OPINION, P8 COMPANIES, P6 EDITORIAL We’ve finally got a GST, now to make it worthwhile! INTERNATIONAL, P16 LEONID BERSHIDSKY BOARD APPOINTMENT RELIEF FOR ASSANGE Next mobile phone revolution is about digital assistants, so bye bye apps Anil Agarwal’s daughter Priya joins Vedanta as director Rape investigation against WikiLeaks founder dropped KOLKATA, SATURDAY, MAY 20, 2017 VOLUME XXVI NO. 170, 24 PAGES, `8.00 AIR SURCHARGE OF `4.00 FOR AGARTALA, `6.00 FOR PORT BLAIR & SILCHAR AND `5.00 FOR GUWAHATI & IMPHAL PUBLISHED FROM: AHMEDABAD, BENGALURU, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI, NEW DELHI, PUNE FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM SENSEX: 30,464.92 ▲ 30.13 NIFTY: 9,427.9 ▼ 1.55 NIKKEI 225: 19,590.76 ▲ 36.9 HANG SENG: 25,174.87 ▲ 38.35 `/$: 64.64 ▲ 0.21 `/€: 72.19 ▲ 0.02 BRENT: $53.24 ▲ $0.73 GOLD: `28,659 ▼ `212 TEXTILE MELTDOWN With talks of branded garments being taxed at 18% under the new GST regime, share prices of retailers of branded garments lost value on Friday. Arvind Future Lifestyle Fashions Intra-day on BSE (`), May 19 400 393.7 Intra-day on BSE (`), May 19 310 376.65 390 Intra-day on BSE (`), May 19 255 288.1 300 Trent 250 250 380 370 Previous close 389.10 Open 280 Close 297.35 Close 240 Intra-day on BSE (`), May 19 180 174.85 175 Previous close 173.10 167.9 170 245 Previous close Open 248.05 243.15 305.9 290 Previous close Aditya Birla Fashion & Retail Open Close 165 Open Close GOODS AND SERVICES TAX Most rates fixed, set for July 1 rollout IN THE NEWS Govt focusing on electrifying rural Complicated rate structure for households FAR FROM SIMPLE ■ Most of the 60 exempt services on the negative list now to be outside the GST net too. These include services provided by educational institutions, healthcare services. services will prove problematic THE GOVERNMENT is planning to train its attention on providing electricity to individual rural households, reports fe Bureau in New Delhi. It has now decided to complete the “100% household electrification mission” by August 15, 2022. Power minister Piyush Goyal on Friday said that "instead of counting 10% households in the village to complete electrification process, now the government is focusing on providing power connections to each and every household of village". SUMIT JHA Srinagar, May 19 THE GOODS AND Services Tax (GST) Council on Fridayapproved a four-rate structure, similar to that forgoods,fortaxing services in the upcoming regime, while retaining most of the current exemptions, including education and healthcare and ordinaryclass travel on trains. Of some 120 services taxed,headline rate will increase from 15% now to 18% formost,including telecom and financial services, while it will come down to 12% forsome, including work contracts. The GST rate will be 5% for most modes of transport, including economyclass airtravel,taxis op- Kerala opposes commercialisation of GM mustard THE KERALA assembly on Friday passed a resolution demanding that the Centre withdraw the decision to grant permission for production and cultivation of genetically-modified (GM) mustard seed for commercial purposes, reports PTI. Moving the resolution, agriculture minister VS Sunil Kumar said it was unfortunate that the Centre's Genetic Engineering Approval Committee (GEAC) had accorded sanction for production and cultivation of GM mustard. ■ Of some 120 services taxed, headline rate will increase from 15% now to 18% for most, 12% levy on a smaller number, while a handful is to be taxed at 5% erated by cab aggregators and freight movement by roads and rail. Besides, a small number of luxuryservices — course betting, cinemas,casinos and hotelswith room rentals over `5,000 per night etc — will be taxed at the highest rate of 28%. Finance ministerArun Jaitley said the categorisationwas done keeping in mind the nature of services and for“special reasons”. He stressed the net effect of GST on goods and services won’t be inflationary,as greater input tax credits (ITC) will lower the tax liability of most businesses. Analysts, however, felt that while GST was meant to simplify the system, the multi-tier structure Ex-coal secy,two others convicted ANINDYA THAKURIA New Delhi, May 19 Researchers find last-ditch cure to unlock WannaCry files FRENCH RESEARCHERS said on Friday they had found a last-chance way for technicians to save Windows files encrypted by WannaCry, racing against a deadline as the ransomware threatens to start locking up victims' computers first infected a week ago, reports Reuters. WannaCry threatens to lock out victims who have not paid a sum of $300 to $600 within a week of infection. PAGE 16 Continued on Page 2 ■ ‘Will find some way to resolve stressed accounts’: P20 REPORT CARD ` crore Q4FY16 Domestic NIM (%) Q4FY17 -16 bps 3.27 122.7 17.3 2.4 12.9 Net interest income Other income Operating profit 2,815 TATA POWER Co reported a consolidated loss of `246.9 crore in the fourth quarter of financial year 2016-17, after the firm made a one-time exceptional payment of `651 crore towards Tata Sons' liabilities to DoCoMo, reports fe Bureau in Mumbai. Excluding the DoCoMo payments, the firm reported a profit of `389 crore, compared with `89 crore profit a year ago, led by strong performance from the coal mines business in Indonesia. PAGE 6 1,264 Tata Power Q4 net loss at `247 crore on exceptional item STATE BANK OF INDIA (SBI) more than doubled its net profit to `2,815 crore in the March 2017 quarter, on the back of lower provisions. Provisions were lower by11%year-on-year (y-o-y) at `11,740 crore, of which those for bad loans fell 10% y-o-y to `10,992 crore. The profits came off a small base — in the March 2016 quarter provisions for non-performing loans had soared following the asset quality review (AQR). SBI’s asset quality improved in the March quarter, with gross NPAs as a percentage of gross advances falling 33 bps sequentially to 6.9%.The net NPA ratioalsowitnessedaquarter-onquarter (q-o-q) decline of 53 bps. SBI chairman Arundhati Bhattacharya said on Friday there had been progress on keeping stressed assets in check. “The accretion of NPAs seems to be slowing,”Bhattacharya said. Shares of SBI rose as much as 4% on the BSE in intra-daytrade on Friday, before ending at `276.26,up 0.15%. 16,026 QuickPicks FE BUREAUS Mumbai/Kolkata, May 19 14,192 Using personalised music in therapy is cheap and can reap great rewards. Dedicated software is emerging to help health care professionals create personalised playlists. ■ Science & Tech, P15 Continued on Page 2 Lower provisions double SBI’s profit 10,327 How personalised music can be used in health care Sponge Steel & Power. The firm KSSPL and its managing director Pawan Kumar Ahluwalia were also convicted under charges of cheating and criminal conspiracy. The court, however, acquitted chartered accountant Amit Goyal in the case. During proceedings earlier, Gupta, who retired as an IAS officer, burst into tears, saying he had run out of resources to hire lawyers and would rather go to jail than face trial repeatedly — he is an accused in other coal scam cases as well. Special judge Bharat Parashar had then asked Gupta to reconsider his submission and did not let it go on record. Q4 EARNINGS 10,585 Special Features criminal conspiracy. Gupta, however, was acquitted of the charge of criminal breach of trust by a public servant. The case relates to alleged irregularities in allocation ofThesgora-B/Rudrapuri coal block in Madhya Pradesh to Kamal 18,071 SUZLON ENERGY reported a turnaround in performance during Q4 FY17 with the company posting consolidated net profit of `579 crore, against a loss of `334 crore during Q4FY16, reports fe Bureau in Pune. Ex-coal secretary HC Gupta 15,401 Suzlon swings back to profit, Q4 net at `579 cr ■ Telecom and financial services may turn costlier; effective tax on mobile services to increase 1-2 percentage points ■ But govt expects mobile tariffs to come down with telcos being eligible for higher input tax credit ■ Telcos must provide a break-down of costs either in individual bills or put out the same on their website, says revenue secretary; cost audit on other firms too if lower tax liability is not passed on COAL SCAM IN THE FIRST instance of senior IAS officers being convicted in the coal scam during the UPA rule, a special court in Delhi on Fridayconvicted formercoal secretary HC Gupta, former joint secretary in the coal ministry and now Meghalaya chief secretary KS Kropha, and then director in the coal ministry and now joint secretary in the minority affairs ministry KC Samria. The court is to sentence them on May 22.They were convicted undersections of the Prevention of CorruptionAct and Indian Penal Code, charged with abusing theirposition as public servants, obtaining pecuniary advantage without public interest, and ■ New concept of luxury services; 5 including betting, cinemas, casinos and high-end hotels to attract 28% rate Net profit 3.11 Net NPA ratio (%) -10 bps 3.81 3.71 Source: SBI and value-based thresholds for restaurant services and renting of hotel rooms might not make the new indirect tax regime less complex. Though the headline rates wouldwork out to be higherthan the actual incidence of tax, there couldstillbeincreaseintaxliabilities of service providers attract- ing 18% or 28% GST and consequent price increases forthe consumers.In the case of the capitalintensive telcos, for instance, the GSTmight increase the availabilityof ITC on telecom equipment, call centres etc. (In the current system, telecom companies are not entitled to offset VAT/CST content in inputs against the tax liability on their output services and GST will address this issue). However, on a net basis, their tax liability in the GST regime could still be 1-1.5 percentage points higher than now. Even though the GSTrate for telecom and most other services will be 18% as against the current 15% service tax, the consumers should not feel the pinch as greater input tax credits will enable the service providers to lowertariffs/prices,revenue secretary Hasmukh Adhia said. Continued on Page 2 Cess rate for demerit goods finalised: P2 ● REAL ESTATE BOOST Despite 12% headline rate, work contracts to be cheaper FE BUREAU New Delhi, May 19 THE GOVERNMENTHAS fixed a goods and services tax (GST) rate of 12% for work contracts, giving the impression of a higher burden on the construction sector. However, a closer look suggests the actual tax incidence under the GST regime would be lower than the existing one, thanks to the facilityof input tax credit (ITC) on raw materials. Also,the newindirect tax regime will simplify the extant convoluted tax structure by treating work contracts as only services. At present, while the Centre effectively levies a 6% services tax on construction work contracts (after a 60% abatement), states imposevalue-added tax of 1-4.5%. However, the ITC facility is unavailable on the payment of taxes on raw materials like steel and cement now on which the existing tax incidence is quite high and varies from state to state. Work contracts cover both commercial and residential infrastructure projects. In the GST regime, though, builders will be able to get input tax credit against their payment of taxes on key inputs like steel and cement. While most of the steel products will be taxed at 18% under the GST regime, THE NEW RULES ■ A 12% GST rate for work contracts will be effectively lower than roughly 11% now, as input tax credit will be available ■ Unlike current practice, work contracts will be considered only services ■ GST will help cut cash component in construction, as inputs have to be sourced from registered vendors to get input tax credits against the current indirect tax incidence of roughly 17.5%, those of cement will attract 28%,comparedwith around 2324% now. “The 12% GST rate for work contract may optimally look high but since additional credits will henceforth be available, the total tax impact may be lower than the current indirect tax regime,”saidAnita Rastogi,partner (indirect tax) at PwC. Continued on Page 2
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