IndUS Business Journal

Online travel agents can deduct 1 percent tax collected at source

Aug 8, 2017 0

New Delhi–Online travel agents fall in the category of e-commerce operators and can deduct 1 per cent tax collected at source (TCS) under the GST, the Central Board of Excise and Customs (CBEC) said on Tuesday.

“Online travel agents providing services through digital or electronic platform will fall under the category of e-commerce operators (ECO) liable to deduct TCS under Section 52 of the CGST Act, 2017,” CBEC said here in a fresh set of frequently asked questions (FAQs).

The e-commerce operator is required to collect an amount at the rate of one per cent (0.5 per cent Central GST plus 0.5 per cent State GST) of the net value of taxable supplies made through it. The amount so collected is called as TCS.

The benefit of threshold exemption of Rs 20 lakh turnover is not available to e-commerce operators and they are liable to be registered irrespective of the value of supply made by them.

“Threshold exemption is not available to e-commerce operators who are required to pay tax on notified services supplied through them,” it said.

“Section 52(1) of the CGST Act, 2017 mandates that TCS is to be collected on the net taxable value of such supplies in respect of which the ECO collects the consideration,” the CBEC said.

CBEC said that TCS is to be collected on the “net value of taxable supplies” made through an ECO and if the supply itself is not taxable, the question of TCS does not arise.

The net value of taxable supplies means the aggregate value of taxable supplies of goods or services or both, other than the services on which entire tax is payable by the e-commerce operator, made during any month by all registered persons through such operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.

In cases where someone is selling their own products through a website, there is no requirement to collect tax at source.

The e-commerce operator needs to make the collection during the month in which the consideration amount is collected from the recipient.

The amount collected by the operator is to be paid to the government within 10 days after the end of the month in which amount was so collected.

The details of supplies furnished by every operator in his statement for the month will be matched with the corresponding details of outward supplies furnished by the supplier concerned in his valid return for the same month or any preceding month. Where the details of outward supplies declared by the operator in his statement do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons.

The supplier in whose out tax liability any amount has been added, shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment. (IANS)

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Indian stock market regulator initiates action against 331 suspected shell companies

Aug 8, 2017 0

Mumbai–Stock market regulator Sebi has asked major domestic equity indices to initiate action against 331 listed firms which are suspected of being “shell companies”.

The development comes a day after the market regulator directed the two major indices — National Stock Exchange of India (NSE) and Bombay Stock Exchange (BSE) — through a letter to initiate action against the suspected firms.

The Sebi letter forwarded a list of 331 suspected “shell companies” identified by the Ministry of Corporate Affairs.

According to the letter, trade in all the 331 listed securities shall be placed in “Stage VI of the Graded Surveillance Measure (GSM)” with immediate effect.

“If any listed company out of the said list is already identified under any stage of GSM, it shall also be moved to GSM stage VI directly,” the letter said.

The stage VI of GSM framework mandates the exchange to allow trade in the identified securities only once a month under its trade-to-trade category.

The framework further mandates that any upward price movement in these securities shall not be permitted beyond the last traded price amongst additional surveillance measures.

The letter further read: “Exchanges shall initiate a process of verifying the credentials, fundamentals of such companies.”

“Exchanges shall appoint an independent auditor to conduct audit of such listed companies and if necessary, even conduct forensic audit of these companies to verify its credentials, fundamentals.” (IANS)

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US-based Copart opens India Technology Center in Hyderabad

Aug 8, 2017 0

Hyderabad–Copart, a US-based global leader in online vehicle auctions. on Tuesday launched its India Technology Centre here

The facility was inaugurated by US Consul General in Hyderabad, Katherine Hadda in the presence of state IT Secretary Jayesh Ranjan and the company’s top management.

Copart Inc Executive Vice President Will Franklin said that the company has nearly 200 yards globally including one each in Delhi and Hyderabad. “We’re aiming at setting up around 50 yards in India gradually,” he said.

Will Franklin

Copart India Technology Centre Director Abdul Khuddus said Athat nearly $2 million have been invested in Indian facility. “Hyderabad provides great opportunity to companies like Copart. The technology support, which is the backbone of the company’s unique system, will be developed and improvised at this facility,” he added.

The company sells nearly 2 million dead cars every year, and aims to double the numbers.

Copart has presence in 190 locations across 11 countries with a Rs 45,000 crore market cap. The company also processes used cars, cars dumped by owners or seized by insurance companies, mostly End of Life Vehicles (ELVs).

Nearly 1600 vehicles that were damaged in Chennai floods were acquired by Copart and sold online to bidders. During the Katrina floods in the US, two lakh ELVs were auctioned online.

Describing Hyderabad as a prime destination for tech companies, US Consul General Hadda said nearly 130 US companies having set up their facilities in the city.

“A company like this (Copart) recognizes the world is getting flatter, and is selling cars as far as in Afghanistan among other locations, which is incredible. It speaks of the power of technology, which is very transformative to our lives,” she said.

Ranjan said it was the small and medium companies like Copart that actually provide numbers for Hyderabad to grow, in addition to tech giants like Google, Amazon and Microsoft.

He hailed the company’s plan to hire 120 people by the end of 2017, and double the number by next year. (IANS)

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Divestment will open doors to better future for Air India

Aug 6, 2017 0

By Rohit Vaid

New Delhi–Air India’s global expansion plans, along with the induction of more aircraft and pilots, would not be hindered by the government’s recent decision to divest its stake in the national carrier, the airline’s top official has said.

The “painful decision” of divestment would “open doors to a better future for the airline and its employees”, Ashwani Lohani, Chairman and Managing Director of Air India, told IANS in an interview here.

Lohani said he had been in “constant touch” with employees to allay their apprehensions over the divestment process.

“I have been in touch with employees through WhatsApp, e-mail, and by having one-on-one interactions. I have asked them — why should we slacken from our end? We should continue to do our best,” he said.

“As and when a decision is taken on the divestment we will make sure that employees’ genuine interests are put forth to the government,” Lohani added.

Elaborating on the company’s international and national expansion plans at its New Delhi-based HQ — Airlines House — Lohani said: “Our expansion plans are on track. We will start a new destination each month till October. A new route to Stockholm will be started in August, followed, a month later, to Copenhagen. In October, we will start our New Delhi-Los Angeles flight operations.”

“We also plan to start operations to Tel Aviv in Israel and Dallas and Houston in the US. Last year, we started operations to four new destinations and this fiscal we plan to introduce seven new flights,” Lohani said.

On Friday, the airline commenced flight operations from pilgrimage destination Varanasi to Colombo, Sri Lanka. In July, it had started a direct connection between New Delhi and Washington.

Last year, the airline added four new international destinations, including New Delhi-San Francisco, Delhi-Vienna, Delhi-Madrid and Ahmedabad-London.

According to Lohani, the airline might consider starting a flight to Nairobi, Kenya. Also on the cards are commercial operations on the Guwahati-Bangkok and Guwahati-Kunming (China) routes.

At present, Air India has a network of more than 30 destinations across the US, Europe, Australia, Far-East and South-East Asia, and the Gulf regions. It gets over 65 per cent of its revenue from overseas operations and has deployed most of its assets on foreign routes.

In addition to its international expansion plans, the airline hopes to introduce what is being touted as the “Necklace” or “Garland” flight on the domestic network from September-October.

The flight will start from Kolkata in the morning to Raipur from where it will head out to Indore and then on to Ahmedabad and Jaipur. Its final port of call will be New Delhi in the evening.

When asked about the extra aircraft and crew required for the current expansion drive, Lohani said: “We have already hired around 250 pilots and more are being inducted. The same is the case with inducting cabin crew. Aircraft acquisition on lease basis is also going according to plan.”

The airline hopes to add around 15 more aircraft to its fleet via the lease model by this fiscal-end. Most of these aircraft will be turbo-prop planes which will be used to connect the hinterland with metropolitan cities.

Currently, the airline has more than 115 aircraft in its fleet — a mix of wide-body Boeing B777s, B747s, B787 Dreamliner aircraft, and the narrow body Airbus A321s, A320s and A319 planes, apart from turbo-props.

The AI chief said that cost-saving measures undertaken, along with aggressive focus on international markets and route rationalisation efforts, are expected to raise the operating profit of the airline to around Rs 150 crore from Rs 110 crore in 2015-16.

“These figures might be inconsequential, but the significance they hold is the fact that a turnaround is taking place,” the airline’s chief said.

The airline might be experiencing a “slow-but-sure” turnaround; however its massive debt of over Rs 50,000 crore accumulated over the years has been one of the biggest obstacles to its financial viability, besides an ill-planned merger.

Lohani said: “We would have been in a much, much better position, if the debt situation was not so. The situation would have been different.”

Lohani maintained that employees remain the most important element for success. Outside his office, which is studded with priceless pieces of art that have been collected by the airline over years, a slew of employees from cabin crew to pilots await their turn to meet him.

The airline has over 11,000 employees, whereas at the group level, including its subsidiaries, the number of staffers goes up to about 20,000. (IANS)

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Manufacturing slowdown not linked to GST: NITI Aayog’s Bibek Debroy

Aug 6, 2017 0

New Delhi– It’s not reasonable to link GST with the slowdown in the manufacturing output as the sector is facing problems which go beyond the tax reform, says NITI Aayog Member Bibek Debroy.

“Why should GST have any impact on manufacturing? The only answer I can think of is that there were some things where there was a lack of clarity in rules and some instances where it was not clear what the GST rate was,” Debroy told IANS in an interview.

“These are very transitory things which we don’t need to worry about because it is a blip that will go away once the transition is complete,” he maintained.

“I don’t think the problem with manufacturing is these transitory things.”

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI), which is a composite indicator of manufacturing performance, on Tuesday showed that India’s manufacturing sector’s output declined last month due to the launch of the Goods and Services Tax (GST) on July 1.

It stood at 47.9 in July — its lowest since February 2009 — compared to 50.9 in June 2017.

An index reading of above 50 indicates an overall increase in economic activity — and below 50, an overall decrease.

Asked whether some serious problems were ailing the manufacturing sector, Debroy said: “I agree. That, I am not disputing.”

“About manufacturing, there is a long list of problems that are ailing the sector like physical infrastructure, including power and transport, procedures, tax issues — direct as well indirect — and credit-related issues,” he aded.

The NITI Aayog Member said that these problems were not new and had been ailing the sector for a long time.

He said the current government had taken several significant measures to improve the sector’s performance but it would take some time for them to bear results.

“None of them will solve things in six months. Most of what this government has done on manufacturing is what economists would call supply side measures. So it takes time. There is no instant fix,” Debroy explained.

According to the Central Statistics Office (CSO), India’s growth saw a slowdown in 2016-17, especially in the last quarter when the GDP growth was estimated to be 6.1 per cent, a dip attributed to the demonetisation exercise and a manufacturing slowdown.

Debroy dismissed the link and said: “Just because three things happen at the same time doesn’t mean that they are linked with each other.”

“GDP is determined by so many different things. To ascribe it to GST or demonetisation is completely unrealistic,” he said, adding that now we don’t have GDP but GVA (Gross Value Added).

Indirect taxes are added while subsidies are subtracted from GVA to arrive at the GDP figure.

Debroy said the CSO estimation is essentially based on the organised sector on the basis of which it does an estimate — “which is more like guesswork” — for the unorganised sector.

“This is fine if whatever trend is happening in the organised sector is similar to the trend that is happening in the unorganised sector. But if the trends are different, then it is a terrible mistake.

Debroy said that historically, the unorganised sector has grown in tandem with the organised sector, particularly during the high-growth years.

“So the question to which I don’t think anyone has a satisfactory answer is — has that link has broken down?

“So if demonetisation has hurt the unorganised sector more, then I have a problem with the CSO numbers. And if it has hurt the organised sector more, then I have a problem with the GVA numbers,” he said.

The noted economist said the second “serious issue” which he feels uncomfortable about is the deflator — a measure of the level of prices of all new, domestically produced, final goods and services in an economy.

Debroy explained that what we have is a nominal GVA figure on which a deflator is used to arrive at the real figure, which takes inflation into account.

“What is continuously reported is the real figure, which is a derived figure,” Debroy said.

According to the government data, while the real growth figures have shown a declining trend, the nominal GVA growth rate has increased from 8.7 per cent in first quarter of 2016-17 to 11.3 per cent in the fourth quarter.

The reason has been the GVA deflator which increased to 5.4 per cent in the fourth quarter of 2016-17 compared to 1.6 per cent the previous year.

“Therefore, while I am confident about 11.5 (nominal figure), I am uncomfortable about the real one,” Debroy said. (IANS)

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Rupee’s high external value hurting exporters: Assocham

Aug 6, 2017 0

New Delhi–The external value of the Indian rupee currently supersedes its internal strength and the resulting mismatch is hurting exporters, whose competitive edge gets hit with the declining value of the dollar vis-a-vis the rupee, industry lobby Assocham said on Sunday.

“External value of rupee is far stronger than its internal strength despite lower inflation with the resultant mismatch, and the continuing trend is hurting exporters whose competitive edge gets directly hit with declining value of dollar against the domestic currency,” Assocham said, citing its report on the subject.

Declining by close to six per cent over the past one year, the rupee is currently trading at 63.63-70, against 66.93 to a dollar in August 2016, Assocham said.

“So, clearly the external value of rupee has strengthened quite,” it added.

The Associated Chambers of Commerce and Industry of India said that, on the other hand, the rupee has weakened at least in reverse proportion to the Consumer Price Index (CPI), or retail inflation, that is inching up all the same.

“Yes, inflation is down; but it is still inflation and not disinflation or deceleration in prices. That means rupee is able to purchase less of commodities (to the extent of 1.58 per cent at least), but when it comes to its value measured against dollar, it has gained by about six per cent,” the Assocham report said.

Owing to this situation, there has been a falling pace of growth exports.

While exports have been growing for the last nine months ending June 2017, the Reserve Bank of India (RBI) observed that the export growth weakened in May and June from the April peak as the value of shipments across commodity groups either slowed or declined.

“Exports have shown growth of 4.39 per cent to $23.56 billion in June 2017, as compared to $22.57 billion a year ago. But this growth had peaked to 20 per cent in April this fiscal,” the statement said.

Moreover, thanks to declining value of dollar in rupee terms, during June 2017 exports showed a negative growth of 0.04 per cent, it added.

“It clearly translates into erosion in margins between six to seven per cent only on account of currency appreciation and the trend is likely to continue on the back of robust inflows in the stock market,” Assocham Secretary General D.S. Rawat said.

The inflows of the dollar, taking the country’s foreign exchange reserves to a record level of $392 billion, “are a result of global liquidity flush finding ways into the financial markets of the emerging economies,” he added. (IANS)

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India’s gold demand up by 37 percent in Q2 of 2017: World Gold Council

Aug 3, 2017 0

New Delhi–Demand for gold in India for the second quarter (April-June) of 2017-18 was at 167.4 tonnes, up by 37 per cent compared to overall Q2 demand of 122.1 tonnes for 2016, World Gold Council data showed here on Thursday.

“India’s gold demand in Q2 2017 stood at 167.4 tonnes, a robust quarter, as seasonal demand and improved rural sentiment contributed to a 37 per cent year-on-year increase. Both jewellery and investment demand saw a healthy rise of 41 per cent and 26 per cent respectively, albeit on a low base of Q2 2016,” said Somasundaram PR, Managing Director, India, World Gold Council.

The gold demand value for the second quarter of 2017 was at Rs 43,600 crore, up by 32 per cent in comparison to Q2 2016 (Rs 33,090 crore).

The total Jewellery demand in India for Q2 2017 was up by 41 per cent at 126.7 tonnes as compared to Q2 2016 (89.8 tonne). The value of jewellery demand was Rs 33,000 crore, up by 36 per cent from Q2 2016 (Rs. 24,350 crore).

“Though underlying concerns about GST and other transparency measures continue, predictably, positive sentiment returned with continued remonetisation and an expectation of good monsoons. This was evident in the sales momentum during Akshaya Tritiya supported by a relatively higher number of auspicious wedding days during the quarter,” said Somasundaram.

“Looking ahead, in second half of year, as consumers and trade adapt to the new tax and compliance regime, growth will remain range bound even with good monsoons. Our full year demand estimate remains between 650 and 750 tonnes, the higher end of the range being more likely,” he added. (IANS)

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Infosys to acquire digital studio in London

Aug 3, 2017 0

Bengaluru–Global software major Infosys on Thursday said it would acquire the London-based digital studio Brilliant Basics for an unspecified amount.

“The acquisition of Brilliant Basics represents our commitment to expand our worldwide connected network of digital studios, which are focused on fulfilling the needs of our global clients for digital transformation solutions,” said the IT major in a statement here.

The acquisition is expected to close during this quarter (July-September).

The customer experience studio is known for design thinking-led approach and experience in executing global programmes.

“Adding the studio’s design and customer experience capabilities has proven to be invaluable, helping us close large deals with a blend of skills,” said the company’s Deputy Chief Operating Officer S. Ravi Kumar in the statement.

The studio will enable the company to drive digital transformation solutions, which connect its clients’ systems of record to new systems of engagement.

“Being a member of the Infosys family allows us to enhance and scale the offering for our clients, as the software major has a unique vision and approach to partnership and acquisition,” said Brilliant Basics Founder and Chief Executive Anand Verma.

Besides in London, Basics has a studio at Dubai in the United Arab Emirates.

With its digital studios the world over, including in Bengaluru, Pune, New York, London and Melbourne, the outsourcing firm will enhance its domain expertise with Basics in the financial services, retail and telco sectors across Europe and West Asia. (IANS)

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Free wifi services launched at 74 UP bus stations

Aug 3, 2017 0

Lucknow– Uttar Pradesh Chief Minister Yogi Adityanath on Thursday launched free wi-fi services at 74 bus stations, spread across 66 district headquarters in the state.

He also laid the foundation stone for three new bus stations at Amroha, Meerut and Ghaziabad.

Besides, water ATMs to provide clean and cold drinking water to passengers at Agra, Mathura, Ghaziabad, Moradabad, Varanasi, Allahabad, Hardoi, Etawah, Rampur and Azamgarh bus stations were also launched.

Interestingly, of the water ATMs inaugurated by the Bharatiya Janata Party (BJP) government in the state, four are in Rampur, Etawah, Hardoi and Azamgarh — the pocketboroughs of the Samajwadi Party (SP).

The wi-fi services with unlimited surfing would be available for passengers through an app — TG Connect, officials said.

The Chief Minister also inaugurated automatic driving test tracks at Varanasi, Allahabad, Meerut and Ghaziabad.

Adityanath patted the back of the transport department and lauded them for fast-tracking development work in the past four months. (IANS)

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US-India partnership can shape up India’s digital economy

Aug 2, 2017 0

New Delhi– The new US-India Strategic Partnership Forum (USISPF) that was announced on Wednesday can shape up the Indian digital payment and economy sector and help the GDP grow, a top government official said here.

“India’s digital economy stands at 15 per cent and it has the potential to increase the GDP growth of the country more than others. This strategic partnership will be a game changer in this sector,” Aruna Sundararajan, Secretary Department of Telecommunications, told reporters here.

“It will also have a great impact on digital payment because we work with a lot of US companies in this area,” she added.

Aruna Sundararajan

Sundararajan said the government was laying 500,000 kilometres of optic fibre to connect rural areas to the Internet and half of it has already been completed.

She added that it will become operational by the end of this year.

The Secretary pointed out that the new US-India partnership can play a part in this area too in order to bring more Indian villages within the networking zones.

She added that the digital partnership demonstrates synergies between the US and India for what it has accomplished.

“We have seen seamless integration in silicon valley between the US technology companies and India,” Sundararajan said.

Cyber Security Coordinator at Prime Minister’s Office Gulshan Rai said as part of the sound and strategic partnership, both the countries need to work on security as the cyber attacks can happen in either of the countries.

“Digital transactions is growing tremendously in India and it’s expected to double by the end of this year. As such the issue of cyber security becomes paramount. So this strategic operation is going to play an important role here,” Rai said.

To deepen business ties between India and the US, the USISPF was set up on Wednesday.

According to the Executive Chairman of Cisco John Chambers, the USISPF would help build stronger and meaningful business relations between the two countries.

“What you see now is a potential of strategic partnership between two countries to be the model for the rest of the world,” the Cisco Executive Chairman said.

“It’s mission is to see how to get economic growth, startup growth, and get innovation, entrepreneurism and benefit society,” he added.

Chambers termed Prime Minister Narendra Modi’s Digital India initiative as a model for the rest of the world, and said the initiative is a comprehensive framework.

“Digital India initiative has the ability to be inclusive in terms of how education, smart cities and health sector will change,” Chambers said.

USISPF will work closely with businesses and government leaders to achieve the goal of driving economic growth, job creation, innovation, inclusion and entrepreneurship.

Chambers said Modi’s meeting with US President Donald Trump in June was successful.

“I am a huge believer in your country and your Prime Minister. India has grown faster than any other country in the last three years and is now known as one of the leading innovators,” Chambers said.

“Our two countries will be able to make great strides in the months to come and USISPF is honoured to be a part of this exciting future,” he added. (IANS)

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