Stocks
Nifty, Sensex may move in a narrow range – Wednesday closing report
We had mentioned in Tuesday’s closing report that Nifty, Sensex were still struggling to go up. The major indices of the Indian stock markets suffered a sharp correction on Wednesday of around 1% over Tuesday’s close. However, the losses were on relatively thinner trading on the NSE. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
 
 
On Wednesday, in line with global cues from the Asian stock markets, the major indices of the Indian stock markets suffered a correction of around 1%. Indian equity markets on Wednesday succumbed to profit booking on uncertainties regarding the passage of the GST (Goods and Services Tax) bill in the Rajya Sabha. Consequently, both the key indices traded in the negative territory during the mid-afternoon trade session as heavy selling pressure was witnessed in automobile, capital goods and fast moving consumer goods (FMCG) stocks. The BSE market breadth was skewed in favour of the bears -- with 1,815 declines and 914 advances. On the NSE, on Wednesday, there were 423 advances, 1,178 declines and 243 unchanged.
 
Initially, the benchmark indices opened on a negative note, as investors traded with caution on expectations of approval of the GST bill in the Rajya Sabha later in the day. Investors are hopeful about the bill's passage after the union cabinet last week approved key changes in the proposed legislation. The amendments in the bill, scheduled to be moved by Finance Minister Arun Jaitley in the Rajya Sabha, are expected to sail through with the government scrapping the additional levy of 1% proposed earlier. Technically called the Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, it has proposed to delete Clause 18 of the original bill that intended to compensate the manufacturing states with one per cent additional duty for a period of two years or more for revenue losses. The pan-India tax reform has been passed by the Lok Sabha but is stuck in the Rajya Sabha, where the government lacks a majority.
 
Global software major Infosys Ltd on Wednesday announced investing $4 million (Rs27 crore) in Cloudyn, an Israeli corporation, providing software as a service (Saas) solutions for the management and optimization of hybrid, multi-cloud deployments. "Cloudyn enables enterprises to manage and optimise their hybrid, multi-cloud deployments. The solution provides visibility into usage, performance and cost, coupled with actionable recommendations for confident cloud growth," said the IT major in a regulatory filing with stock exchange BSE in Mumbai. The company did not disclose the minority holding in percentage equivalent to the cash investment in the five-year-old Israeli firm, which has presence in the US. "The investment is expected to be completed on August 15," the filing noted. Infosys shares closed at Rs1,085.00, up 0.06% on the BSE.
 
Berger Paints India posted a consolidated net profit of Rs120.30 crore for the first quarter of the current fiscal, registering a jump of 54.6% over the corresponding year-ago period, the company said on Wednesday. "Income from operations for the quarter ended in June this year was Rs1,246.10 crore against Rs1,126.30 crore last year, an increase of 10.6%," it said at its 92nd annual general meeting. "Net profit for the quarter ended was Rs120.30 crore against Rs77.80 crore last year, representing an increase of 54.60%," company chairman K.S. Dhingra said. The company's standalone profits stood at Rs114.20 crore against Rs83.30 crore in the corresponding quarter, registering an increase of 37%. Dhingra said the company has approved issue of bonus shares in the proportion of two bonus shares for every existing fully paid up equity shares. Talking about the expansion plans, CEO Abhijit Roy said the company was setting up two plants in Assam. Berger Paints shares closed at Rs234.55, down 2.25% on the BSE.
 
Global IT services major HCL Technologies Ltd on Wednesday reported a consolidated net profit of Rs2,047 crore for first (April-June) quarter of fiscal 2016-17, registering 14.8% year-on-year growth. The Noida-based software firm said consolidated revenue grew 15.9% year-on-year to Rs 11,336 crore under the Indian accounting standard. Revenue in constant currency was up 11.2%. Under the International Financial Reporting Standard (IFRS), consolidated net income was up 9.5% to $305 million and consolidated revenue up 10% year-on-year to $1,691 million ($1.7 billion). On standalone basis, net income was Rs1,799 crore and revenue Rs4,829 crore for the quarter under review (Q1). The company’s shares closed at Rs825.90, up 3.16% on the BSE.
 
Public sector Indian Bank on Tuesday said it closed the first quarter of the current fiscal with a net profit of Rs307.35 crore. In a regulatory filing in BSE, the bank said it has posted a net profit of Rs307.35 crore for the quarter ended on June 30, 2016 as compared to Rs215.27 crore for the quarter ended on June 30, 2015. Indian Bank earned a total income of Rs4,512.96 crore for the quarter ended on June 30, up from Rs4,494.53 crore earned during comparable quarter the previous year. The bank’s shares closed at Rs179.70, down 3.49% on Wednesday 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:

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GST Bill tabled in Rajya Sabha but a long road ahead
On 3 August 2016, union finance minister Arun Jaitely tabled the Goods and Services Tax (GST) bill in Rajya Sabha. The GST will replace a patchwork of central and state levies on goods and services and will bring multiple taxes on goods and services and bring them under one rate. Once passed, the GST is expected to be the most significant tax reform since Independence. However, the passage of the GST Constitution Amendment Bill is just one milestone and lot will depend on its implementation.
 
Rohit Jain, Partner, Economic Laws Practice says that “though the passage of the Constitution Amendment Bill through the Rajya Sabha is one of the milestone moments for the introduction of GST. Thereafter, there is still a lot of ground to cover.” According to Jain, the government will need to take in to account stakeholder comments, formation of the GST Council, evolving the GST Network (GSTN) which will form the IT backbone and to ensure that there is breathing room for industry to prepare for the transition.
 
The actual GST rate will be decided over the next few months in consultation with state governments; it will then be brought for review to parliament in separate legislation. A GST Council combining representatives of the Centre with state governments, with decision-making powers skewed towards them will decide on the tax rate to be submitted to parliament for its review. Therefore, according to Mr Jain, an April 2017 deadline would therefore be challenging – realistically, the date may be closer to July or October 2017.
 
According to news reports, The National Institute of Public Finance and Policy (NIPFP) favoured a standard GST rate in the range of 23-25%. In December 2015, a committee headed by the chief economic adviser Dr Arvind Subramanian on ‘Possible Tax rates under GST’ recommended that lower rates be kept around 12% (Centre plus states) with standard rates varying between 17% and 18%. On the revenue neutral rate, the Committee’s view was that the range should between 15% and 15.5% (Centre and states combined) but with a preference for the lower end of that range based on the analysis in this report.
 
The Central levies which would be subsumed under GST are Central Excise Duty, Service Tax, Countervailing Duty (CVD) on imports, Special Additional Duty (SAD) on imports, Surcharges and Cesses. The State levies which would be subsumed under GST are VAT / Sales Tax, Luxury Tax, Taxes on Lottery, Betting and Gambling, Entertainment Tax, Entry Tax (not in lieu of Octroi), State Surcharges and Cesses.
 
The GST bill will cover taxes like central excise duty, state-level taxes like, VAT or sales tax, entertainment tax, entry tax, purchase tax, luxury tax and octroi. The reform will create uniformity in taxes across states, increasing efficiency & compliance. The Rajya Sabha appears ready to approve an amendment to the constitution that gives the government new taxation powers.  

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Goods and Services Tax: Frequently Asked Questions
1. What is Goods and Services Tax (GST)? How does it work? 
The GST is a single indirect tax for the whole nation, which will make India one unified common market. It is a single tax on the supply of goods and services, right from the manufacturer to the consumer.
 
Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
 
2. What are the benefits of GST?
 
The benefits of GST can be summarised as under:
 
-- For business and industry:
 
** Easy compliance
** Uniformity of tax rates and structures
** Removal of cascading
** Improved competitiveness
** Gain to manufacturers and exporters
 
-- For central and state governments:
 
** Simple and easy to administer
** Better controls on leakage
** Higher revenue efficiency
 
-- For the consumer:
 
** Single and transparent tax proportionate to the value of goods and services
** Relief in overall tax burden
 
3. Which taxes at the Centre and state level are being subsumed into GST?
 
At the Central level: 
 
Central excise duty, additional excise duty, service tax, additional customs duty (commonly known as countervailing duty) and special additional duty of customs.
 
At the state level: Subsuming of state value added tax/sales tax, entertainment tax (other than the tax levied by the local bodies), central sales tax (levied by the Centre and collected by the states), octroi and entry tax, purchase tax, luxury tax, and taxes on lottery, betting and gambling.
 
4. How will GST be levied?
 
The Central GST (CGST) and the State GST (SGST) would be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. 
 
Further, both would be levied on the same price or value unlike state value added tax, which is levied on the value of the goods inclusive of central excise.
 
5. How will imports be taxed under GST?
 
The Additional Duty of Excise and the Special Additional Duty presently being levied on imports will be subsumed under GST. Unlike in the present regime, the states where imported goods are consumed will now gain their share from this Integrated GST paid on imported goods.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Dahyabhai S Patel

10 months ago

What would be the status of taxes like STT, Stamp Duty, Turnover Tax, Swachchha Bharat cess and Krishi Kalyan Cess which are levied on trading of securities?

Pradeep Kumar M Sreedharan

10 months ago

Is it true that potable alcohol, petrol,Real estate are outside the purview of GST?

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