Govt Likely to Miss FY20 Disinvestment Target, Startups Demand GST Simplification, Income Tax Cuts Likely

BPCL and ConCor disinvestment unlikely to be completed in current FY. Government has so far met only 16.5% of disinvestment goal. First coal auctions to be held in current fiscal. Not filing GST returns on time could cost businesses their assets, tax registration. Finance Ministry considering income tax cuts and new tax slabs in upcoming Budget. Startups demand GST simplification, faster processing in upcoming year. Chinese investment in Indian startups surged 94% this year. Bank NPAs decline for the first time in seven years. As data tariffs rise, consumers opt for monthly recharges. Cyrus Mistry unlikely to take up board position at Tata Sons. The Nissan-Renault alliance has begun to crack.

 

 

DISINVESTMENT

BPCL and ConCor disinvestment unlikely to be completed in current FY. Government has so far met only 16.5% of disinvestment goal.

Slow and Steady Loses the Race: The government is racing against time to keep to its disinvestment commitments.

 

Ensuring that the disinvestment of BPCL and ConCor before the current fiscal ends is important for the revenue-strained government, which has also set an FY20 disinvestment target of ?1.05Lcr.

 

Such strategic transactions usually require about four months’ time once expressions of interest (EoIs) are invited. But so far, even EoIs have not been floated for the sale of the above-mentioned two PSUs (and Air India’s too). Financial Express

 

Selling its 53.3% stake in BPCL (worth ?60,000cr) and its 30.8% stake in ConCor (worth ?11,000cr) is important for the government since, so far, it has met only 16.5% of its disinvestment target. Given the decelerating GDP growth and sub-par direct and indirect tax collections, this is more bad news in an already grim situation. Livemint

First coal auctions to be held in current fiscal.

Coal Me Maybe: The first tranche of coal auctions for commercial mining will reportedly begin this FY. In the next five years, over 200 coal blocks could be auctioned, having the potential to produce at least 400m tonnes of coat at peak capacity. ET Metals & Mining

 

TAXES

Not filing GST returns on time could cost businesses their assets, tax registration.

Penal Action: As per government instructions to field officers, not filing GST returns on time could cost businesses their assets and their tax registration. The new guidelines were issued on Tuesday.

 

The move comes at a time when revenue collections and tax return filings remain way below expected levels. Against the total GST registrations of 12.2m as of June 2019, only 7.8m filed their returns for October, as per official data. Livemint

Finance Ministry considering income tax cuts and new tax slabs in upcoming Budget.

Cut It Down: As the country waits for the third Budget in 12 months, rumours are rife that the Finance Ministry is mulling over income tax cuts and new tax slabs to encourage Indians to spend more. More details here.

 

STARTUPS

Startups demand GST simplification, faster processing in upcoming year.

Start It Up: Startups have a list of demands to ask the government to address in the coming year. These include faster processing of Tax Deducted at Source and GST refunds and taxing of employee stock ownership plans only at the time of sale. Other demands are for a single GST registration that works across states, easier tax processing for procuring services from abroad, and a mechanism for penalising institutions that don't pay startups on time. Read more here.

Chinese investment in Indian startups surged 94% this year.

With Love, From Shanghai: 2019 was a year when Chinese investment in Indian startups erupted. Investments from the Middle Kingdom surged 94% this year to $3,918m from $2,020m in the previous year.

 

The nature of funding changed too. While previously it was defined by technology majors investing in unicorns, now it is led by financial investors looking to diversify their portfolio or picking up stakes in promising start-ups for long-term commitments. BS

 

Govt Likely to Miss FY20 Disinvestment Target, Startups Demand GST Simplification, Income Tax Cuts Likely

 

TRENDS

Bank NPAs decline for the first time in seven years.

Good News on Bad Debt: Reversing an upward trend that lasted seven years, non-performing assets reported by banks are now declining, the RBI has said. A conducive policy environment and the Insolvency and Bankruptcy Code (IBC) helped banks combat the bad loans crisis.

 

The gross NPAs declined to 9.1% in March 2019 from 11.2% in March 2018 as recognition of bad loans neared completion, the Central Bank's report noted. "Decline in the slippage ratio as well as a reduction in outstanding GNPAs helped in improving the GNPA ratio. While a part of the write-offs was due to ageing of loans, recovery efforts received a boost from the IBC. The restructured standard advances to gross advances ratio began declining after the asset quality review in 2015 and reached 0.55% at end-March 2019," the report stated. ToI

As data tariffs rise, consumers opt for monthly recharges.

Adapt and Thrive: Indian telcos recently raised tariffs by c. 40%, and this has forced consumers to change their recharging patterns. Monthly plans are becoming more popular as money-sensitive customers embrace these relatively cheaper plans at the expense of their long-term counterparts to save money.

 

One implication of this trend is that consumers are less likely to be bound to one provider and feel more inclined to change operators given that their packages are only a month-long. This is why telcos have been offering discounts on 12-month recharge plans. ET Telecom News

 

COMPANIES

Cyrus Mistry unlikely to take up board position at Tata Sons.

Update: Days after he was reinstated as Executive Chairman of Tata Sons and three other group companies, it is being reported that Cyrus Mistry won't take up a board position at any of these companies. He will likely appoint nominee directors to the board. More details here.

The Nissan-Renault alliance has begun to crack.

Coalition of the Unwilling: Two of the world's biggest auto makers had endured a business alliance for two decades. Then Carlos Ghosn was arrested in November 2018. In the year since, the Nissan-Renault alliance has frayed and begun to crack.

 

And this has hurt both companies' fortunes. Their share prices have dropped by a third since last November; they have sold half-a-million fewer cars in 2019 than they did in the previous year; and both are losing money rapidly. WSJ

FIN.

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