by admin | May 25, 2021 | Opinions
By Vikram Singh,
The implementation of the Goods and Services Tax (GST) has received much appreciation from various industries, but there are sectors that have been terribly impacted after the introduction of the new tax regime.
Private security is among the worst hit. The industry, which ensures security to other sectors, is looking rather unsafe and unstable under the taxation pressure. Going by available estimates, around nine million people, both men and women, are employed in India’s private security industry (PSI) and it has the potential to employ an additional 3.1 million people by 2022.
The livelihood of this large chunk of people is at stake as the industry mainly comprises small and medium security agencies which work on very low margins and often struggle with cash-flow problems. For such SMEs, even distributing monthly salaries to their employees is itself a challenge and the burden of 18 per cent tax on their gross income will worsen their precarious economic condition.
In fact, the 18 per cent GST has created cash-flow problems for a majority of private security agencies in the country. Instead, a five per cent GST on their gross income — or 18 per cent GST only on their commission — would be a more feasible rate for the industry and the people employed in it.
Security companies are liable to pay GST on the 20th of every month, the usual trend in the industry is that their clients clear invoices after only 60-90 days. This imbalance causes a vicious cash crunch in the industry. Though PSI is the second-largest employer in the country after agriculture, many security organisations are compelled to retrench their employees to ward off business closure.
The industry veterans have already expressed their concern before the Finance Ministry and the GST Commissioner. Several written requests have been made to Cabinet ministers and government officials, including Minister of Railways and Coal Piyush Goyal, but no concrete decision has been taken so far, except for words of sympathy.
Unfortunately, sympathy cannot save the livelihoods of millions of people and the future of their dependents. The industry cannot sustain heavy losses for long and expects positive action from the government — replacing the existing 18 per cent GST with a five per cent levy.
According to a joint study of Ficci and management consulting firm BDO, the organised Indian PSI is growing annually at 20 per cent and its total worth is expected to reach Rs 1.5 lakh crore by 2022. Despite knowing its significance in supporting the government machinery in homeland security and realising the fact that PSI is creating jobs for those who have migrated from villages, and retired servicemen, the government seems a bit irrational in levying 18 per cent GST on the industry which safeguards the interests of the whole economy.
Moreover, at a time when crime against women is rising in the workplace, the government should take adequate measures to boost the industry rather than adopting discouraging policies. The present tax rate on the industry needs to be revised as PSI is a labour-intensive industry where the biggest component of costs comes under the head of wages. Hence, either the GST rate should be reduced or the compliance obligation must be shifted from the service provider to the service user.
These initiatives will definitely help more than 15,000 MSMEs, and millions of guards would be able to secure their jobs.
(Vikram Singh is Chairman of CAPSI — Central Association of Private Security Industry — India. The views expressed are personal)
—IANS
by admin | May 25, 2021 | Opinions
By Amulya Ganguli,
Rahul Gandhi has had another of his escape-velocity-of-Jupiter moments.
His reference to the massive gravitational force of the solar system’s largest planet was in the context of “explaining” how much velocity was required by a spacecraft to lift itself from the surface of Jupiter compared to what was required on earth — 60 km/sec against 11 km/sec.
According to him, this was the kind of stupendous “effort” which the Dalits needed to “escape” from their present lowly socio-economic conditions.
Following that foray into space science, the Congress president has now offered an economic “explanation” for the lynchings in India during a speech in Germany by arguing that the unemployment caused by demonetisation, which hit small businesses, is behind the mob violence.
Moreover, the traders and entrepreneurs have also experienced grave difficulties because of the “badly implemented” Goods and Services Tax (GST).
The link, however, between demonetisation and lynching is tenuous. For one thing, the people in general showed exemplary patience in lining up for hours before banks and ATMs after the Rs 500 and Rs 1,000 currency notes were withdrawn from circulation.
For another, the cow-related lynchings of Muslims are widely believed to be the outcome of the atmosphere of hate created by the longstanding anti-minority propaganda of the saffron brotherhood, which has gained traction with the Bharatiya Janata Party’s (BJP) assumption of power.
Demonetisation and GST have nothing to do with the attacks on Muslims for consuming beef or transporting cattle.
After this flawed interpretation of communal incidents, Rahul Gandhi ventured into another dicey area by linking the rise of the Islamic State in West Asia to the US intervention in Iraq and the resultant insurgency caused by the stalling of the “development process”.
If the Congress president’s point is that the absence of adequate economic opportunities for Muslims and Dalits can breed terrorism in India, he can only be said to be grossly exaggerating.
He had earlier acknowledged during a visit to the US that he is not as good a speaker as Prime Minister Narendra Modi. Now he has shown that his arguments are not always credible.
Little wonder that the BJP is cock-a-hoop with joy, for Rahul’s speech has reinforced, in its view, his Pappu image which he had been gradually shedding.
In the present highly charged political atmosphere, there is every need for public speakers to weigh their words with care lest the slightest slip enables their opponents to trip them up. No quarter is given at the moment, which is perhaps as it should be, for the age of gentlemanly parry and thrust in politics is over.
For Rahul Gandhi and the national opposition, there are any number of issues on which the BJP can be criticised. These include, among other things, the insecurity of the Muslims as a result of the lynchings and the perception among Dalits of being oppressed, which has been reinforced by the prolonged incarceration of one of their top-ranking leaders, Chandrashekhar Azad “Ravan”.
The fear among the Muslims and also peace-loving Hindus have also been heightened by the possibility of violence caused by various diktats of the Hindutva lobby such as banning animal slaughter on the occasion of Eid or the provocative shows of strength with the brandishing of arms by saffron groups during Navaratri which used to be earlier always observed peacefully.
Apart from these flashpoints, there are also the problems of unemployment and agrarian distress. There is no need, therefore, to range further afield by referring to the Islamic State, especially when the Muslim community in India has always shunned terrorism except for a few who have gone to Syria.
If anything is to be highlighted, it is this spirit of forbearance and tolerance for which the country has always been known rather than the possibility of deprivation leading to the adoption of extreme measures.
India is on the brink of a seminal change. The two opposing political forces facing each other — the BJP on one side and the Congress and the national opposition on the other — represent two virtually diametrically opposite “ideas” of India.
While one is avowedly Hindu-centric, the other emphasises the country’s composite culture.
As one of the leaders of the latter group, Rahul Gandhi has to demonstrate that he and his party are ready to put behind them the ignominious past of being able to win only 44 seats in the Lok Sabha and are ready to take on the BJP’s formidable election machinery and its highly articulate orator, Narendra Modi.
To do so, Rahul Gandhi has to choose his words with care whether speaking at home or abroad and concentrate on the BJP’s obvious weak points instead of looking for parallels from world events.
Since the BJP has the advantage of having a domineering “presidential” figure at its helm, it is keen on turning the next year’s general election into a one-to-one contest with Rahul Gandhi in mind since there is no other leader in the non-BJP camp with a pan-India appeal as his not inconsiderable 27 per cent approval rating compared to Modi’s much higher 49 per cent shows.
But to make it a battle of equals, Rahul Gandhi must not neglect his home work.
(Amulya Ganguli is a political analyst. The views expressed are personal. He can be reached at amulyaganguli@gmail.com)
—IANS
by admin | May 25, 2021 | Opinions
By Vinod Behl,
Landmark reforms like RERA and GST, as also demonetisation, have brought about much-needed transparency in transactions, helping the real estate sector to free itself of fraud, malpractices and other problems faced by consumers and investors. Yet, the sector needs more reforms to break free of the various ills that still plague it in order to realise its full potential as a major contributor to the country’s GDP.
The reform-oriented Narendra Modi government, which is fine-tuning and reinforcing the reforms undertaken by it to increase their on-ground efficacy, has its task cut out to free real estate from high transaction costs, especially to achieve the success of its flagship mission of “Housing for All”.
Though the interest subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) has proved to be a big boost for first-time home buyers in the EWS, LIG and MIG category, yet high transaction costs are a deterrent to home ownership. Currently, GST, stamp duty and registration costs act as a dampener. There is an average stamp duty of six percent and it is not uniform and is much higher in some states. Further, in many cities, there is the anomaly of collector rates of property being higher than the market rates.
As such, home buyers end up paying more stamp duty and registration fee. Home buyers need to be given freedom from high transaction costs to boost sales and revive residential real estate, facing a slowdown for long. And this can be achieved by either rationalising stamp duty or simply subsuming stamp duty in GST. Similarly, while GST has imporved ease of doing business by doing away with multiple taxation, there is still a need to lower its 12 per cent rate, which is almost double the VAT and Service tax prevalent in pre-GST era, especially when Input Tax Credit provided by the government is not having the desired effect. Further, the high GST on cement should be brought down as in the case of paints, to bring down the cost of homes.
Home buyers also need freedom from the double burden of rent and EMI, particularly as hundreds of thousands of housing projects across the country are facing long delays. Earlier, the home buyers would get possession of their homes in 3-4 years but now, in many cases, it has almost doubled, causing great hardships to home buyers in terms of dual burden of rent and EMI. Some developers are helping home buyers tide over this problem by offering schemes to pay EMI only after possession. But ready homes is a sound solution to this problem as they do not have any development risk and, moreover, home buyers save on 12 per cent GST.
That’s why ready-to-occupy homes are being lapped up by home buyers. Here, the concept of “Build and Sell” can provide a long-term solution. Under RERA, a developer can’t start his project without land and all mandatory permissions in place. Also, there is not only a ban on funding projects through customer advances by way of pre-launching of projects but there is also a strict check on (mis)utilising funds collected from customers through the implementation of the escrow account mechanism.
As such, it makes sense for developers to adopt the “Build and Sell” model which is common in advanced countries. Leading developer DLF has already announced it would adopt this model. And, if the government organises cheap bank funding for at least developers of affordable housing, many of them will take to “Build and Sell”, to the advantage of property consumers.
Red-tapism is also proving to be a big bane of the real estate sector as the unduly long time taken by authorities in giving construction permits and other multiple sanctions adds the developers’ debt, in turn increasing home costs. And, since the sanctioning authorities do not come under the purview of RERA, there is no check on project delays due to the unduly long time taken in according project sanctions and giving completion certificates.
The ideal solution to this problem is a single window mechanism for project sanctions/clearances. Since this is not happening, the government should fast-track the process of online permissions/sanctions and make this time-bound.
Last but not the least, there should be freedom from defective and fraudulent land/property titles to make property transactions easier and safer. Thus, there is an urgent need to set up a Land Titling Authority in states to prepare and maintain a digitised registry of all immovable properties. This, together with introduction of Title Insurance for providing protection against any financial loss due to title deficiencies, will considerably help in enforcing contracts and prevent property deals from falling through, thereby effectively checking high litigation due to property ownership disputes.
The transparency brought in by this will further boost the confidence of foreign investors, thereby helping in putting foreign investment in Indian real estate on the fast track.
(Vinod Behl is editor, Realty Plus, a leading real estate monthly. The views expressed are personal. He can be reached at vbehl2008@gmail.com)
—IANS
by admin | May 25, 2021 | Economy, Markets, News
By Rituraj Baruah,
Mumbai : With healthy quarterly earnings, tax-rate cuts on over 50 consumer items, domestic investor sentiments firmed up in the week ended Friday making the equity indices set new records and benchmarks every other day.
On Friday, both the S&P BSE Sensex and NSE Nifty50 settled at their respective highest closing levels of 37,336.85 points and 11,278.35 points after touching intra-day records of 37,368.62 points and 11,283.40 points earlier in the day.
According to market observers, appreciation in the Indian rupee and progress in the southwest monsoon rains also added to the enthusiasm in the market.
On a weekly basis, Sensex closed at 37,336.85 points — up 840.48 points or 2.30 per cent from the previous close.
The wider Nifty50 on the National Stock Exchange (NSE) settled at 11,278.35 points, higher by 268.15 points or 2.44 per cent — from its previous week’s close.
Market breadth was positive in all the five trading sessions of the week, according to Deepak Jasani, Head of Retail Research at HDFC Securities.
“Traders and investors were happy about a good start to the earnings session and GST tax rate cuts,” said Prateek Jain, Director of Hem Securities.
Kotak Mutual Fund’s Senior Vice President and Head of Equity Research, Shibani Kurian said the investor sentiments were also boosted by the reduction in tax rates of many consumer items from 28 per cent to 18 per cent.
The GST (Goods and Services Tax) council on July 21 in its 28th meeting decided to lower tax rates on several consumer items.
The progress of the South-West monsoons picked up pace, which further improved the sentiments, Kurian told IANS.
On the currency front, the rupee closed at 68.66 on Friday, strengthening by 19 paise from its previous week’s close of 68.85 per greenback.
In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors bought scrip worth Rs 2,539.58 crore, while the domestic institutional investors sold stocks worth Rs 1,573.68 crore in the week bygone.
Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) invested Rs 3,154.23 crore, or $459.02 million from the equities segment on stock exchanges during the week ended on July 27.
Sector-wise, top gainers were public sector banks, metals, FMCG and realty indices while the IT index was the only loser during the week, Jasani told IANS.
The top weekly Sensex gainers were ITC (up 10.51 per cent at Rs 302.20); ICICI Bank (up 10.26 per cent at Rs 293.30); State Bank of India (up 9.83 per cent at Rs 286.60); Tata Steel (up 9.14 per cent at Rs 549.45); and Vedanta (up 8.49 per cent at Rs 219.80 per share).
The major losers were Bajaj Auto (down 5.74 per cent at Rs 2,678.05); Hero MotoCorp (down 5.32 per cent at Rs 3,193.80); Yes Bank (down 4.33 per cent at Rs 369.90); Wipro (down 3.02 per cent at Rs 274.50); and Tata Consultancy Services (down 2.65 per cent at Rs 1,943.10 per share).
(Rituraj Baruah can be contacted at rituraj.b@ians.in)
—IANS
by admin | May 25, 2021 | Business, Commodities, Commodities News, Economy, Markets, Medium Enterprise, News
New Delhi : Welcoming the government’s decision to slash Goods and Services Tax (GST) rates on over 50 items including refrigerators, washing machines and small televisions, several consumer electronics companies, including Samsung, have promised that they will pass on the full benefits to the consumers.
The new prices will be applicable from July 27, Samsung India said in statement.
“Samsung is a consumer-centric company. We are happy to extend full benefits, that is 7.81+ per cent of GST rate reduction to all our consumers,” said Rajeev Bhutani, Senior Vice President, Consumer Electronics, Samsung India.
“We believe it will fuel the demand for consumer electronics products now and in the ensuing festival season,” Bhutani said.
GST Council last week decided that over 50 items should be taxed at 18 per cent, down from the current 28 per cent.
The decision could also boost India’s mobile phone industry as lithium-ion batteries is among the items listed for tax reduction.
“The reduction of GST slab on lithium-ion batteries used in mobile phones from 28 per cent to 18 per cent will certainly prove as a good boost to the mobile phone industry as it would improve the penetration and affordability of the product in smaller towns across the country,” said Sudhir Kumar, CEO of domestic smartphone firm Tambo Mobile.
Domestic consumer electronic brand Intex Technologies also welcomed the move.
“The move by the government to cut GST in product segments like televisions (below 68 cm), washing machines, refrigerators and even powerbanks from 28 per cent to 18 per cent is indeed a very welcome and much awaited move,” said Nidhi Markanday, Director, Intex Technologies.
“The rate cut will benefit consumer durable companies like us to pass on the benefit to the consumers for the upcoming festive season. This move brings cheer to both consumers and players like us. We will definitely re-work the pricing and announce the price drop it well in time for the festive season,” Markanday said.
—IANS
