@Leisure - Vol-25 | srei
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@Leisure - Vol-25


GST Demystified

Central Excise Duty, Service Tax, CENVAT, Sales Tax, Entertainment Tax, Luxury Tax, Entry Tax, Octroi, Surcharges and Cesses... Phew! Yes, this is only a partial list of taxes currently levied on businesses in India by the centre and state governments. But soon this may be history and there might prevail a single pan-India tax regime if the proposed Goods and Services Tax (GST) regime sees the light of the day in the upper house of parliament, where the bill is currently stuck.

The Basics

GST is the most far reaching indirect tax reform in India. It is a levy that will cover manufacture, sales and consumption of goods and services with setoff benefits (tax credit) available at each stage of value addition. In addition, it aims to integrate the state economies thereby boosting economic growth of the nation. True to the comprehensive nature of GST, it covers all goods and services, except for a specific list of exempted items.

The post-GST Achche Din

The most important benefit GST brings is removal of multiple taxation, thereby instilling simplicity and no-hassle tax compliance. Higher compliance translates into higher tax collections for the government. Under the GST regime, the confusion about whether tax is to be paid on manufacturing or sale or movement also gets eliminated. Further, the costs are likely to fall because of reduction in the cascading effect of taxes. Lower costs would benefit consumers and also boost India’s export competitiveness. Also, GST will be applied at a standard rate which might be higher or lower than the existing rate of taxation for different goods and services. In either scenario, the consumer benefits in the end with multiple layers of taxes gone.

The Roadblocks

GST has a global track record of success. It is estimated that about 140 countries have already adopted it. Despite the benefits and global testimony, why is it yet to materialize in India? The trouble begins with Indian states fearing a loss of revenue since under GST, even for the inter-state trade, it is the centre that will collect the tax. Municipalities stand to lose as entry tax too will be subsumed under GST. The states are seeking a compensation for their losses and a formula is being worked out by the centre.  Another bone of contention is the rate of taxation which is around 27%.

Parting Shot

All said and done, GST is likely to lubricate how business is done by trimming taxation and having to file multiple returns, leading to higher profitability. This means a rising GDP and investment growth. An NCAER (National Council for Applied Economics and Research) study projects GST alone to push GDP by 0.9-1.7%.


Srei plans special economic zone
to rival Bandra-Kurla Complex (BKC)

Srei has initiated a 350-acre economic zone in Mumbai called the Attivo Services City. This economic zone is located at Alibaug in the Raigarh district and is 85 Km from Mumbai. Attivo Services City formerly known as Mumbai Futuristic Economic Zone is a Special Economic Zone (SEZ) and will provide an alternative to the current BKC.

Key Features of Attivo Services City

  • Proximity to Mumbai: Attivo Services City is located just 2 ½ hours’ drive from Mumbai airport and the project area has a seafront where a jetty will be set up. It will be possible to reach the SEZ through sea from the Gateway of India in just 40 minutes. The geographic attraction of the area is likely to rise after the Sewri-Uran sea link and the Navi Mumbai airport are developed.
  • Rival to BKC: Currently BKC is home to many domestic as well as international financial firms, but rentals tend to be one of the most expensive in Asia. Attivo Services City hopes to transform itself into a rival financial hub in Mumbai.
  • Diverse and full service: Although mainly targeted at the financial services industry, the SEZ will be home to many different companies that operate across sectors like IT, ITeS, healthcare and education. The SEZ will also have residential property, villas and resorts.
  • Holistic: Not only will Attivo Services City develop the area in which it is coming up, the city will also contain a sports arena and themed zones for meditation, nature, spirituality and wellness. This will create a holistic lifestyle and experience centre.

Conclusion: Attivo Services City aims to provide an opportunity to a wide range of businesses to thrive and prosper in a modern and well-connected atmosphere. In the future, Attivo will not only be a rival to BKC, but a new address of prosperity for firms, due to its strategic location between Mumbai and Pune.1

1 - http://www.dnaindia.com/money/report-srei-plans-special-economic-zone-as-rival-to-bkc-2121310


How India Inc. climbed the
Rs. 6 Trillion Ladder in 2015?

Amidst the crisis faced by China, Russia and Brazil, India witnessed a power packed 2015. The Indian GDP growth rate (July- September) was 7.4% while for the similar period, it was 6.9% in China. The Indian economy showed substantial growth in the industrial, agricultural and services sectors. The RBI was successful in keeping inflation under check through prudent monetary policy. Companies raised a whopping Rs. 6.3 lakh crore in 2015 compared to Rs. 5.85 lakh crore in 2014 through bonds, equity, IPOs and foreign direct investments.

Capital Market

The capital market in 2015 flourished, given an environment of suitable policy structure and growth potential at the corporate level. Investment in the capital market by domestic and international markets led to the S&P BSE SENSEX rising by 40% from 2014. Average assets under management of mutual funds saw a rise from Rs. 4.8 trillion to Rs. 6 trillion with a growth rate of 28 per cent. The Government’s policies such as allowing foreign investors to invest in debentures by Indian companies, buying back securities and disinvestment of shares aided growth in the capital market.

According to a report by the World Bank, foreign remittance inflow escalated in the post-election period in 2015, touching Rs. 4.36 lakh crore, boosting macroeconomic parameters. Other inflows were aided by several reforms in the FDI sector. FDI norms were eased in 15 sectors including mining, civil aviation, real estate, construction including 100% in cable networks, DTH and plantation of rubber, cardamom and coffee.2 The Foreign Investment Promotion Board raised investment limit from Rs. 3,000 crore to Rs. 5,000 crore.

International factors like Quantitative Easing (QE) in Japan and around 1-trillion Euros worth bond-buying by the European Central Bank increased the liquidity in global markets. This money was invested into projects in developing economies that provided higher returns. A promising market and higher returns than any other country directed the money into India’s capital market.

IPOs, Equities and Bonds

Considering India safe in view of the global crisis, 2015 was a major year for the IPO market raising Rs. 12,600 crore, compared to Rs. 1,247 crore in 2014.

Once a company goes public, it is easier to sell additional equities to raise capital. Given the favorable conditions, well-performing companies could easily borrow money, adding capital in the corporate sector.

Indian banks raised secondary capital through Tier-II bonds which have a high demand due to their cheap price and higher returns compared to any public sector company. Since April 2015, banks raised Rs. 9,000 crore. SBI alone raised Rs. 12,000 crore.3

The Future Potential

The easing of FDI norms would attract capital into the country with investors targeting initiatives like Digital and Start-Up India, and e-commerce companies. Continuing the 2015 trend for capital growth from bonds, stocks and FDI, let’s see what 2016 beholds.4

2 - http://www.financialexpress.com/article/economy/india-tops-in-remittances-receives-us-dollar-70-billion-world-bank/63475/
3 - http://www.thehindu.com/business/markets/sbi-to-raise-rs12000-cr-through-tierii-bonds/article8014687.ece
4 - http://articles.economictimes.indiatimes.com/2015-12-13/news/69006459_1_lakh-crore-capital-markets-rs-15


Buddy Jokes


1. Money can’t buy friends for you, but you do get a better class of enemies.
– Spike Milligan

2. HR Manager: I’m desperately looking for an accountant.
Friend: I thought you hired one a short time back.
HR Manager: Yes! That’s the one I’m looking for.

3. One word that can make a group of lawyers posing for a photograph - FEES!

4. Human brain is the most outstanding object in world. It start’s functioning right from the time we are born, and stops only when we enter the examination hall.


Buddy Quiz

True or False

1. GST is the most far reaching direct tax reform in India.
a. True
b. False

2. GST has a global track record of success, it is estimated that about 140 countries of the world have already adopted it.
a. True
b. False

3. Srei is planning a 350-acre economic zone called Attivo Services City that will be developed at Alibaug near Mumbai.
a. True
b. False

4. The Government’s policies such as allowing foreign investors to invest in debentures by Indian companies, buying back securities and disinvestment of shares aided growth in the capital market.
a. True
b. False

5. FDI norms were eased in 50 sectors
a. True
b. False

Answer: 1. (False); 2. (True); 3. (True); 4. (True); 5. (False).