01 Mar, 2017
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March 1, 2017
ND has initiated a new section of daily news, where our news desk compiles the latest news on the Indian economy, to keep our readers abreast and updated on daily economic state of affairs.
The economy news compilations bring business news reports that are relevant today and tomorrow, based on the new pattern of current affairs, and for English awareness. This gives vital inputs on the various sectors of the Indian Industry and trade.
- OECD Economic Survey of India 2017
- Central Board of Direct Taxes (CBDT)
- Advanced Pricing Agreements (APAs)
- TransUnion Cibil launches credit ranking for MSMEs
OECD Economic Survey of India 2017: Indian economy is expanding at a fast pace, boosting living standards and reducing poverty nationwide
Press Information Bureau: March 01, 2017
OECD Economic Survey of India 2017 : Indian economy is expanding at a fast pace, boosting living standards and reducing poverty nationwide; Hails India’s recent growth rate of more than 7 percent annually as the strongest among G-20 countries; Secretary, Department of Economic Affairs, Shri Shaktikanta Das and Secretary-General OECD, Mr. Angel Gurria jointly launched OECD Economic Survey of India in Delhi today.
New Delhi: The Indian economy is expanding at a fast pace, boosting living standards and reducing poverty nationwide. Further reforms are now necessary to maintain strong growth and ensure that all Indians benefit from it, according to a new report from the OECD.
The latest OECD Economic Survey of India 2017 finds that the acceleration of structural reforms and the move toward a rule-based macroeconomic policy framework are sustaining the country’s longstanding rapid economic expansion.
The Survey, launched in New Delhi today by OECD Secretary-General Mr Angel Gurria and Secretary, Department of Economic Affairs, Ministry of Finance, Govt. of India, Shri Shaktikanta Das, hails India’s recent growth rate of more than 7 percent annually as the strongest among G-20 countries. It identifies priority areas for future action, including continuing plans to maintain macroeconomic stability and further reduce poverty, additional comprehensive tax reforms and new efforts to boost productivity and reduce disparities between India’s various regions.
Speaking on the occasion, Mr Gurria said that India provides a welcome counter-point to a global economy that has been under-performing for years. He further said that India has been top performer and reforms are bearing fruit, growth is strong and other macroeconomic indicators are improving. Mr Gurria said that Maintaining the reform momentum will be critical to boosting investment and creating the quality jobs needed to ensure strong and inclusive growth for future generation, with all segments of society benefitting from it.
Later, Shri Shaktikanta Das, Secretary, Department of Economic Affairs, Ministry of Finance, Government of India said that he was pleased to note that the OECD survey considers India as a top reformer in the world. As per the report, the ease of doing business in India has improved. He assured that the Government of India is well aware about the challenges before it and there is work in progress on all of the recommendations enshrined in the Survey.
The implementation of the landmark GST reform will contribute to making India a more integrated market. By reducing tax cascading, it will boost competitiveness, investment and job creation. The GST reform – designed to be initially revenue-neutral – should be complemented by a form of income and property taxes, the Survey said.
The Survey points out the need to make income and property taxes more growth-friendly and redistributive. A comprehensive tax reform could help raise revenue to finance much-needed social and physical infrastructure, promote corporate investment, enable more effective redistribution and strengthen the ability of states and municipalities to better respond to local needs, according to the Survey.
The OECD points out that achieving strong and balanced regional development will also be key to promoting inclusive growth. Inequality in income and in access to core public services between states and between rural and urban areas is currently large across India, while rural poverty is pervasive. Continuing efforts to improve universal access to core public services is essential.
Recent changes in India’s federalism model have given states more freedom and incentives to modernize regulations and tailor public policies to local circumstances. Ranking states on the ease of doing business is opening a new era of structural reforms at the state level and will help unleash India’s growth potential. Further benchmarking among states and strengthening the sharing of best practices, particularly labor regulations and land laws could add to the reform momentum.
Raising living standard in poorer states will require increasing productivity in the agricultural sector. With employment expected to gradually shift away from the agricultural sector, urbanization will gather pace. Thus, better urban infrastructure will be needed to fully exploit cities’ potential for job creation, productivity gains and improving the quality of life.
TransUnion Cibil launches credit ranking for MSMEs
Livemint: March 01, 2017
Mumbai: TransUnion Cibil on Tuesday launched credit ranking for micro, small and medium enterprises (MSME) which have aggregated exposure between Rs10 lakh to Rs10 crore. Using machine learning algorithms, credit ranking will predict the probability of MSME becoming non performing asset (NPA) in span of next one year.
Ranking will be given to MSMEs on a scale of one to 10 on the basis of credit history of past 24 months. Higher ranking will imply higher credit risk.
MSMEs falling in the highest risk bracket have credit outstanding of Rs54,799 crore which is at risk of becoming bad loans. Currently the total MSME credit portfolio is estimated at Rs12 trillion.
Central Board of Direct Taxes (CBDT) total number of Advanced Pricing Agreements (APAs) entered into reaches 140
Press Information Bureau: March 01, 2017
New Delhi: The Central Board of Direct Taxes (CBDT) has entered into 10 more Advance Pricing Agreements (APAs) over the last one week, including 7 Unilateral APAs signed today. Two of these ten agreements are Bilateral APAs with the United Kingdom and Japan. Seven of these Agreements have Rollback provisions in them.
With this, the total number of APAs entered into by the CBDT has reached 140. This includes 10 Bilateral APAs and 130 Unilateral APAs. In the current financial year, a total of 76 APAs (7 Bilateral APAs and 61 Unilateral APAs) have already been entered into. The CBDT expects more APAs to be concluded and signed before the end of the current fiscal.
The APAs entered into over the last week pertain to various sectors of the economy like Telecom, Pharmaceutical, Banking & Finance, Steel, Retail, Information Technology, etc. The international transactions covered in these agreements include Payment of Royalty Fee, Trading in Goods, IT Enabled Services, Software Development Services, Marketing Support Services, Clinical Research Services, Non-binding Investment Advisory Services, Payment of Interest on ECB, etc.
The APA Scheme was introduced in the Income-tax Act in 2012 and the “Rollback” provisions were introduced in 2014. The scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and setting the prices of international transactions in advance. Since its inception, the APA scheme has evinced a lot of interest from taxpayers and that has resulted in more than 700 applications (both unilateral and bilateral) being filed so far in about five years.
The progress of the APA Scheme strengthens the Government’s resolve of fostering a non-adversarial tax regime. The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.
GST to provide US$ 39bn auto ancillary industry fuel for growth
Times of India: March 01, 2017
Jaipur: The $39 billion auto ancillary industry which complements the OEMs will be benefited from the GST regime. The current effective rate of tax for auto ancillary industry is between at 28 to 30% but this will come down to 18% after the GST implementation.
“Many auto component manufacturers usually set up their units closer to the OEM facilities just to avoid VAT credit chain. However, in the new GST regime there will be no such compulsion as the input credit claim will be available to them through IGST and SGST. This will reduce the capital investments and increase working capital inflows to auto ancillary industry,” said Mohit Bhambani, CEO of Jaipur-based KDK Softwares Pvt Ltd, on the sidelines of an event.
Accounting to EY reports, for auto component manufacturers, the present disputes with VAT authorities on the concept of pre-determined sales to OEMs will go away after the GST implementation. Also, there will be a reduction in their inter-state procurement costs as IGST will be creditable.
As per another report, GST implementation is expected to bring the unorganized players of the auto ancillary industry under the tax net, ultimately reducing the price gap between organized and unorganized players.
Battery companies like Exide which has about 40% of after-market share in revenues is likely to be benefitted. As per Auto Component Manufacturers Association (ACMA) report, the implementation of GST would open new prospects for the auto ancillary companies, which is expected to grow in double digits this year.
GST is expected to impact vehicle pricing, sourcing strategies, distribution costs and dealer profitability. It is expected that consolidation of these facilities would be beneficial for the overall economic efficiency of the auto industry.
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