Govt to Slash Corporate Tax to 25%, Amazon Food Delivery Service, Vodafone Idea CEO Balesh Sharma Quits

Government mulls reduction of corporate tax to 25% for all companies. Direct Tax Code (DTC) task force recommends major overhaul to the Income Tax Act. Amazon will reportedly launch a food delivery service in October. From Zomato to Swiggy, food delivery companies face protests from restaurant associations. SBI wants to do away with all debit cards. Visa critical of govt’s move towards zero-fee debit card transactions.

 

Moving on to the top Business news stories of the day: 

 

 COMPANIES 
 
Shell India sells entire stake in Mahanagar Gas. Vodafone Idea CEO Balesh Sharma steps down.
 
 
Withdrawing: Netherlands-based Royal Dutch Shell Plc’s Indian arm has sold its entire 10% stake in Mahanagar Gas Ltd (MGL) for INR770cr.
 
 
The deal marks Shell’s exit from the city gas distribution business in the country. 
 
 
Previously: When MGL was listed in July 2016, Shell and GAIL held 32.5% stake each in the company. Last year, however, Shell sold 24% of its shareholding in two tranches - 8.5% in April and 14% in August - in the open market through bulk deals.
 
 
Happy News: Mahanagar Gas share price rose 10% on back of the news before closing at INR848.15 (7.77%)
 
 
Stepping Down: Vodafone Idea CEO Balesh Sharma has stepped down citing personal reasons. 
 
 
Gearing Up: Ravinder Takkar, currently Vodafone Group's representative in India, will be appointed as the new MD and CEO with immediate effect, announced the telecom major.
 
 
 TAX REFORMS 
 
Government mulls reduction of corporate tax to 25% for all companies. Direct Tax Code (DTC) task force recommends major overhaul to the Income Tax Act.
 
 
Corporate Tax Greetings: The government has announced that it would, over time, cut the corporate tax rate to 25% for all companies, including the large ones with an annual turnover of over INR400cr.
 
 
No time frame was mentioned for the move, though. 
 
 
FYI: The government has, over the last five years, trimmed the rate to 25% from 30% in a phased manner for 99.3% of companies. However, the 0.7% large companies that don’t enjoy this benefit make up for almost 80% of the total corporate tax collection and are subject to as much as a 30% tax.
 
 
Tax Refurbish: The Direct Tax Code (DTC) task force, set up to overhaul the 58-year old Income Tax Act, has suggested some major overhauls. These include a significant increase in the highest income tax slabs, slashing corporate tax rate to 25% for both domestic and foreign companies and incentives for start-ups, among others. 
 
 
More on this proposed changes here.
 
 
 FOOD TECH 

Amazon will reportedly launch a food delivery service in October. From Zomato to Swiggy, food delivery companies face protests from restaurant associations.  
 

Chef Bezos: India’s food delivery market might soon see an Amazonian addition.
 
 
Amazon is reportedly planning to launch a food delivery service this October under the name “Amazon Restaurant”. The service could be accessible through the e-commerce giant’s grocery delivery app Prime Now.
 

Amazon’s interests in expanding operations in the vast Indian market are no secret. Besides floating a rival to Zomato and Swiggy, it is also reportedly eyeing a partnership with/acquisition of Ola’s Foodpanda, which would help it get a foothold in the industry.
 

Brood Delivery: Speaking of the food delivery scene in India, things have gone downhill. The National Restaurant Association of India and the Federation of Hotel & Restaurant Associations of India are up in arms over the practices of companies like Zomato and Swiggy, to say nothing of the angst of food service aggregators who allege “arm-twisting using their dominant position”. More on this here.
 
 
 DIGITAL INDIA 

SBI wants to do away with all debit cards. Visa critical of govt’s move towards zero-fee debit card transactions.
 
 
Surf, Don’t Swipe: India’s largest lender wants to do away with all debit cards in a bid to promote digital payment solutions. The SBI serves a fifth of the population and there are 90 crore debit cards in India currently as opposed to 3 crore credit cards. But Chairman Rajnish Kumar still thinks this is a doable task. He highlighted the bank’s “Yono cashpoints” (which enables customers to withdraw cash at ATMs or pay at stores without the use of the plastic cards) as a way to decrease the public’s reliance on debit cards.
 
 
MDR Madness: The government’s decision to require banks and card payment companies to offer zero-fee debit card transactions has not gone down well with Visa.
 
 
Last month, the Finance Minister said businesses with annual turnover of INR500mn will not have to pay MDR on debit card transactions, though who would bear the costs instead is still unclear. Bearing MDR costs would be to the detriment of banks and payment companies like Visa who could be required to pick up the tab.
 
 
 DEBT 

DHFL shares plummet after it defaults on financial repayment obligations. Another Asian debt crisis likely, McKinsey report warns.
 
 
The Rift That Keeps On Giving: Today, a day after DHFL defaulted on financial repayment obligations worth INR1,571cr, its shares plunged nearly 8% intraday. The defaults relate to interest payments on non-convertible debentures and commercial papers.
 
 
God is Debt: The possibility of an Asian debt crisis is becoming more and likely,McKinsey & Co. said in its August report. The consulting firm cited increased indebtedness, difficulties in resolving debts, lender vulnerabilities and shadow banking practices as particular concerns. An analysis of 23,000+ companies in 11 Asia-Pacific countries found “significant stress" in servicing debt obligations while in India and China these pressures have reportedly increased. 
 
 
(Don't want to miss out on these End Of Day Wrap Ups?  Subscribe Now to our WhatsApp Feed and get the day's Top Business stories straight on your favourite messaging app.)