Goods And Service Tax Collections Top ₹1,65,000 Crore

On today’s episode, financial journalist Govindraj Ethiraj talks to Dinesh Kanabar, founder & CEO of tax firm Dhruva Advisors as well as Gautam Chikermane Vice President at Observer Research Foundation.

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Our Top Reports For Today

• <00:51> GST Collections top Rs 165,000 crore, will this momentum hold? with Dinesh Kanabar
• <09:55> Gold demand set to slip this year as do Indian markets, on August 1
• <10:52> A new bill aims to decriminalise draconian laws that hurt business. Is it enough? with Gautam Chikermane
• <19:45> Another airline gets set to fly international

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TRANSCRIPT

NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

GST Collections Rise Above 165,000 Crore Mark

India’s gross Goods and Services Tax collections grew 11% in July, touching Rs 1,65,105 crore, according to government data released on Tuesday.

The country has been seeing collections above the Rs 150,000 crore mark since February 2023 and this is the fifth time collections have been over Rs 1.6 lakh crore since the inception of the GST in 2017. The average GST collection in the first quarter of FY24 was over 1.61 lakh crore.

The highest ever collection was recorded in April for transactions in March 2023, when the gross GST revenue stood at Rs 1.87 lakh crore.

Maharashtra, the state of which Mumbai is the capital where this podcast comes from, saw an 18% annual growth to Rs 26,064 crore. Karnataka registered the second-highest state revenues at Rs 11,505 crore in collections (17% year-on-year growth), followed by Gujarat at Rs 9787 crore (7% year-on-year growth).

To get a sense on how to see the overall GST numbers in terms of trend and trajectory, I reached out to Dinesh Kanabar, founder & CEO of tax firm Dhruva Advisors and began by asking him how he was seeing the high GST numbers.

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I also asked Dinesh Kanabar what he felt about the individual tax returns that closed on Monday or the night of July 31.

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Speaking of collections, the Reserve Bank of India (RBI) said on Tuesday 88% of the highest denomination Rs 2000 currency notes – worth Rs 3.14 trillion or Rs 340,000 crores ($38.17 billion) – have been returned since its decision to demonetise and withdraw them from circulation.

In case you forgot, though I am sure you did not, the RBI in May sprung an announcement to withdraw these high-value notes, permitting their exchange or deposit until Sept. 30. That is roughly 60 days from now in case you were still holding some of these notes.

The total value of 2000-rupee notes in circulation was down to 3.56 trillion rupees as of May 19 from 3.62 trillion rupees as on Mar. 31 – the end of the last fiscal year – the central bank said in a statement.

Currently, 420 billion rupees worth of these notes are in circulation, it said.

Data collected from major banks indicate that about 87% of the banknotes received by lenders was in the form of deposits, while around 13% had been exchanged for other denominations, the RBI said.

The 2000-rupee notes were introduced in 2016 after the big demonetisation move then.

Other data points to quickly pick up on..

India's manufacturing sector activity continued to expand in July compared to June, although the S&P Global Purchasing Managers' Index (PMI) edged down marginally to 57.7, data released on August 1 showed.

The manufacturing PMI stood at 57.8 in June. The number to focus on or the gauge of manufacturing sector activity which in July is above the key level of 50 - which separates expansion in activity from contraction - for the 25th month in a row.

"The Indian manufacturing sector showed little sign of losing growth momentum in July as production lines continued to motor on the back of strong new order growth," said Andrew Harker, Economics Director at S&P Global Market Intelligence as quoted by news reports.

"All in all, the Indian manufacturing sector has maintained its position as one of the star performers globally, bucking the trend of demand weakness seen in other parts of the world," Harker added.

Manufacturing is up but demand for gold is down.

India's gold demand in 2023 could fall 10% from a year ago to their lowest in three years to 700 tonnes, as record high prices are dampening retail purchases, the World Gold Council (WGC) said on Tuesday. Demand was 774 metric tons a year ago. The WGC said.

Indian gold consumption in the April-June quarter fell 7% to 158 metric tons, Reuters reported. Gold hit a record high of 61,845 rupees per 10 grams in the quarter, the WGC said.

The markets were down too, on the first day of the month of August. The S&P BSE Sensex closed 68 points lower at 66,459 while the NSE Nifty 50 declined 20 points to end at 19,733.55.

Doing Business & Going To Jail

The Indian Post Office Act of 1898 originally extended to all of British India, Upper Burma, British Baluchistan, Santhan Parganass and Pargana of Spiti.

The good news is that offences under this very act have been now removed, under a bill passed last week, which is 2023, just 125 years later.

There are of course many more such laws and punishments floating around in the deepest recesses of Indian law books, many dating back as far as well..

Of the 1,536 laws that govern doing business in India, more than half carry imprisonment clauses. Of the 69,233 compliances that businesses have to follow, roughly 38% (or almost two out of every five) carry imprisonment clauses. More than half the clauses requiring imprisonment carry a sentence of at least one year.

Arrests and jail are not common or likely in many of these cases but the prospect of it or the power to do so obviously spurs corruption.

The Lok Sabha or India’s lower house of parliament last week passed the Jan Vishwas bill last week with six amendments recommended by a joint parliamentary committee.

The Jan Vishwas which loosely translated is people’s trust aims to promote ease of doing business and ease of living.

Ease of doing business is something the present Government has put much energy into to address, for businesses large and small.

There has been some question about delivering on the promises of course.

Now, this bill proposes to amend some 183 provisions to be decriminalised in 42 Central Acts administered by 19 ministries and departments.

Piyush Goyal, the minister of commerce and industry, said in Parliament that as many as 40,000 provisions and procedures, that can potentially impact the people, have been either removed or simplified by the government in the past 9 years.

The bill was first tabled in Parliament on December 22, last year.

Through the bill, the government has converted several fines into penalties in some provisions. The bill has also removed imprisonment and fine in some provisions. In certain provisions, the bill has removed imprisonment and retained fines.

In a few provisions, while the fine has been enhanced, imprisonment has been removed. The compounding of offences is proposed to be introduced in a few provisions.

One area that has already seen some pushback is offences relating to misbranded or not of standard quality drugs. The Bill converts all these into compoundable offences, meaning that the accused can escape jail time upon payment of a fine of Rs 5 lakh.

"The nature of the penal consequence of an offence committed should be commensurate with the seriousness of the offence. This bill establishes a balance between the severity of the offence/violation committed and the gravity of the prescribed punishment. The proposed amendments ensure the adherence to the law by businesses and citizens, without losing the rigour of the law," the Government has said.

To understand whether this bill in its present form is a good first move and how far we still have to go, I reached out to Gautam Chikermane Vice President at Observer Research Foundation who authored a paper on this subject titled Jailed For Doing Business last year alongwith Rishi Agrawal is Co-founder and CEO of TeamLease RegTech.

I began by asking Gautam what he thought of this bill.

The Movie Conundrum

Box offices are feeling pressure world over and now in India. We spoke last week of how the Hollywood pipeline is drying up because of stories by writers and actors there while the Bollywood pipeline does not look set to deliver any high value hits this year.

Life after Oppenheimer, Mission Impossible and Barbie looks a little quiet, it appears.

Multiplex chain PVR Inox on Tuesday reported a consolidated net loss of Rs 82 crore for the quarter ended June 30 versus a net profit of Rs 53 crore in the corresponding quarter of the previous financial year.

This is despite a 11% increase in patrons visiting the cinemas at around 34 million, slightly higher average ticket price at Rs 246 and a 9% higher F&B spend at Rs 130.

So revenue from operations were up 32% to Rs 1,304.90 crore year-on-year and yet losses, primarily thanks to a sharp rise in expenses at Rs 1,437.70 crore versus Rs 917 crore in the year ago period.

And before I go, aviation news in the form of another international airline from India getting set to take fly overseas.

New kid on the block Akasa Air has brought in its 20th aircraft, fulfilling the mandate of the National Civil Aviation Policy 2016, which requires an airline to have 20 aircraft in its fleet to be able to start international operations.

Akasa has 19 aircraft in its fleet and has placed an order for 76 aircraft, of which 23 are the MAX-8 while the other 53 would be the B737-8-200, reports said. Akasa’s 737-8-200 will be the first such model in India.

That’s it from me for today. Have a great day ahead and see you tomorrow.

And do write in to us.