Citizens' Issues
Citizens Whistle Blowers Forum requests action against PricewaterhouseCoopers
Delhi-based Citizens Whistle Blowers Forum (CWBF) has requested Prime Minister Narendra Modi and Finance Minister Arun Jaitley to take immediate action against PricewaterhouseCoopers India Pvt Ltd (PwC) for allegedly posing threat to national interests.
 
CWBF, in a release says, "A number of highly disconcerting issues involving PwC, which pose serious threat to national interests, safety of investments of common man, result in significant losses to the public exchequer and which expose lack of efficacy of controls in the banking system have come to the notice of the CWBF. Further PwC has been found guilty of criminal acts by the Serious Frauds Investigation Office (SFIO) and by the Special CBI Court. Despite this, PwC is being rewarded with significant government business including those where there are direct conflicts of interest."
 
The Forum is headed by Justice AP Shah, former Chief Justice of Delhi High Court with Senior Advocate Prashant Bhushan as its Member Secretary. Other members of the Forum include Prof Aruna Roy, former Finance Secretary EAS Sarma, Prof Jagdeep Chhokar, Admiral Lara Ramdas and Wajahat Habibullah, former Chief Election Commissioner. 
 
 

User

COMMENTS

Vaibhav Dhoka

2 weeks ago

It is rightly said that Finance minister should have initiated action but our PM said and lashed at ICAI for not taking disciplinary action on erring CAs overlooking PWC where action should have initiated long back.Catching petty CA is no great.

A BANERJEE

2 weeks ago

As rightly stated in the article and worth quoting: "...PwC has been found guilty of criminal acts by the Serious Frauds Investigation Office (SFIO) and by the Special CBI Court. Despite this, PwC is being rewarded with significant government business including those where there are direct conflicts of interest." It is indeed strange and shocking that a group of eminent citizens should take up the issue with FM who ought to have taken necessary action in this regard on his own. And, this happens during a nationalistic dispensation! Will the PM take this matter up in the interest of the country?

Nifty, Sensex in an uptrend again – Wednesday closing report
We had mentioned in Tuesday’s closing report that Nifty, Sensex might move sideways. The major indices of the Indian stock markets were range-bound on Wednesday and closed with small gains over Tuesday’s close. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
 
 
Expectations of robust quarterly results, along with buying in energy sector stocks pushed the Indian equity markets higher on Wednesday. According to market observers, gains were capped due to investors' reluctance to further invest in expensive market conditions and caution over the upcoming macro-economic inflation and industrial production data points. 
 
Key Indian equity indices were trading flat in the afternoon session on Wednesday. India's annual retail inflation eased to a record low of 1.54% during June, while the country's factory output growth also slowed to 1.7% in May, official data showed on Wednesday. As per data released by the Central Statistics Office (CSO) on Consumer Price Index (CPI), retail inflation was dragged lower by a sharp fall in prices of food items like pulses, vegetables and other perishables. The current inflation rate is the lowest since the series began in 2012. The June retail inflation rate fell when compared with May, when it prevailed at a higher rate of 2.18%. On a year-on-year (YoY) basis, the country's June retail inflation was lower from 5.77% CPI rate reported for the corresponding month of last year. The other key macro-economic data -- Index of Industrial Production (IIP) -- released by the CSO showed that on a sequential basis, the output rose slower than the revised estimates for April 2017. The growth estimates for April 2017 were revised to 2.79% from 3.1%.
 
Provisional data with the exchanges showed that foreign institutional investors (FIIs) bought stocks worth Rs 361.25 crore while domestic institutional investors (DIIs) divested Rs330.58 crore. Hindustan Unilever, ONGC, ACC and Bharti Infratel gained the most on both indices, while Mahindra and Mahindra as well as TCS were the top losers. Oil and gas sector's stocks gained the most followed by auto, telecom, bank, capital goods, whereas IT (information technology) stocks ended in the red.
 
Lending major IndusInd Bank on Tuesday reported a rise of 26% in its net profit for the first quarter (Q1) of 2017-18. According to the lending major, its net profit during the quarter under review rose to Rs836.55 crore from Rs661.38 crore reported for the corresponding period of last fiscal.
 
"The quarter saw the momentum of the economy gradually picking up as the process of remonetisation moved towards completion," Romesh Sobti, MD and CEO, IndusInd Bank was quoted as saying in a statement. "With consumption activity slowly picking up, there is a sustained rise in credit uptake. Against the challenging environment, the bank has shown consistent performance, riding on the positive sentiment in the economy." Beside, IndusInd Bank reported that its net interest income (NII) for Q1 augmented by 31% to Rs1,774.06 crore from Rs1,356.42 crore in the corresponding quarter of the previous year. Net Interest Margin (NIM) for the current quarter is 4.00 per cent as against 3.97% in the corresponding quarter of the previous year, the statement said. Net NPA (non-performing asset) as on June 30, 2017 is at 0.44% as against 0.38% on June 30, 2016. IndusInd Bank shares closed at Rs1,572.70, up 0.86% on the BSE.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 
 

User

GST on property: Urgent need to safeguard buyers vis-à-vis input tax credit, says report
The Goods and Services Tax (GST) has finally become a reality and is touted as the one of the biggest tax reforms in India. However, there is urgent need to safeguard the interest of buyers rather than just framing guidelines for developers, especially on the mechanism for input tax credit (ITC), says a research note.
 
In the report, Liases Foras, a non-brokerage research centric firm, says, "A detailed mechanism to ensure the smooth implementation of ITC facility is warranted to educate average home buyers about the process and implementation of ITC to make it what it is envisaged for."
 
At present, there is no transparent formula whereby a customer can ascertain what benefit he can get. "How do they ensure that 100% benefit is passed on to them? Where can the buyer verify details of input tax credit for the individual projects and calculate benefits available to her? At present, while their liabilities in terms of higher GST on subsequent instalments are fixed, their benefits are not fixed or guaranteed."
 
"It hinges on developer's capacity to get the ITC for input taxes for themselves first and then willingly pass it to buyers, separately for individual projects. Accurate estimation of both remains a challenge right now based on assumptions about pivotal things. Bottom-line, the tax is a pass-through and whether developers would reduce margins to pass on the benefits seems unlikely. Hence it will be given only when it is available with developers in actual terms," the report says.
While the GST is being lauded for simplifying the tax structure, the ITC is being seen as the biggest game changer whereby credits of input taxes paid at each stage of production or service delivery can be availed in the succeeding stages of value addition. At present, the Industry is rife with speculation about the functioning or implementation of ITC facilities in real estate and its role to force a dip in real estate prices.
 
"This is because, under the GST structure, buying under-construction properties will attract a net effective rate of 12% as against the earlier rate of around 4.5-9%, including value added tax-VAT and service tax that varies across states. However, due to the input credit benefits that most builders will get on the key raw materials they buy, the buyer could actually benefit in terms of lower prices," Liases Foras says.
 
According to the rules, the quantum of GST a developer will be charging customers will be based on total outstanding amount as on 1 July 2017. This can be different for different customers in the same project. It is, therefore, possible that different customers in the same project with different amounts payable to the builder and different customers in different projects with the same amount payable to the builder may end up getting a different input set-off benefit.
 
Liases Foras explains this with an example, assuming the cost of construction for a housing unit worth Rs80 lakh is 50% or Rs40 lakh and of which the developer has so far spent Rs30 lakh. Under GST regime, the builder will have to pay the remaining Rs10 lakh after 1st July to get input tax credit from the vendors. Assuming that GST applicable to the builder is 18%, then the builder will pay a GST tax of Rs1.8 lakh to the vendor.
 
 
Now, for a customer who may have already paid Rs70 Lakh (possible under down payment plan) and has only Rs10 lakh as outstanding post 1st July, will have to pay Rs1.2 lakh (@12%) as GST, meaning that the builder can technically pass on the full input tax credit benefit of Rs1.2 lakh to this buyer.
 
As for a different customer, who has an outstanding amount of Rs60 lakh (possible under subvention schemes) as on 1st July, the amount due from him will be Rs60 lakh plus 12% GST, which is Rs7.2 lakh. Out of this, a developer may be able to pass on an input tax credit limited to Rs1.8 Lakh only.
 
"Further," Liases Foras says, "the troubling part for developers is that, they themselves are left in the quandary to ascertain regarding the ITC benefits they would be getting from their vendors. That again is also dependent on whether the turnover of the vendor is less than Rs20 lakh or over Rs20 lakh. For new projects or projects in early stages of construction, it may be relatively easier, but developers are left with significant challenges on how to rework contracts with existing customers in case of partly paid for projects well ahead into their construction, say 50%."
 
"Of course, the above analysis assumes the critical fact that all developers are willingly passing on 100% ITC benefit to buyers," the report says. 
 
The developers may just have to because of the anti-profiteering provision. To ensure that manufacturers, developers and service providers pass on the benefit to the final customer, the Government has included an anti-profiteering clause in the GST bill under section 171 of GST law. This clause clearly states that it is mandatory to pass on the benefit of tax reduction due to input tax credit to the final customer.
 
If any developer chooses not to do so, then there are penal consequences, to be decided by Anti-profiteering Authority.
 
 
"Besides the aforesaid guidelines, there is no concrete mechanism to compel developers to pass the benefits. While these guidelines serve as a deterrent, But considering the track record of real estate developers, it remains to be seen how many actually comply with the law in an honest manner. Sadly, if they choose not to, it is the buyer who has to suffer and go through 8-11 months long time to get justice," Liases Foras says.
 
Already many confused buyers are writing to developers asking for clarity on their available benefits in response to developer's mails stating that going forward 12% GST is to be charged on future instalments. That is where there is scope for disputes and litigations, if developers are unable to provide satisfactory answers.
 
According to Liases Foras, valuation of land in the payment of taxes is another major challenge for developers who are expected to pass on the ITC benefits to buyers. As proposed earlier, stamp duty has not been summed up in GST. 
 
"Hence, if the government does not come out with the abatement of the land value in the valuation of taxable amount, it will lead to double taxation of the land being transferred to the buyer during execution of the project. In case of a joint development project, total taxable value of land will be a matter of concern. In the coming times, this should be addressed by authorities and courts. The buyers may end up paying higher cost in absence of abatement of the land," it concluded. 
 

 

User

COMMENTS

Anil Singh

1 day ago

Wonderfully written article, covering each aspect and thought process of buyer going through now a days

Avick Chakraborty

2 weeks ago

Excellent Report. Govt. should come out with clear guidelines to protect buyers' interest on ITC per individual unit and it's construction stage of the building where the unit is located. Before raising a "Demand of Payment" for a stage of construction there should be a transparent method on construction cost till that stage with a clear guidelines from Govt (later it can be by RERA when fully implemented). Remember, stage of construction for that stage including a clear and transparent accounting on split or transfer of input cost to other project or another building in same project. Stage of construction in a single project can also varies due to different Phases in a project. Some projects has Phase-2 and Phase-3 where construction starts much later. Also I doubt anti-profiteering clause is going to help. Firstly, Govt, does not want to invoke it and wants to use it as mere deterrent, most individual buyers are reluctant to go through painful legal journey, also 2 years period starting 1-Jul-17 is very small for real estate projects where completion time is on an average 3-4 years. RERA much ensure ITC component is very transparently communicated to customers at the time booking with a min. amount committed by builder (will enforce efficiency of execution of project) and an transparent mechanism to calculate and community the final ITC value to buyers at the time of payment.

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)