GST relief: Tax cut on 178 items, only 50 still in 28% slab

Big GST relief: Tax cut on 178 items, only 50 still in 28% slab

SURABHI

Composition scheme threshold raised to ₹1.5 cr; returns norms eased

GUWAHATI, NOV 10:  

Providing a big relief to India Inc and consumers alike, the GST Council decided on Friday to lower the tax rate on 178 items, leaving just 50 items in the top 28 per cent rate slab under the Goods and Services Tax.

“Optically, some items should not be in the 28 per cent bracket even if they were taxed at such levels before GST,” said Finance Minister Arun Jaitley after the Council meeting.

Now, only items that attract the cess, such as luxury and sin goods, white goods, cement, paint, and automobile, aircraft and yacht parts, will be in the top tax category.

Prime Minister Narendra Modi had on November 4 given an indication of this, during his presentation on ‘India’s Business Reforms’, attended by World Bank CEO Kristalina Georgieva.

Modi had said that if no State government creates trouble, further steps will be taken to address problems faced by businesses and traders in the implementation of the GST by the Council at its meeting in Guwahati.

On Friday, the Council meeting decided to reduced the rate on items such as chocolates, washing powder, shampoos, aftershave, deodorants, granite and marble from the earlier 28 per cent GST to 18 per cent. Other items that will now be taxed at 18 per cent include washbasins, plywood, sanitary and construction materials, wrist watches, fire-fighting equipment and mattresses.

The rate on fly ash, bricks and some sweets has been lowered to 5 per cent from 18 per cent.

The GST rate on some more items has been reviewed; the GST on dried vegetables, for instance, has been reduced to nil (see chart).

Revenue Secretary Hasmukh Adhia said all these decisions will take effect prospectively from November 15.

Composition scheme

Additionally, in a further relaxation to small and medium enterprises, which were facing a huge compliance burden under GST, the Council has decided to increase the threshold for the compositon scheme to an annual turnover of ₹1.5 crore. However, an amendment to the GST law will first have to be passed by Parliament.

A uniform tax rate of 1 per cent will be levied under the scheme, which allows for quarterly filing of returns and payment of taxes. Eligible manufacturers with service activities with an annual turnover of up to ₹5 lakh will also be allowed in the scheme.

Restaurants

The GST Council also took a stern view of restaurants that have not passed the benefits of input tax credit to customers.

It has now decided to do away with the distinction for AC and non-AC and levy a flat 5 per cent tax with no input credit on all eateries.

However, outdoor catering and restaurants in five star hotels will attract 18 per cent tax with input tax credit. The GST Council has also announced more simplification of the return filing process, and GSTR 3B is being continued till March 2018 for all taxpayers.

There will also be more simplification of the form for filers with no tax liability, said Adhia.

Moreover, for this fiscal, taxpayers will only have to file GSTR 1, due to the “backlog in filing returns” and GSTN will work to further simplify the purchase-matching process.

New deadlines for return filing and lower penalties for late filing were also announced.

Revenue loss

The Council also reviewed the revenue trends under GST for the first three months. Jailtey said that a lot of Integrated GST (estimated at ₹90,000 crore) is blocked in transitional credit and it is too early to get a clear picture of the tax collection trends.

However, the rate cuts will not be cheap and will cost about ₹20,000 crore to the exchequer annually, according to Bihar Finance Minister Sushil Modi.

Meanwhile, West Bengal Finance Minister Amit Mitra said that in the first three months, GST has resulted in a revenue loss of ₹60,000 crore to the Centre and ₹30,000 crore to the States. He blamed this on the hasty implementation of the tax.

http://www.thehindubusinessline.com/economy/policy/gst-council-prunes-list-of-goods-to-be-taxed-at-28-to-just-50/article9952407.ece?homepage=true

Cyclical improvement in growth & earnings - AXIS CAPITAL

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Q2 reflects cyclical improvement in growth & earnings

The market is riding on strong macroeconomic fundamentals and this growth would continue, giving retail investors an opportunity to participate in this growth, says Arun Thukral, MD & CEO, Axis Securities. In an interview to Sangeetha G, Thukral says the pace of NPA revival is critical for the economy’s revival. He also believes Jerome Powell as the US Fed chief will be good for the Indian market.

How do you evaluate the Q2 earnings season?

The earnings season so far have been better than expectations. The concerns about supply chain disruption post-GST implementation has been put to rest with companies reporting flat or positive volume growth. Mid- and small-cap firms seem to have do­ne better than top-tier companies that form part of the index. The Q2 performance reflects the cyc­l­ical improvement in growth and earnings, aided by government reforms and an improvement in global growth conditions.

What trend do you find in the divergent performance of banking stocks? What does it say about the economy?

The recent stimulus from the go­vernment will go a long way in su­pporting the public sector banks that were reeling under the pressure of NPAs. The private sector banks have slightly disappointed the markets on account of excess provisioning for the NPAs. So markets responded positively to the public sector banks due to the visible light of NPA resolution and was negatively surprised due to provisioning by private banks. Hence, there was the divergent trend amongst banking stocks.

The credit off-take from the corporate sector is meagre, however, retail off-take is indicating strength. In the last four to five quarters, profitability of PSU banks was primarily driven by bond portfolio, which aided them to take higher provisioning. This quarter, lack of credit growth, high provisioning and low treasury gains weighed on their performances. However, net interest margins were stable. There are signs of asset quality stress alleviating with lower incremental slippages. With the insolvency board in place, there is a fast track mechanism for settling recoveries and also we see more number of PSU players keen on faster resolution of NPAs, by bringing their stressed assets on the table.

Revival of the economy will largely depend on the pace of resolution of NPA issue. Lower additions to fresh slippages hint at gr­e­en shoots of recovery in the syst­em. The increased availability of capital after the recapitalisation move should help to accelerate the stressed assets recognition and equip banks to get in shape to lend to help revive capex cycle.

Looking at the performance of consumer goods stocks, do you think the consumption cycle has revived? Or are the good numbers just a matter of re-stocking post-GST?

Q2FY18 performance of FMCG and consumer staples stocks are indicating that volume growth has come due to 1) re-stocking post GST, 2) normalisation of trade pipeline across the channel (retail and ‘modern trade level’). In wholesale 80-85 per cent of the channel is back and canteen stores channel is witnessing some comeback after having witnessed slowdown in business from July up to September. While, these are primarily due to GST, we believe that growth opportunity and headroom for incremental gro­wth for consumer driven companies is large in rural India where one can expect volume growth to come in faster than expected, driven by government stimulus, hike in MSPs for rabi crop and other such schemes.

The consumption cycle is here to stay and in H2FY18, we could see a much better performance in terms of volume and value growth, also partially aided by low base of last year (impact of demonetisation). Given that India is a consumption driven economy, over the longer term the trend is here to stay as the Indian consumer is evolving by the passing year, and demand higher end products. Thus, focus should shift to the long-term sustainable trend rather than intermittent hiccups caused largely from reformist measures. The same is re-iterated by managements of consumer-based companies.

How will the selection of Jerome Powell as the US Federal Reserve chairman will affect the monetary policy?

The appointment of Jerome Powell has been positively taken by the US markets, as he is likely to provide monetary policy continuity by adopting Janet Yellen’s framework of gradually normalising interest rates and predictably reducing the Fed’s balance sheet. He is also likely to be more receptive to calls for adjusting financial regulation prudently, especially for smaller banks. Markets like continuity of policies and there are no negative surprises with Mr. Powell taking the new chair.

How will a change in policy affect global markets, including emerging economies like India?

Monetary policy tightening in the US could lead to capital outflows from emerging economies, affecting their current account deficit. But India would be better off co­mpared with other emerging ma­rkets due to fundamental stren­gth. In the event of hawkish view by Fed, markets may see a correction and domestic institutions could use every such dip as a buying opportunity. In the event the hikes are done on an accelerated basis, it could likely lead to rupee depreciation, due to the cascading effect on all emerging mark­e­ts. Import-oriented firms could be under pressure with a weaker rupee, whereas export-oriented industries will benefit from favo­urable foreign exchange gains.

We are hearing positive and negative news from China. How will this affect movement of industrial metals and the performance of our metal stocks?

We are seeing some uptrend in cyclical sectors, largely metals. There have been multiple factors for the same, however, the most important is the China factor. The bull run in metals is likely to sustain due to China’s Belt & Road initiative where it plans to build and strengthen overland and sea corridors linking Asia to Africa and Europe. This is a big project and will augur well for commodities across the world. Another important aspect is the stringent norms towards environmental pollution imposed by the Chinese government on steel industries. In its efforts to reduce environmental pollution and thereby improve quality of life, the government has asked steel plants to shut down operations in the seven months of winter. This essentially means that China will need to import large quantities of commodities like steel and iron to carry forward its infrastructure (commodity intensive) initiatives and investments. Prior to pollution curbs by China, it would consume 40-50 per cent of most industrial metals, even as it is a large producer. For instance, it accounts for 50 per cent of global steel production. This will be beneficial for Indian metal companies as it will lead to firming of global commodity prices.

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http://www.mydigitalfc.com/fc-supplements/invest/q2-reflects-cyclical-improvement-growth-earnings

Axis bank to raise Rs 11,625 crore - BAIN CAPITAL IN

Axis bank to raise Rs 11,625 crore by selling 9% equity stake to Bain Capital and others
By: FE Online | Updated: November 10, 2017 5:54 PM

In what could be a major boost to Axis Bank, the private lender’s board has approved a plan to raise as much as Rs 11,625 crore through issue of equity shares and convertible warrants to investors including Bain Capital and others. The board of Axis Capital has approved a 9% stake sale to Bain Capital and other investors in its bid to raise capital by issue of equity of equity linked securities on a preferential basis. Axis bank will issue 5.56 crore preference shares to Bain Capital Asia Investments, 3.19 crore preference shares to Integral Ivestment South Asia IV and also 4 crore convertible warrants to Bain Capital Asia Investments III on a preferential basis.
In all, the bank seeks to issue 17.26 crore equity shares to investors (including promoters) at Rs 525 per share. Further, India’s third largest lender will issue 4.53 crore warrants in total at Rs 565 per warrant. Notably, Life Insurance Corporation (LIC) will also be issued around 3.02 crore equity shares on a preferential basis to raise over Rs 1,500 crore. Axis Bank had informed the exchange earlier this week that it will hold board meeting on Friday for approval of fund raising. In a notice to the stock exchanges, Axis Bank said on Tuesday that it would consider raising funds through equity, or equity-linked securities, at an appropriate time once the board gives its approval. 
The announcement comes close on the heels of a government decision to recapitalise public sector banks to the tune of Rs 2.11 lakh crore over the next two years. Earlier this month, Axis Bank reported worse than expected performance on bad loans for the fiscal second quarter July-September, with fresh corporate slippages at Rs 8,110 crore. Gross NPAs in absolute terms were at Rs 27,402 crore rising 3.12% from 2.02% in the same quarter a year ago. Provisions in the quarter were at Rs 3,886 crore.
Post its second quarter earnings, the bank had reported that the RBI wasn’t happy with its classification of nine large corporate accounts as standard assets. As a result, the non-state-owned bank, the country’s sixth-largest by market value, had decided to rebrand the entire $750 million as nonperforming.

In what could be a major boost to Axis Bank, the private lender’s board has approved a plan to raise as much as Rs 11,625 crore through issue of equity shares and convertible warrants to investors including Bain Capital and others.

http://www.financialexpress.com/market/axis-bank-to-raise-rs-11625-crore-from-bain-capital-and-others/927894/

Saudi Crown Prince Mohammed bin Salman removed ....!

Saudi purge: Senior royal ousted; 11 princes detained in corruption probe

The king ousted one of the country's highest-level royals from power, removing Prince Miteb bin Abdullah as head of the National Guard

Saudi Crown Prince Mohammed bin Salman. Photo: Reuters

Saudi Arabia's King Salman removed a prominent prince who headed the National Guard, replaced the economy minister and announced the creation of a new anti-corruption committee.
The Saudi-owned Al-Arabiya news channel also reported late Saturday that 11 princes and dozens of former ministers were detained in a new anti-corruption probe headed by the kingdom's powerful Crown Prince Mohammed bin Salman, who was also named to oversee the new committee.Al-Arabiya reported that the committee is looking into devastating and deadly floods that overwhelmed parts of the city of Jiddah in 2009 and is investigating the Saudi government's response to the Middle East Respiratory Syndrome (MERS) virus that has killed several hundred people in the past few years.

Meanwhile, the kingdom's top council of clerics issued a statement saying it is an Islamic duty to fight corruption essentially giving religious backing to the high-level arrests being reported.

The government said the anti-corruption committee has the right to issue arrest warrants, impose travel restrictions and freeze bank accounts. It can also trace funds, prevent the transfer of funds or the liquidation of assets and take other precautionary measures until cases are referred to the judiciary.

The royal order said the committee was established "due to the propensity of some people for abuse, putting their personal interest above public interest, and stealing public funds."

Saudi nationals have long complained of rampant corruption in government and of public funds being squandered or misused by people in power.

The 32-year-old crown prince has been seeking to attract greater international investments and improve the country's reputation as a place to do business. It's part of a larger effort to diversify the economy away from dependence on oil revenue.

The king ousted one of the country's highest-level royals from power, removing Prince Miteb bin Abdullah as head of the National Guard. He was replaced by Prince Khalid bin Ayyaf al-Muqrin, who had held a senior post with the guard.

Prince Miteb's father was the late King Abdullah, who also had led the National Guard and had transformed it into a powerful and prestigious force tasked with protecting the ruling Al Saud family, as well as important holy sites in Mecca and Medina, and oil and gas sites.

Prince Miteb was once considered a contender for the throne. His ouster as head of the National Guard essentially sidelines one of the most formidable rivals to the current crown prince, who has amassed enormous power in less than three years since his father, King Salman, ascended to the throne.

It comes just three months after Prince Mohammed bin Nayef was ousted from the line of succession and from his post as interior minister, overseeing internal security.

With the two princes now sidelined, control of the kingdom's security apparatus is now largely centralized under Crown Prince Mohammed bin Salman, who is also defense minister.

The monarch also replaced Minister of Economy and Planning Adel Fakeih with his deputy, Mohammad al-Tuwaijri.

Admiral Abdullah Al-Sultan was also sacked as commander of Saudi Naval Forces and replaced by Admiral Fahd bin Abdullah Al-Ghifaili.

First Published: Sun, November 05 2017. 10:08 IST

http://www.business-standard.com/article/international/saudi-purge-senior-royal-ousted-11-princes-detained-in-corruption-probe-117110500059_1.html

260,000 towers up for grabs....

260,000 towers up for grabs as telcos look to repay debt and boost network

The value of each cell tower varies from Rs 30 lakh to Rs 70 lakh, depending on the number of tenants and the length of the contracts

Two in three cell towers in the country are up for sale as their owners, mostly telecom companies, try to repay their debts and upgrade networks. 

Over 65 per cent of the 400,000-odd cell towers have been put on the block, according to some estimates, by Bharti Airtel, Vodafone, Idea Cellular, and Reliance Communications, apart from independent tower companies GTL Infrastructure and Tower Vision. 

Bharti Airtel announced on Tuesday that it would consider selling its stake in Bharti Infratel to private investors, a move that might give them a controlling interest in the tower infrastructure firm.  

On the other side of the table are three big buyers — private equity fund KKR along with consortium partners, American Tower Corporation (ATC), and global asset management company Brookfield — scouting for attractive deals in what is clearly a seller’s market. Analysts reckon they will fork out around Rs 90,000 crore — averaging out the lowest and highest prices — to buy cell towers.

The value of each cell tower, according to private equity funds, varies from Rs 30 lakh to Rs 70 lakh, depending on the number of tenants and the length of the contracts.

For telecom companies, the monetisation of their cell towers will help repay debt and finance the expansion of 4G LTE services, where they are battling the onslaught of newcomer Reliance Jio. For Reliance Communications, selling the towers is integral to its Rs 45,000-crore debt restructuring plan.

The buyers see this as a stable business, especially after consolidation in the telecom industry, with assured 8-10 per cent long-term returns on investment annually. As telecom companies expand their data networks, buyers expect renewed demand for cell towers from Reliance Jio and Bharti Airtel.
 

Reliance Jio is planning to increase its tower infrastructure from 175,000 — of which it owns 60,000 —to 250,000 in the next few months. With about 185,000 towers, Bharti Airtel is also expected to put up more to ensure there is no gap with Reliance Jio. And as 5G networks roll out over the next few years, telecom companies will need more towers to enable higher speed data.

ATC, which control Viom Networks with a 51 per cent stake, has over 60,000 towers. About 40 per cent of Viom Networks’ business is derived from Tata Teleservices and Telenor, both of which have sold their businesses. 

Sources said Tata Teleservices’ buyer, Bharti Airtel, would retain at least half the tenancies. 

Viom Networks also has an assurance that Tata Teleservices will pay Rs 6,000-7,000 crore for the residual life of its contract that ends in 2023. 

ATC is in talks to buy 20,000 towers owned by Idea Cellular and Vodafone, according to sources, which, if successful, could neutralise the loss arising out of the Tata Teleservices development. 

Brookfield, too, is interested in these towers. And both are looking at smaller players like Tower Vision and GTL Infrastructure, which together have 37,000 towers. 

ATC did not comment on the developments, and Tower Vision did not respond to an email. The GTL Infrastructure spokesperson pointed out the company had received expressions of interest from 19 investors.

Brookfield is also revaluing its offer to buy Reliance Infratel after the failure of Reliance Communications’ merger with Aircel. Reliance Communications has also decided to stop providing 2G services, which means fewer tower tenants for the buyer. 

Expectations are, a deal with over 43,600 towers, in which Reliance Jio is a key tenant, could go through for anything between Rs 8,000 crore and Rs 13,000 crore for a 100 per cent stake. Earlier, Brookfield had valued Reliance Infratel at over Rs 20,000 crore.

KKR and a consortium of partners already hold 10.3 per cent equity in Bharti Infratel, which has announced it is planning to increase its 42 per cent stake in Indus Towers by buying shares from partners Idea Cellular, Vodafone, and Providence Equity Partners. 

Analysts said once Indus Towers became a wholly owned subsidiary of Bharti Infratel, the KKR-led consortium could increase its stake substantially, make an open offer and take a controlling interest in Bharti Infratel. In the process, it will control over 160,000 cell towers across the country, with a 40 per cent share of the market.

First Published: Sat, November 04 2017. 01:37 IST

http://www.business-standard.com/article/companies/260-000-towers-up-for-grabs-as-telcos-look-to-repay-debt-and-boost-network-117110400059_1.html