Skip to main content

Gst Council To Meet Today, First Time After July 1 Roll Out

A fortnight into the GST, small and medium dealers, and manufacturers are grappling with issues of the new indirect taxation regime.
Finance Minister Arun Jaitley will chair the 19th meeting of the GST Council on Monday, via video conference.
This would be the first meeting after the implementation.
The meeting would reportedly discuss tweaking of rates on some products, besides taking stock of the rollout of the new indirect tax system.
The spread was 1.9 percentage point at the end of FY16 and 4.8 percentage points at beginning of the current rally in March 2013.
The spread was 1.5 percentage point at the end of March 2008.
The earnings yield is the potential yield for an equity investor if the company pays 100 per cent of its current (annual) net profit as equity dividend.
Simply put, it is net profit divided by the market capitalisation of a company.
Typically, the earnings yield on equities should be sufficiently higher than the yield on riskfree assets (such as government bonds) to compensate for the greater risk of owning equities.
Analysts say that this raises the prospect of an outflow of capital from the equity market if the bond yields in the US harden any further.
“The market has been expensive for too long now, aided by lower interest rates in major developed markets like the US. Any further tightening of interest rates in the US or further fall in the earnings yield in India may lead toamarket correction,” says Dhananjay Sinha, head research, economist and equity strategist, Emkay Global Financial Services.
The benchmark interest rates in the US are up nearly 20 bps since the beginning of the current calendar year.
One basis point is onehundredth of one per cent.
This has been partly compensated by around a decline of 10 bps in benchmark interest rates in India.
While many are expecting interest rate cuts by the Reserve Bank of India, there are others who think otherwise.
They argue that interest rates in India could rise, as various state governments hit the bond market to raise funds to finance the farm loan waivers and bigger fiscal deficits.
For domestic investors, the yield spread on equities (difference between 10 year GSec yield and equities yield) is nowanegative 3.2 percentage point, which is worse than a negative spread of 2.8 percentage point at the end of March 2014 but better than negative 4 percentage point at the end of FY 15.
Simply,abroad portfolio of stocks now yieldsapotential dividend of Rs 3,300 for every Rs 1 lakh worth of investment, down from Rs 4,000 at the end of March 2016 and Rs 6,600 at the end of March 2013.
The market is set to get even more expensive as brokerages expect companies to report declines in net profits onayearonyear (YoY) basis during the June 2017 quarter.
The combined net profit of all Nifty 50 companies is expected to decline by 2.6 per cent YoY during the quarter, while excluding metals & oil companies, the net profit is likely to decline by 7.6 per cent YoY for the June quarter.
Three index companies —TCS, IndusInd Bank, and Infosys —have reported their firstquarter results so far and the net profit trend is far from being exciting.
The Business Standard, New Delhi, 17th July 2017


Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …