable trading in the stock market but they find it complicated to decrypt its tax treatment. Here, we discuss how to report gains arising out of listed equity shares and mutual funds in the ITR.
It is important to disclose income under the correct head and in correct schedule. Thus, the first moot question is whether gains arising from sale of securities should be reported as business income or capital gains. It is an important riddle to solve as both of them have different tax treatment. As per CBDT guidelines, if assessee himself treats listed shares as stock-in-trade, the income arising from such transfer would be treated as business income.
If the listed shares are held for more than 12 months, the assessee can treat the income arising for their sale as capital gains. However, this stand, once taken in a particular year, shall remain applicable in subsequent years also and taxpayers shall not be allowed to adopt a contrary stand in this regard in subsequent years.
TV sales were growing at 20pc
India’s television industry is in the middle of a slump. Sales are falling as consumers are putting off purchase decisions of discretionary goods. For manufacturers, the average selling prices are under pressure too, as many new brands have started competing in a flat market.
The TV industry was growing at over 20 percent for many years. However, in the last calendar year, volumes inched up just 3 percent while the value growth remained flat.
“The demand isn’t growing. TV is at 15 million units annually. Many years ago, it was at 12 million,” Manish Sharma, CEO – India and South Asia, Panasonic, told during an interaction. “Fact of the matter is that for almost three quarters, TVs are facing a tough time. Last calendar year was flat and this year is going very tough. The first quarter has seen a de-growth – the segment would have de-grown 15-20 percent versus the same period last year for the industry,” he added.
TVs typically see a boost before major sporting events. However, this year turned out different. The Cricket World Cup didn’t tickle the market much.
Pakistan decides to ban all cultural exchanges with India
Pakistan has decided to ban all cultural exchanges with India, including all kinds of joint ventures between the entertainment industry of the two countries after India revoked the special status of Jammu and Kashmir, a media report said on Friday. The Ministry of Information and Broadcasting on Thursday launched a national slogan ‘Say No to India’, Dawn newspaper reported.
“All kinds of Indian content have been stopped and Pemra [Pakistan Electronic Media Regulatory Authority] has been directed to step up its vigilance along with actions against the sale of Indian DTH instruments,” said Special Assistant to Prime Minister on Information and Broadcasting Firdous Ashiq Awan.
Earlier this week, India revoked Article 370 to withdraw the special status to Jammu and Kashmir and bifurcated the region into two Union Territories –Jammu and Kashmir, Ladakh. Pakistan termed the Indian action as “unilateral and illegal”, and said it will take the matter to the UN Security Council. Awan said that the deception of cultural exchange was polluting the minds of Pakistani youth. She said that the National Security Council had decided to establish a group and Pakistan would fight the “Hindutva ideology” from all fronts.
FM to meet FPIs on reforms, tax issues
After a three-hour meeting with top India Inc leaders on Thursday to deliberate upon the issues plaguing the economy and sagging industrial growth, Finance Minister Nirmala Sitharam is scheduled to meet capital market representatives, including senior officials of foreign portfolio investors (FPIs), NBFCs and mutual funds. Based on these discussions, the Centre is reportedly planning reforms in crucial sectors over the next few months.
These plans include a public transportation initiative on the lines of the erstwhile National Urban Renewal Mission (JN-NURM) for the automobile sector, a tax overhaul through the direct tax code, which is in the works, scrapping punitive penal provisions for non-compliance with corporate social responsibility (CSR) spending norms and others, the Business Standard reported.
Under the Companies Act, certain classes of profitable companies are required to shell out at least two percent of their three-year annual average net profit towards CSR activities in a particular financial year and the requirement came into force from April 1, 2014. But amendments to the Act, passed in July, that seeks to strengthen enforcement provisions had India Inc plenty worried. Under the amended Section 135, non-compliance with CSR spending requirement could attract a fine of at least Rs 50,000, going up to Rs 25 lakh. Furthermore, every defaulting officer will be punishable with a jail term of up to three years and/or a fine ranging from Rs 50,000 to Rs 5 lakh.
Red alert in 9 Kerala districts
Monsoon rains have wreaked havoc in Kerala, Maharashtra, Karnataka, Assam, Odisha and eastern part of India. At least 22 people have lost lives in floods in Kerala alone, and over 10,000 people have been evacuated to safe areas. At least 27 people have drowned in Maharashtra. In Karnataka, nine people have drowned while over 44,000 people have been displaced. Incessant rains have also triggered flooding in several parts of Madhya Pradesh, Goa, Gurajat, Andhra Pradesh, Odisha and West Bengal, leading to major devastation. The Kerala government has issued a red alert in the wake of excess rainfall. The Kochi International airport has suspended all operations till Sunday as the runway area in the airport is water logged due to flood. The Kerala government has declared holiday for the day for all schools. Wayanad, Kozhikode and Idukki are the most-affected districts. The Army and National Disaster Response Force (NDRF) have been called to rescue people stuck in flood-prone areas. Kerala had also seen the worst floods in a century in 2018, in which over 417 people lost lives and several went missing. As per the Indian Meteorological Department (IMD), the next two days will see more rains in Gujarat, Karnataka and Maharashtra.
Tax authority eases norms for pending angel tax assessments
Following through on Finance Minister Nirmala Sitharaman’s Budget promises to resolve issues plaguing startups, the Central Board of Direct Taxes (CBDT) has issued a circular relaxing its assessment and scrutiny norms for such businesses. Seeking to allay concerns over angel tax, the apex body for direct taxes has assured that tax officers won’t carry out any verification of issues raised with startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT).
This move is part of the procedure being laid out by the CBDT to deal with pending angel tax assessments of startups, and is aimed at easing tax compliance for such ventures. For cases that land in limited scrutiny, “no verification of such issues will be done by the assessing officers during the proceedings and the contention of such recognised start-up companies the issue will be summarily accepted”, the CBDT said in a circular dated August 7. The Income Tax Department carries out two types of scrutiny procedures – limited and complete – and both entail submission of additional documents and financial reports.
It’s important to stress that the relaxed norms only apply to the angel tax section. The amount raised by a startup in excess of its fair market value is deemed as income from other sources and is taxed at 30 percent. The income tax provision Section 56 (2)(viib), which is at the root of this problem, was incorporated in the Income Tax Act in 2012 to stop unaccounted money from being funnelled into corporate world. But it ended up hitting the funding of startups, and hence the demand for abolishing this tax. Normally, about 300-400 startups receive angel funding in a year. Their investment in a unit ranges between Rs 15 lakh and Rs 4 crore.
Gov will cover 10 crore farmers under PM-Kisan by year-end
The government aims to cover this year as many as 10 crore farmers under the PM-Kisan scheme, wherein they will be given Rs 6,000 annually in three equal instalments, Agriculture Minister Narendra Singh Tomar said on Friday.
Around 5.88 crore small farmers have so far received the first tranche of Rs 2,000 each under the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) and 3.40 crore peasants have got the second instalment as well, he said.
“Barring West Bengal, all states are participating in the scheme. The progress so far is very good. We are targeting to reach out 10 crore farmers by end of the year,” Tomar told reporters.
The scheme will cover all 14.5 crore farmers in the country, irrespective of the size of their landholding, he said.
The scheme was launched on February 24 this year in the run-up to the 2019 Parliamentary elections in Gorakhpur, Uttar Pradesh where the first rounds of instalments were paid to several farmers.
Initially, the scheme was designed to cover an estimated 12.5 crore small and marginal farmers holding land up to 2 hectares.
Later the scheme was revised to cover around additional 2 crore farmers, increasing the coverage of PM-Kisan to around 14.5 crore beneficiaries, with an estimated expenditure of Rs 87,217.50 crores by the Central Government in the fiscal year 2019-20.
Top automakers plan production cuts in response to slow demand
Indian automakers Tata Motors Ltd and Mahindra and Mahindra Ltd (M&M) said on Friday they would cut production at some plants in response to slowing demand that industry executives say has driven the sector into one of its worst downturns. Tata Motors, which had previously flagged a “challenging external environment”, said it closed some blocks at its Pune plant in Maharashtra. The company, India’s top automaker by revenue, had last month posted a bigger-than-expected quarterly loss due to weak conditions at home and problems at its British luxury car unit. M&M said on Friday its automotive segment, which makes passenger and commercial vehicles and spare parts, would cut production for 8-14 days at various plants during the second quarter. Shares of Tata Motors and M&M fell between 1.8percent and 2.4percent before cutting losses in a broader Mumbai market that was 1.3percent higher as of 0720 GMT. The slowdown in the sector has triggered massive job cuts, with initial estimates suggesting that automakers, parts manufacturers and dealers have laid off about 350,000 workers since April, a senior industry source told earlier this week.