Corporate and Professional Updates on 3rd April 2019

Indirect Tax Updates:

• The financial year 2018-19 ended on a happy note on the goods and services tax front. At Rs 1.06 trillion, the government has announced the highest monthly collection from GST in March since its roll-out 21 months ago. This is the fourth time in FY19 that the monthly GST collection has crossed the Rs 1-trillion mark, meeting the target. With this, the total GST collected during the year has touched Rs 11.77 trillion, still nearly Rs 75,000 crore short of the initial annual expectation.
• Even so, the GST mop-up, together with the direct tax collection of Rs 11.5 trillion, may somewhat ease the government’s worry about a steep tax shortfall for now. Analysts said the latest numbers would help the government move closer to the fiscal deficit target of 3.4 per cent of the country’s gross domestic product set for FY19. “The monthly average of GST revenue during FY19 is Rs 98,114 crore, which is 9.2 per cent higher than 2017-18. These figures indicate that the revenue growth has been picking up in recent months, despite various rate rationalisation measures..
• The total GST collections in March were up 16 per cent from the corresponding period last year. Of that, the central GST (CGST) stood at Rs 20,353 crore, while state GST (SGST), and integrated GST (IGST) were pegged at Rs 27,520 crore and Rs 50,418 crore, respectively. The collection from cess was Rs 8,286 crore. chart “The major reasons for the growth could be reconciliations by businesses of outward and inward supplies, intelligent data analytics, related tax leakage detections, and consequent GST payment by businesses.
• The CGST for the financial year adds up to Rs 4.6 trillion, against the revised target of Rs 5.04 trillion, leading to a shortfall of nearly Rs 45,000 crore. However, the amount collected as GST compensation cess which is left unutilised and is yet to be distributed to states is likely to be adequate enough to meet the shortfall, finance ministry officials said. This amount, they said, has helped the central government meet its revised GST target. The compensation cess is distributed among the states every two months, beginning May. The unutilised cess stands at around Rs 40,000 crore for the fiscal.

RBI Updates:

• The Reserve Bank of India (RBI) has made life a little easier for banks by tweaking the rule on bad-loan divergence disclosures. Banks’ disclosure of divergences, mandated by the RBI, aims at improving the transparency in asset classification and preventing under-reporting of bad loans. The central bank on Monday appears to have diluted the rule a bit without compromising the intent. “Some banks, on account of low or negative net profit, are required to disclose small divergences, which is contrary to the regulatory intent that only material divergences be disclosed.
• It told banks to disclose divergences when the additional provisioning for bad loans assessed by the RBI exceeds 10% of the reported profit before  provisions and contingencies for the reference period, instead of the earlier rule of 15% of the published net profits after tax.
• There was no change in the second condition: That additional gross NPAs identified by RBI exceed 15% of the published incremental gross NPAs for the reference period. “This is clearly in line with substance over form. Some of the state-run banks were needed to report even minor non-material differences, primarily because they were making losses or hardly making profit on account of large provisioning pressure. This could have led to conflicting signals to the market.

SEBI Updates:

• The Securities and Exchange Board of India has proposed a self-regulatory body for distributors and advisors of mutual funds products. The regulator said the distributors of mutual fund products and investment advisers are becoming important players in the market and growing in number.  There are about 1.24 lakh distributors of mutual fund products as on February 28, 2019 and 1,136 investment advisers registered with SEBI as on March 19, 2019. “Therefore, their direct supervision by SEBI would be challenging. Hence, some form of a first-level regulator is required to have an oversight on them.
• SEBI has stated in a discussion paper on Monday seeking public comments by April 21, 2019. “Further, the same may be extended to such other intermediaries or other market participants as may be notified by SEBI from time to time.” The regulator has sought feedback on whether there should be single or different SROs for different classes of regulatees and on enhancing the net worth of SROs from the existing? 1 crore. At present, asset management companies are responsible for the conduct of the distributors empanelled by it. But, there are diverse practices in the industry regarding the relationships between the asset management company and the distributor. Besides, a distributor is empanelled with multiple asset management companies

Other Updates:

• Legal fraternity divided over SC order on NPA circular
• ‘Precarious’ global rebound expected in late 2019: IMF
• Jet grounds 15 more planes over non-payment of dues
• Banks can now refer defaulters to NCLT: Bankers
• BlackRock begins its biggest organisational overhaul in years
• Britain to seek further delay to Brexit: Theresa May
• SC order on RBI circular negative for banks, may defer debt resolution
• Rel Jio transfers fibre and tower infrastructure to InvITs
• Manufacturing growth slips to six-month low in March: PMI
• RBI to introduce new seven-year and 20-yr bonds on April 5
• S&P Global Ratings revises outlook on Tata Steel to positive from stable
• Paytm Money receives Sebi approval to start stock broking services.
• Infosys says Kiran Mazumdar-Shaw sold 1,600 Shares without pre-clearance.
• Naresh Goyal agrees to step down as Chairman of Jet Airways.
• Iran buys Indian sugar to ease its oil-money headache.
• LG India aims for 30% Growth in commercial ACs this year.
• NIIF, CDC & Eversource Capital to invest $330 mn in Ayana.
• Lupin launches chronic angina treatment drug in the US.
• Future Group to bring 7-Eleven Stores to India.
• Cabinet clears ₹10,000 Crore FAME II scheme.
• RBI constitutes task force under Usha Thorat on offshore rupee markets.
• REC Board approves borrowing limit hike,₹11 Per Share Interim Dividend.
• J&J allowed resuming Baby Talc Production.
• Fraud-hit PNB ranks highest in implementation of ‘Reforms Agenda’ in 2018.

Key Due dates:

• ITC in respect of the invoices issued during 2017-18   may be availed till the due date of GSTR 3B for the month of March 2019.
• The Due Date of GSTR-3B for the month of March 2019 is 20^th April 2019.