25% surge in FPI flows before DTAA

New Delhi: Grandfathering is the term that allows investment actions taken before a certain date to be subject to old rules. In the new tax arrangement with Mauritius and Singapore, all investments from these places will be subject to a short-term capital gains tax (if booked before 12 months). However, all investments prior to March 31, 2017, would be exempt from paying such capital gains tax, under the grandfathering clause.
In those three months, for instance, the market value of Morgan Stanley Mauritius jumped more than two-fold to ~6,719 crore in the three months. Similarly, the portfolio value of Government of Singapore funds, HSBC Mauritius, Ishares India and Cinnamon Capital saw their holdings’ value rise a little more than a fifth. FPIs pumped a little more than $6 billion (~38,500 crore) into Indian equities during the three months.
In contrast, the total value of investments of these top 50 FPIs remained the same at around ~3.65 lakh crore.
As on April, the Singapore and Mauritius-based entities owned nearly 30 per cent of all FPI assets, showed data from depository NSDL.
Said Pranav Sayta, senior tax partner at consultancy EY: “A number of other factors would have also contributed, including the outcome of the recent state elections and high potential growth for the Indian economy as a whole. Yet, the fact that investments made up to end-March are grandfathered under the tax treaties with both, and also under the newly-applicable General AntiAvoidance Rule provisions (on taxes), encouraged investors to accelerate their investments, to be eligible for tax benefits upon a future exit.”
Investments between April 2017 and end-March 2019 would attract 7.5 per cent tax. From April 1, 2019, all investments through these countries would attract 15 per cent short-term capital gains. Long-term capital gains (on holdings of more than one year) will be exempt for both domestic and foreign investors.
Experts say all the major FPIs domiciled in Singapore and Mauritius are revaluating their strategies with the new tax regulations. While some of them are moving out of these jurisdictions to more tax-friendly countries like France and Netherlands, some others plan to reduce their short-term trades and concentrate on long positions.
“FPIs are coming to terms with the new reality, that there will be no tax havens. For a short span of time, they could think of shifting their base to other jurisdictions. But, from a long-term perspective, the government has already made its stance clear. If it is under the impression that any tax treaty is being misused, they would amend the treaty with that country,” said Tejesh Chitlangi, partner, IC Legal.

Exporters to get tax refund within 10 days

Exporters to get tax refund within 10 days
Business Standard: May 22, 2017
New Delhi: Commerce and Industry Minister Nirmala Sitharaman at a press conference on the key initiatives and achievements of the ministry during the three years of the NDA government in New Delhi on Saturday
The Goods and Services Tax (GST) Council has accepted the commerce ministry’s suggestion of refunding 90 per cent of exporters’ claims on incentive schemes within 10 days of applying for them.
However, the Council, which had met on Thursday and Friday in Srinagar, is yet to take a decision on allowing a different mechanism of claiming incentives for exporters belonging to medium, small and micro enterprises (MSME), Commerce and Industry Minister Nirmala Sitharaman said on Saturday.
The ministry had argued for exempting the sector from paying duties, since it would be difficult for such firms to go without crucial working capital for long.
“On the refund issue, our request to the GST Council was that for MSMEs, if an alternative could be thought of, rather than asking them to pay first and then get a refund. We are yet to hear from them,” Sitharaman said, addressing a press conference on three years of the government. Exporters are now allowed duty-free import of inputs that are used to manufacture export products. However, under the GST regime, which is expected to be rolled out on July 1, they will have to pay the duty and then apply for refunds.
Subsequently, they had argued that significant working capital would be locked up in the new system.
While the government had earlier promised that the duty would be refunded within the first seven days of submitting an application, it had added a further step of acknowledging each claim within three days, Director General of Foreign Trade Ajay Bhalla said.
Provisions have been made for additional refunds of 6 per cent if payments are late. The last 10 per cent of refunds would be subject to verification by the revenue department.
The issue was referred to the GST Council by a special three-member committee including Commerce Secretary Rita Teaotia; the head of the committee on duty drawbacks, GK Pillai; and a finance ministry official.
It had also raised the issue that under the GST, if exempt goods were inputs in making products used for exports, export credits would not be provided for them.
Sitharaman also said the government was considering creating spice development agencies at the state level to boost the working of the Spices Board. On this note, it is looking at spice development parks in Telangana and other states.

GST to help improve India's exports: Sitharaman

New Delhi: As per Ms Nirmala Sitharaman, Ministry of Commerce and Industry, Government of India, GST is expected to boost Indian exports following fitment discussions in the GST council and the treatment of commodities and services. India's total exports bounced back with a 4.95 per cent growth in 2016-17, inspite of services having a negative growth. The GST council on May 19, 2017 announced the fitment of services and GST rates for 1,211 goods as it headed towards July 1, 2017 rollout.

India Inc ready for July 1 GST roll-out: CEO poll

New Delhi: Captains of Indian industry across sectors say they are ready for a July 1 roll-out of the “game-changing” goods and services tax (GST).
The GST would help the economy pick up pace, bring down the inflation rate, and boost the fortunes of corporate India, a nationwide poll of top chief executive officers (CEOs) revealed.
A survey of 34 CEOs conducted across India on Saturday, after the GST Council agreed on the rates for various goods and services in Srinagar last week, found that 88 per cent of corporate executives were prepared for a July 1 roll-out.
Ninety-four per cent of the CEOs surveyed said the GST would have a positive impact on the economy and 62 per cent said that the tax would have a positive impact on inflation. The GST rates have exempted several food products from the tax and kept a majority of essential items in the lower tax bracket of 5 per cent.
However, the anti-profiteering clause, which requires firms to pass on the benefit of input credit or tax reduction to the end consumer by a commensurate reduction in prices, is cause for worry in the corner office as 32 per cent of the CEOs said it could lead to harassment by tax officials, and another 21 per cent chose not to respond in ‘yes’ or ‘no’ terms.
CEOs are upbeat on the impact of the GST on their industries and companies. About 65 per cent of them said their industry would benefit from it, and only 26 per cent say it would adversely impact them.
“I have always been and continue to be very optimistic about India's future after the GST roll-out. While demonetisation has helped in checking black money, and ensuring medium- and long-term growth, the GST, which would be implemented from July, would help in achieving positive economic growth in the country,” said Adi Godrej, chairman emeritus, Godrej group, and a vocal supporter of the GST since it was first announced in 2005.
Most companies said they had set up cross-functional core groups with external consultants to get the software in place and train the staff. Industry is likely to undergo a phase of transition in the next two-three months, and then things will return to normal.
Industry says a unified GST is a prerequisite for a modern developed economy. “With India's primacy in the global commercial and economic space, we cannot lag behind. The pain of short-term inflation and adverse tax burden on companies will be eventually compensated by gains from transparency, better tax credit systems, and ease of administration. It is certainly a progressive tax reform and industry is for it,” said Harsh Goenka, chairman of RPG Enterprises.
However, CEOs said they wanted more clarity on rates. “On the one hand, healthcare is exempted, while, on the other hand, certain rates are given for pharmaceutical industry. I do not know yet what it means,” said Kiran Mazumdar-Shaw, chairperson and managing director, Biocon.
CEOs in the hotel industry are apprehensive about the impact of the 28 per cent rate on five-star hotels, which could dampen demand. “We need clarity on how the GST will work in the hotel industry, in which we see seasonal fluctuations in tariffs and a lot of discounts by outside agents,” said the CEO of a leading hotel chain.
When asked whether there was enough clarity on input tax credit, 56 per cent of CEOs said they were aware of the input credit, and 28 per cent of the CEOs said there was no clarity. The rest were non-committal.
All the CEOs said they would not look at any relocation of their manufacturing plants because of the GST.

Rank of India Improves in International Tourist Arrivals

New Delhi: As per the UNWTO definition, International Tourist Arrivals (ITAs) comprises two components namely Foreign Tourist Arrivals (FTAs) and Arrivals of Non-Resident Nationals. The UNWTO in its barometer ranks countries in terms of their ITAs. So far only the figures of FTAs were compiled in India. However, now India has started compiling the data arrivals of Non-Resident Indians (NRIs), also.
The number of NRI arrivals during 2014 and 2015 were 5.43 million and 5.26 million, respectively. Accordingly, the numbers of ITAs in India during 2014 and 2015 were 13.11 million and 13.28 million, respectively. The data of ITAs, containing both the arrivals of NRIs and FTAs, is now as per International recommendations.
Due to this inclusion, India’s improved rank reflecting the true and comparable scenario has now been acknowledged by the UNWTO. As per the latest UNWTO Barometer for March 2017, Rank of India in International Tourist Arrivals in both 2014 and 2015 is 24 as against the previous rank of 41 and 40 in the year 2014 and 2015, respectively. With this inclusion the share of India in the ITAs has also increased from 0.68% (based on FTAs) to 1.12% in the year 2015.
Earlier India’s rank in the Travel & Tourism Competitiveness Index (TTCI), 2017 had also shown a 12 places jump from 2015. Rank of India in TTCI Report of 2017 was 40th as compared to 52nd in 2015, 65th in 2013 and 68th in 2011.
While UNWTO gives ranking in terms of numbers of ITAs, TTCI is composed of 14 pillars organized into four sub-indices of ‘Enabling Environment’, ‘Travel & Trade Policy and Enabling Conditions’, ‘Infrastructure’ and ‘Natural and Cultural Resources.

Paytm Payments Bank to launch in Delhi NCR today

New Delhi: Paytm Payments Bank is set to go live on Tuesday with a select first-phase rollout by offering accounts on an invite-only basis to consumers largely in north India, and said it would invest about Rs400 crore over the next two years to build its banking network across the country.
The first physical branch of Paytm Payments Bank will go live in Noida on Tuesday.
The bank plans to expand its physical presence to 31 branches and 3,000 customer service points in the first year.
The firm is targeting 500 million customers by 2020.
“We will first start the services in Delhi-NCR followed by the second phase of launch in other top metro cities,” said Vijay Shekhar Sharma, founder of One97 Communication Ltd, which owns Paytm, over phone.
The second phase of the rollout is expected after three months.
The company is expecting a customer acquisition cost of Rs125-150 crore over the next 12 months.
Paytm Payments Bank will offer accounts with a zero balance requirement and every online transaction such as immediate payment service, national electronic funds transfer, real-time gross settlement will be offered free of charge. For savings accounts, the company will also offer an interest of 4% per annum, much lower than competitor Airtel Payment Bank’s interest offering of 7.2%.
Paytm Payments Bank will offer current accounts to its millions of merchants.
Paytm Payments Bank will also offer a cashback of Rs250 to its first million customers who reach a deposit of Rs25,000.
According to Sharma, the free of charge fund transfers and between Paytm wallets will make them “the most compelling bank account and wallet for consumers”.
“This is the best value proposition we have offered,” he said.
The company will issue debit cards with an annual fee of Rs100 in partnership with Rupay.
Paytm Payments Bank has already received investment of about Rs220 crore from One97 Communications Ltd and its founder Sharma in November. Sharma was one of the 11 recipients of RBI’s payments bank licence and has personally invested Rs112 crore of the total investment received.
“RBI has given us an opportunity to create a new kind of banking model in the world. We are proud that our customer deposits will be safely invested in government bonds, and be used for nation building. None of our deposits will be converted in to risky assets,” said Sharma, who is also chairman of Paytm Payments Bank.
The company said in a statement that it will roll out its beta banking app for its employees and associates and that Paytm customers can request an invite by going to PaytmPaymentsBank.com or on the Paytm iOS app.
“Our ambition is to become India’s most trusted and consumer-friendly bank. Leveraging power of technology, we aim to become the preferred bank for 500 million Indians by 2020,” said Renu Satti, chief executive at Paytm Payments Bank.
The firm said it will move all active wallet accounts on the Paytm app to the payments bank.
But it will allow users, who do not wish to transfer their accounts, to opt out by a written request; accounts dormant for six months and having zero balances, Paytm will transfer wallets only when the user notifies it to do so.
In November, Bharti Airtel became the first payment bank to start operations followed by India Post Payment Bank.

GST to have minimal impact on retail inflation: Morgan Stanley

New Delhi: The implementation of the Goods and Services Tax (GST) is expected have a minimal impact on the consumer price index (CPI) basket, as tax rates for items in the CPI basket are expected be to lower under the GST in comparison with the current levy, according to a report by Morgan Stanley. The report further stated that the final impact on underlying inflationary pressures will likely depend on the trends in aggregate demand and output gap after the implementation of GST. The impact of GST is expected to be positive for sectors like consumer staples, media, cement and steel, and negative for airlines and oil and gas. Whereas impact on auto, hotels and telecom sector is expected to be neutral or marginally negative.

Crisil says Narendra Modi's steps to benefit growth over medium term

Mumbai: The initiatives taken by the Government of India, led by Mr Narendra Modi, Prime Minister of India, are expected to enable India to attain faster and sustainable growth over the medium term, according to a report by rating agency, Crisil. India's gross domestic product (GDP) has increased to over 7 per cent, thereby making India the world's fastest-growing major economy. The report further stated that the government is trying to deal with difficult aspects including corruption, red-tape and inefficiencies.

PM launches various projects of Kandla Port Trust

New Delhi: The Prime Minister, Shri Narendra Modi, today launched various projects of Kandla Port Trust at Gandhidham in Gujarat.
He unveiled plaques to mark the laying of Foundation Stone for construction of the Dr. Babasaheb Ambedkar Convention Centre; and the development of the 14th and 16th General Cargo Berth.
He handed over Letters of Award for Construction of Interchange-cum-ROB at Kutch Salt Junction; Deployment of two Mobile Harbour Cranes; and Mechanization for handling of fertilisers at Kandla Port.
Speaking on the occasion, Union Minister Shri Nitin Gadkari said that the Sagarmala project, and port-led development would have a positive impact on the State of Gujarat, and would lead to job creation as well.
Gujarat Chief Minister Shri Vijay Rupani spoke of the rich maritime traditions of the State, and added that the spirit continues even today.
Prime Minister Narendra Modi thanked the people for the warm welcome accorded to him on the way from the helipad to the venue of the function.
He said the people of Kutch are well aware of the importance of water. He spoke of the rich and glorious history and culture of the Kutch region.
The Prime Minister said that if India wants to make a place for itself in global trade, it should have the best of arrangements in the port sector.
The combination of infrastructure and efficiency is vital for the port sector to thrive, he said, adding that the Kandla Port has emerged as one of the finest in Asia.
The Prime Minister said that the Chabahar port, being developed with Indian participation in Iran, would further spur the growth of Kandla Port. The Prime Minister also mentioned the Dr. Babasaheb Ambedkar Convention Center whose Foundation Stone was laid today.
The Prime Minister asked the people to resolve to make whatever contribution they can for the nation over the next five years, in the run-up to the seventy-fifth anniversary of Independence.
Stating that the nation is celebrating the centenary year of Pt. Deendayal Upadhyay, the Prime Minister suggested that Kandla Port Trust be renamed as "Deendayal Port Trust - Kandla."

The Union Minister of Finance Shri Arun Jaitley says India-Africa together can shape the future of the world

New Delhi: The Union Minister of Finance and Corporate Affairs Shri Arun Jailtey said that the African Development Bank’s (AfDB) Annual Meeting organized in India this year is a new chapter in India - Africa relationship. India-Africa together can shape the future of the world, he added. Shri Jaitley was speaking at the Opening Session of Annual meeting of African Development Bank themed on 'Africa-India Cooperation on enhancing the High 5 Strategy' at Mahatma Mandir in Gandhinagar, Gujarat today.
Shri Jaitley said “our commitment is reflected in high level engagement with Africa on a scale never seen before.” He further added that ''India-Africa partnership model is unique; the cornerstone is voluntary partnership without any imposition on partner and the partner is free to decide what is best for them.”
Talking about the 'High 5' Agenda of the AfDB, the Finance Minister said that the High 5 Agenda is not different from Indian policy. “If India is a bright spot, then Africa is not very far away”, he added.
Speaking on the occasion, Shri Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance called Africa a continent of immense opportunities and said that there are opportunities for India and Africa to revive global growth.
Daniel Kablan Duncan, Vice President, Republic of Cote d’lvoire, Akinwumi Adesina, President, African development Bank, Rakesh Bharti Mittal, President designate, CII, Chandrajit Banerjee, Director General, CII and other dignitaries were also present on the occasion.