Indian’s New Taxation Policy- GST

Since the India’s economy began to be opened up 25 years ago, the GST (Goods & Services Tax) is the biggest reform now converting into a big reality. Today the constitution (122nd) Amendment Bill has come up in Rajya Sabha, on the back of a board political consensus and boosted by the Good Wishes of the congress, which hold the crucial cards on its passage.

Let’s take an example to study the GST, its working and what are the effects of GST after parliament passes the Bill.

In the GST regime-

STEP-1 (Manufacturer)

Consider a manufacturer of shoes; he buys a raw material or input- sole, insole Board, chemical & stiffener sheet, non-woven, PU and PVC, synthetic leather, etc. worth Rs 1000, a sum that includes a tax of Rs 100 on the raw material of these shoes.

To the process of creating the shoes, the manufacture adds value to the materials he started with out with. Let’s take this value of Rs 300. Now the gross value of goods is 1000+300= 1300, the tax Rate of 10%, the tax on output will then be Rs 130 but under the GST, he can set off this tax (Rs130) against the tax he has already paid on raw material (Rs100) therefore, the effective GST incidence on the manufacture is only Rs 30 (Rs130-100).

STEP-2 (Wholesaler)

Now the goods come to the Wholesaler in bulk, he purchases it for Rs 1300 and add on value (margin) of Say Rs 200 now the gross value of gold is Rs 1300+200=Rs1500. and a tax of 10% amount will be Rs 150. But again under GST he can set off the tax on his output (Rs150) against the tax on his purchased food from the manufacturer (Rs 130) thus, the effective GST incidence on the wholesaler is only Rs 20 (Rs150-130).

STEP-3 (Retailer)

It is the final stage; a retailer buys a shoe from the wholesaler. To his purchase price of Rs 1500, he added his value (margin) of Rs 100 now the gross value of goods is 1500+100=Rs 1600.on the 10% tax will apply on the Rs 1600 is 160. But by the setting of the tax (160) against the tax on his purchase from the wholesaler (Rs 150) the retailer brings down the effective GST incidence on himself to Rs 10 (Rs160-150)
Now the total GST from the above Chian is Rs 100+30+20+10= Rs 160.

NON-GST regime-

The non-GST system is a cascading burden of TAX ON TAX here no set-offs fro taxes paid on input or on previous purchase. Let’s take the same example we took above
The MANUFACTURER buys the raw material at Rs1000 after paying Tax of Rs 100, the gross value of food is now 1300 on which he pays a tax of Rs 130. But here, is now set off value against Rs 100 so sold the good at Rs 1430 (Rs 1300+130).

Now the WHOLESALER adds value of Rs200 on now the gross value is Rs 1630, and a tax of 10% will increase it up to Rs 1793.
Now the RETAILER buys the good on Rs 1793 and convert its gross value of Rs 2082.3 which include Rs 100 and a tax of Rs 189.3.
So the non-GST regime total tax includes Rs (100+130+163+189.3=582.3)
And finally consumer got better on Rs1500+582. 3= Rs 2082.3
Compare this tax RS 2082.3 with the tax of Rs 582.3 so the final price of Rs 2664.6 includes the tax of Rs 160 under the GST.

WHAT HAPPEN IF GST APLLY IN INDIA AND IT WILL REPLACE THESE-

l Central excise duty.

l Duties of excise (medical and toilet).

l Additional duties of exercise (goods of special importance, textile and its products and CVD).

l Special additional duty of custom

l Service tax

l Cases and surcharges in so far as they relate to supply of goods or services.

GST WILL SUBSUME STATE TAXES-

  • State VAT
  • Central sales TAX
  • Purchase TAX
  • Luxury TAX
  • Entertainment TAX
  • TAXES on advertisements
  • TAXES on lotteries, betting and gambling.

TAX GAINS

l BIGGEST BENEFIT is that it will disincentives tax evasion. If you don’t pay tax on what you sell, you don’t get credit for taxes on your inputs. Also, you will buy only from those who have already paid taxes on what they are supplying. Result: a lot of currently underground transactions will come overground.

l LOWER TAX RATES will follow from GST covering all goods and services, with tax only on value addition and set-offs against taxes on inputs/previous purchases. Right now, we have more tax on fewer items; with GST, there will be less tax on more items. Ideally, no good or service should be tax-exempt, as this will break the input tax chain.

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Gains 2% On USFDA Approval – Alembic Pharma

On Thursday Alembic Pharmaceuticals shares it gained 2% Intraday and it received USFDA (United States Food & Drug Administration) approval.The company also received approval from the USFDA for the abbreviated New Drug Application for the Amantadine Hydrochloride capsules USP 100 mg.
The ANDA approval is equivalent to the reference or the listed drug product Symmetrel capsules 100 mg. The capsules are indicated in the treatment of parkinsonism and drug induced extrapyramidal reactions.
The total approval is 58 ANDA from the USFDA. The market size of USD 37 million for the 2 months from the ending December 2016.
The company also received approval on June 21 from USFDA for Candesartan Cilexetil Tablet 32mg. Alembic Pharmaceuticals was quoting at Rs. 541 up to Rs. 9.10 or 1.71% on the BSE.
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Amtek Auto Was Buzzing Stock

In Wednesday Amtek Auto was the buzzing stock during the morning and it is trading higher by 9.96% at Rs 28.15/share. Media reports say that big players are planning to buy stakes in the company.
The national news agency reported that around 21 investors are willing to buy stakes in the debt-ridden Amtek Auto some are Bain Capital, TPG Capital, DA Capital and Piramal Enterprises.
The company’s founder Arvind sham and his Family hold 52.4% stake in the company and promoters have one of the options is a stake sale to get rid of huge Rs 13,0000 car debt.
On Wednesday the Nifty and Sensex was trading in negative territory, in which Nifty is down by 30 points and 45 points by Sensex mainly on the back of MSCI’s decision to include some large cap Chinese stock in its flagship emerging market index.
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Infosys’ loss High Level Of Executive Of US

Sandeep Dadlani, the recent high level executive of Infosys is quiet and will join as a Chief Digital Officer of Snickers chocolate bars.
He was the head of Americans and Global Head of Retail, CPG, Manufacturing and Logistics, will be responsible for working with Mars’ global business segments. Mars said in a statement about Dadlani will retire on 1 September 2017, he succeeds Chief Information Officer Vittorio Cretella.
The deadline will join to Mars’ New Jersey offices, and report into Angela Mangiapane, president, Mars Global Services, and Claus Aagaard, chief Financial Officer.
Mars CEO and president further added in his statement that Digital is changing the way of their customer and consumers’ experiences with their product and services. Every day the company faces new expectation, competition, distribution channels and opportunities.
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Indian Equity Market Is Trade On A Flat To Positive Note

On Tuesday Morning the Indian Equity Market is traded in a flat to positive note- marginally in the green. At 11 Am the Nifty of NSE is trading at 9,666.20 points which is up by 8.65 points or 0.09%.
The Sensex of BSE is opened at 31,392.53 points, which is traded at 31,349.71 points up 38.14 points or 0.12% against a previous close of 31,311.57 points. The Sensex reached as high of 31,392.53 points and a low of 31,318.87 points and had a bullish market with 1,143 advances and 1,069 declines.
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Key Indian Equity Indices Open Higher

On Monday the key Indian Equity indices in the morning session the trading was higher. The trading was 134.34 points in the 30-scrip Sensitive Index and the 0.43%, which was higher soon after the opening.
The Nifty of the National Stock Exchange, which was 0.40% higher in the 9,626.85 points and traded at 38.80 points.The Sensex of the BSE, which was opened at 31,168.98 points and traded at 31,190.74 higher and the previous day close was at 0.43% at 31,056.40 points.The Sensex touched high 31,202.63 points and low at 31,163.35 points.
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Telecom Stocks Were In Green Zone

Major telecom sectors stocks gain on Monday morning, telecom index was trading higher by 1.37% at Rs 379.95/ share in which Bharti Infratel was the top gainer in BSE. More than 1% at Rs814/share were trading by Vindhya telelinks Limited. By volume Reliance Communication was the most active telecom stocks.
As per the TRAI (Telecom Regulatory Authority of India) monthly report says, Bharti Airtel adds 21 lakh, Aircel adds 1.7 lakh, idea cellular adds 1.9 lakh and reliance Jio adds 11.2 Cr subscriptions.
On April 1,198.89 millions telecom subscriber base in the country, because of new customers added by Reliance Jio its growth continued to downward trend in the market.
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Reduces Bike Prices – Bajaj Auto

On Wednesday Bajaj Auto two wheeler or three wheeler said that it has reduce the prices of the bikes up by Rs.4,500 and he wants to give advantages to its customers in order to pass on the expected GST.
The company said that in which state the motorcycle is purchased it will depend on the model and the saving will range up to RS.4,500.The post-GST will give give benefits according to the states and differ motorcycle models.
Eric Vias, President, Motorcycle Business, Bajaj Auto said that GST implementation and it will be useful for the customers on their savings.
From July 1, 350 cc engines of the motorcycle or more than that which attract a 28.84% tax, and the high end luxury cars a tax of 32.2%.
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At Days Low – Bank Nifty

Intra-day low of the Bank Nifty has touched is 23394 level down and its points is 104. In the Index trading The Punjab National Bank is the top loser it is lower by 2.71% at the Rs.148.7 per share.
On Wednesday trading it is on the bourses and on the Thursday the stock gain onthat day of the trading session. Some of the banks like Canara Bank, Vijaya Bank, Bank of Baroda and the Dena Bank they were losing sheen on Thursday in the morning hours.
On Thursday the bank were down like Canara Bank-1.03%, Dena Bank – 1.5%, Vijaya Bank – 0.18%, Bank of Baroda – 1.16%.Nifty PSU Bank and Nifty private Bank they were down by 0.66% and 0.41%.
Bank Nifty on 15 June 23,500 CE PE witnessed and gave the maximum addition in their open interest.

 

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Revise Norms On Commodity options – SEBI

The Securities and Exchange Board Of India (SEBI) has introduced new rules for the commodity options. It would allow one commodity option per exchange on a pilot basis.
Exchanges would be submitted at the proposal for the product they wish to launch. The agricultural commodity it would be based on the average turnover of Rs.200 crore.
These commodities were in the top five exchanges daily turnovers.

These rules, which should be allowed for the settlements of the options by the physical delivery or by cash. After the changes in the rules, commodity exchanges which should introduce options and had future contracts were underlying. It is also introduced that the option contracts that would be converted to the fitter on the day of expiry.

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