OPINION, P6 MARKETS, P10 T NANDA KUMAR APMCs key to price discovery, need to reinvent themselves INTERNATIONAL, P8 EDITORIAL EYE ON YIELDS ELECTION DAY Centre should move away from cesses; these are unfair to states, and CAG highlights, are mostly misused RBI rejects all bids at first open market bond buy this year Trump won’t commit to peaceful transfer of power if he loses KOLKATA, FRIDAY, SEPTEMBER 25, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.29 NO. 280, 14 PAGES, `6.00 (NORTH EAST STATES & ANDAMAN `11.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 36,553.60 ▼ 1,114.82 NIFTY: 10,805.55 ▼ 326.30 NIKKEI 225: 23,087.82 ▼ 258.67 HANG SENG: 23,311.07 ▼ 431.44 `/$: 73.90 ▼ 0.33 `/€: 86.18 ▼ 0.22 BRENT: $41.66 ▼ $0.11 GOLD: `49,707 ▼ `544 matelythe parties mayhave to seek a clarification from the apex court as the operators, based on the legal advice of their lawyers are also quite confident of their stand. The confusion has arisen because of the wording of the orderwhichstates,“That,atthe first instance, the respective telecom operators shall make the payment of 10% of the totalduesasdemandedbyDoT by 31.3.2021.” Most 'arrears' can't be collected 7,00,148 FY15 27,116 8,24,211 FY16 21,955 10,44,688 FY17 14,963 11,14,182 FY18 20,159 FY19 Continued on Page 12 Harley to ride out of India Insolvency in yet another blow to govt suspended ANURAG KOTOKY New Delhi, September 24 HARLEY-DAVIDSON IS PULLINGoutofIndia,anothermajor setback to the government’s efforts to lure or retain foreign manufacturers in the midst of the nation’s worst economic downturn in decades. The motorcycle manufacturerwill discontinue sales and manufacturingoperationsin India as part of broader additionalcutbacks,according to a regulatoryfiling. TAXING TIME Motorcycle maker to discontinue sales, manufacturing; dismiss another roughly 70 employees ■ Harley says latest moves to boost restructuring expenses this year to about $169 million ■ Recently, Toyota Motor said it won’t expand further in India over high taxes; GM pulled out in 2017 Continued on Page 2 QuickPicks Some needed 50% GST aid, others 10% THE COMPENSATION REQUIREMENT for all states combined was nearly a quarter of their protected revenue under GST in 2019-20, reports Sumit Jha in New Delhi. While many state’s deficit were in line with the national average, some managed to earn nearly 90% of protected revenue, while others resorted to compensation for nearly half of the protected revenue. PAGE 2 Valli: Murugappa family wants control DAYS AFTER saying she will drag the Murugappa family members to court for rejecting her nomination to the board ofAmbady Investments, Valli Arunachalam has said the family’s complete failure to act in a constructive manner to date shows they are primarily want to exercise control over the assets of her late father, reports Sajan C Kumar in Chennai. PAGE 4 Special Feature ‘Offline channel will remain Vivo’s priority’ Nipun Marya, director – brand strategy, Vivo India, on why the company will continue to focus on offline retail, and what its ‘marketing 2.0’ strategy, minus IPL, entails ■ BrandWagon, P9 12,34,078 (` cr) Stuck at CIT-A (` cr) *Just appeals before HCs and SC; if ITAT cases included (`2.35 lakh crore in FY18 and number cases have only Tax base growth: Note ban gains gone with the wind Direct tax 20 15 10 5 0 -5 -10 Growth (%, y-o-y) 2017-18 18 9 -1.03 1.62 0.82 Buoyancy 2014-15 FE BUREAU New Delhi, September 24 THE GOVERNMENT HAS extended the suspension of insolvency cases against fresh Covid-relateddefaultsbythree months from September 25, upon the expiry of the current six-month deadline on Thursday, according to an official notification. Parliamentary approval has already been obtained by the Centre, through the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2020, for an up to one-year suspension of the initiatition of insolvency proceedings for fresh defaults from March 25. The idea was to help cashstrapped firms tide over the Covidimpactwithoutthefears of getting dragged to the National Company Law Tribunal (NCLT). An official source said that the government will review the situation before the latest three-month extension expires, and another threemonth extension will be granted only if it’s necessary. -7.4 2019-20 (2016-17 demonetisation year) FE BUREAU New Delhi, September 24 DEMONETISATION BOLSTERED THE direct tax assessee base and improved the tax's buoyancyto a reasonable degree, but the slump in economic growth and a return to old, evasive habits by sections of taxpayers have led to a sudden,precipitous erosion of these gains in FY19 and FY20 (see chart).Needless to say,the scenariowould be muchworse in the current financialyear,as the pandemic has dealt a body blow the economy. Continued on Page 2 Search & seizure: No scrutiny of 77% of income revisions ASAMPLEANALYSISbyCAGrevealedthatover three fourths of the income additions sought by the taxman under search and seizure don’t standthetestofjudicialscrutinyatthelevelsof CIT Appeals/appellate tribunals, reports fe BureauinNewDelhi.“Wealsoobservedcases where sustainability of additions made in the assessment orderswas nil at the appellate stage,”itwrote.Theinadequatehandlingofsearch and seizure cases had a monetary impact of `3,729crorein1,291auditedcases. ■ Page 2 TRACKING PROTEST Farmers block a railway track as they participate in Rail Roko Andolan during a protest against the farm Bills passed in both the Houses of Parliament recently, near Amritsar on Thursday Continued on Page 2 Stocks crash, rupee weakens, bonds steady Sensex 37,400 37,200 37,000 36,800 36,600 36,400 36,553.6 Previous close 37,668.42 Open Nifty50 11,050 11,000 10,950 10,900 10,850 10,800 10,750 Intra-day, September 24 37,282.18 Close Intra-day, September 24 11,011 10,805.55 Previous close: 11,131.85 Open Intra-day, September 24 THECAGFOUNDthattheI-Tdepartmenthad under-assessed income in a sample of scrutiny assessment cases,leading to a lower taxdemandbyover`44,000crore,reportsfe Bureau in New Delhi. The CAG audited nearly3.32lakhsuchcasesforfinancialyears 2017-18 and 2018-19.The report tabled in Parliament onWednesdaysaid recurrence of irregularities,despite being pointed out repeatedly in audit reports,is indicative of nonseriousnessof the department. ■ Page 2 by 3 more months TERRIBLE THURSDAY Close 10-year bond yield (%) CAG detects `44,000-cr tax loss for govt in FY18-FY19 On the job Retail hires on the rise 14,593 Locked up at ITAT/courts Total arrears of demand risen since), the disputed amount will be ~`4.5 lakh cr Net collectible demand Source: CGA, CAG ● MORE RELIEF ● COST-CUTTING (` cr) Continued on Page 2 5,62,806 12,601 5,18,647 4,197 FY19 Dues paid Dues remaining FY18 16,798 6,11,227 DESPITE A SERIES of dispute resolution initiatives, including the latest ‘Vivad Se Vishwas’ scheme and oft-articulated commitment to reduce the backlog of litigation by withdrawing frivolous pleas, the government’s tax officers at the field level seem to have relented little when it comes Tata Teleservices Total dues FY17 50,400 5,16,250 7,854 Dues remaining 3,83,797 Dues paid FE BUREAU New Delhi, September 24 FY16 58,254 FY15 Vodafone Idea Total dues 2,10,833 25,976 FY19* 18,004 43,980 Dues remaining to tax aggression. The just-released Comptroller and Auditor General of India’s audit report with respect to the tax department, for the financial year 201819, revealed that the number of disputes and also the amounts locked up at various forums, including the tribunals courts,have only risen. The amount locked up in appeal cases with CIT-Appeals (`5.63 lakh crore) in 2018-19 was more than the Centre’s revenue deficit in the year,the CAG observed. Also, the auditor has noted a trend of rise in ‘demands difficult to recover’, in what reflects the taxman’s refusal to stop pushing cases lacking merit. 4,39,637 Dues paid KIRAN RATHEE New Delhi, September 24 TELECOM OPERATORS LIKE Bharti Airtel and Vodafone Idea, and the department of telecommunications (DoT) are headed for another legal clash over payment of 10% of their adjusted gross revenue dues as per the order of the Supreme Court.The two sides are differing as to when do they need to pay their first installment. While DoT has maintained that the operators need to pay theirfirst installment,which is 10%ofthetotalduesbyMarch 31, 2021, both the operators have said that since they have alreadypaidmorethan10%of their total dues before the SC order,their next installment is due in March 2022. Though, at this stage, DoT officials have ruled out taking any legal opinion on the matter as it maintains that the SC order is quite clear, legal observers maintain that ulti- Amount locked up with CIT-Appeals in FY19 was more than Centre’s revenue deficit in the year, the auditor noted Bharti Airtel Total dues 4,42,825 Figures in ` crore FY18 UNACADEMY ON THURSDAY announced the acquisition of UPSC test preparation platform Coursavy, reports fe Bureau in New Delhi. Earlier this month, it had bagged $150 million in a funding round led by SoftBank that valued the company at $1.45 billion. Due date 3,04,494 Unacademy buys UPSC prep platform Coursavy DoT wants payment of 10% of total dues by March 31, 2021, operators say payment only in March 2022 CAG busts myth of reduced disputes FY17 THE FINANCE MINISTRY on Thursday said banks have sanctioned loans of about `1.77 lakh crore to 44.2 lakh business units under the `3lakh-crore Emergency Credit Line Guarantee Scheme for the MSME sector reeling under the slowdown caused by the coronavirus pandemic, reports PTI. Telcos, DoT brace for next legal spat FY16 Banks sanction loans of `1.77L cr to MSMEs TAX TALK 1,87,873 A FIRE AT the country’s top oil and gas producer ONGC’s gas processing facility near Surat in Gujarat on Thursday snapped fuel supplies to power and fertiliser firms, but the company is diverting gas from other fields to make up for the shortfall, reports PTI. AGR DUES FY15 IN THE NEWS Fire at ONGC’s Hazira plant snaps supplies 6.036 6.024 6.012 6.000 5.988 5.976 5.964 5.986 Open 73.70 73.75 73.80 73.85 73.90 73.95 74.00 Intra-day, September 24 (Inverted scale) 73.82 73.90 Previous close: 73.57 Open Close FE BUREAU Mumbai, September 24 INDIAN EQUITIES FELL for the sixth straight session onThursday,asweakeconomicforecasts and rising Covid-19 cases dampened investor sentiment, causing investors to lose nearly `4 lakh crore in market capitalisation.The rupee lost value in sync with other peer currencies inAsiaasthedollarputongains, endingthedayat73.9037againstthegreenback.Bondsended the day on a steady note with yields coming off towards the close to 5.99%; earliertheyhad sold off after Reserve Bank of India(RBI)declinedalloffersfor a`10,000croreatanopenmarketoperation(OMO)withyields Intra-day, September 24 1,870 1,865 1,860 1,855 1,850 1,845 1,840 1,858.75 1,863.32 Open Continued on Page 12 WHAT’S BREWING Tata Consumer looks to bid for Coffee Day vending business BAIJU KALESH & ANTO ANTONY Mumbai, September 24 TATACONSUMERPRODUCTS is weighing a non-binding bid for the vending machine business of Coffee Day Enterprises, according to people familiar with the matter. The board of Tata Consumer Products has approved a proposal to explore an acquisition of the operation from Coffee Day, said one of the people, who asked not to be identified as the information is private. Coffee Day is seeking a valuation of about `2,000 crore for the vending machine business, another person said. Coffee Day, the owner of India’s largestcoffeechain,has been trying to sell assets to repaylendersafterthedeathof its founderVG Siddhartha last year. It had agreed to sell its corporate business park to Blackstone Group. The potential deal comes as Tata Consumer, whose prod- ■ Coffee Day is seeking a valuation of about `2,000 crore for the vending machine business ■ Cafe Coffee Day owner has been trying to sell assets to repay lenders ■ It had agreed to sell its corporate business park to Blackstone Group ucts include Tata Tea, Tetley and Tata Salt, is seeking to expand its presence in the world’ssecond-mostpopulous country.It also has a joint venture with Starbucks in India. Continued on Page 2 The retail and allied sectors employed 36.3 million people in FY20, making them the second highest employment provider after agriculture. In the next five years, retail is expected to add 9.2 million additional jobs and that will take the total to 45.5 million in FY25. 9.1 9.2 12.7 2020 E (in %) 82.1 2025 P (in %) 78 Modern retail Traditional retail Allied industry Total employment (mn) 36.3 2020E Close risingto6.03%.Goldpriceswitnesseda sharp correction. The Sensex crashed 1114.82 points (2.96%) to close at 36,553.6 while the Nifty50 gave up the 11,000 mark after falling 326.3 points (2.93%) to close at 10,805.55. Foreign portfolio investors (FPIs),havepulledout $807.39 millioninthelastthreesessions bringing down September inflowstojust$245.95million. Goldwastradingat$1861.5 per ounce, down by 0.36% on Thursday. Prices of gold have come down by nearly 5.1% since September 21, after Wall Streetandotherequitymarkets globallystarted correcting. FE BUREAU 8.8 Close Gold ($/troy ounce) 5.994 Previous close: 5.990 `/$ 45.5 9.2 2025P million Source: Technopak SHYAM KUMAR PRASAD Kolkata
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