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Showing posts from November 7, 2016

Making GST lawlitigation-proof

Make Advance Rulings binding on Centre, states

The GST Council has come up with multiple rates for the goods and services tax — zero per cent, five per cent, 12 per cent, 18 per cent and 28 per cent — and also cess. The burden of commodity taxation, such as GST, will have to be ultimately borne by the consumers.

Those who profess simplicity in tax administration will vote for single or dual rates, avoiding disputes. This may be workable in developed countries where population of the poor is small, but not in India. Simplicity in tax administration should not burden the poor and the rich alike. Therefore, there is a need for multiple rates. Different rates of taxation in GST will raise classification disputes, which is unavoidable.

We need to look at the following measures to minimise litigation:

Adopt HSN (Harmonised System of Nomenclature) classifications for commodities, including Interpretative Rules and Explanatory Notes, as binding.

Classification opinions of the CCCN (Customs Coopera…

Some relief for home buyers

Leading banks and housing finance companies are beginning to cut interest rates on home loans. State Bank of India (SBI)’s special rate for women now stands at 9.10 per cent for a loan up to ~75 lakh, while others can get the same for 9.15 per cent. Housing Development Finance Corporation and ICICI Bank have brought their rates (for up to ~75 lakh) down to 9.15 per cent for women borrowers and 9.20 per cent for others.

For a new (woman), who plans to take a loan of ~75 lakh for 20 years from SBI, the new rate will translate into a lowering of equated-monthly instalment (EMI) by ~727. The total saving in interest outgo over the entire 20 years will be ~1,74,591 ( see table ).

Are you feeling left out? When interest rate cuts are announced, existing borrowers on base rates need to check if they have got the entire of benefit. “If they haven’t, they should reach out to the bank and negotiate. If they do so, the entire benefit usually gets passed on to them. Alternatively, they should get t…

Ratings alone shouldn't be used for investment decisions

Sebi's recent circular plugs many loopholes but some lacunae remain
In less than a decade, the Securities and Exchange Board of India (Sebi) has completely changed its position on the importance of credit rating for both equity and debt instruments.

In 2007, Sebi had made grading of initial public offerings (IPOs) mandatory. Six years later, in 2013, it made it voluntary. During the past year, it has mandated that fund houses do their own research when investing in debt papers. Ratings from credit rating agencies can only be used as secondary support — a move many chief executive officers (CEOs) of fund houses have applauded. Says the CEO of a leading fund house: “Since we are in the business of making investment decisions, research is the backbone of that. And, if a fund house does not have capability to do so, it should get out of that product line completely.” What led to these decisions? According to Sebi’s observations, IPO grading had not served the intended purpose as investo…

How to make GST fair and simple

onflicting demands of different stakeholders make tax reform the art of the impossible. While the gainers are silent, the vociferous cacophony of the opponents drowns the voice asking for bold and imaginative reform. It therefore comes as no surprise that the Union finance minister has had to abandon most essential features of the transformational goods and services tax (GST) reform. Bound by the constraint of his 30 colleagues in the GST Council wedded to the legacy system, he is forced to follow the path of mediocrity.
The unanimous passage of the Constitution Bill in Parliament had revived the hopes that Prime Minister Narendra Modi could well make impossible possible and deliver a GST that met the triple objectives of fairness, simplicity, and economic growth. However, the proposals of the GST Council meet none of these objectives.

The positive impact of GST on economic growth will be a result of the removal of cascading of taxes, i.e., noncreditable taxes on investment and product…

Pvt Sector NPS Subscribers can Invest in AIFs, REITs

NEW DELHI: Regulator PFRDA has created a separate asset class under which private sector National Pension System (NPS) sub scribers can invest up to 5% in AIFs and REITs.The new class is in addition to the existing three categories -equity, corporate bond and government debt. With creation of a separate class, private sector subscribers can now nvest up to 5% of funds in commercial mortgage-based securities or residential mortgaged based securities and units issued by Real Estate Investment Trusts (REITs), and asset backed securities regulated by SEBI. They can also invest in units issued by Infrastructure Investment Trusts and Alternative Investment Funds (AIF).
The Economics Times New Delhi,07th November 2016