QBiz: States Seek GST Compensation; Credit Window for Mutual Funds

Your daily lowdown of all the top business news for the day.

Published28 Apr 2020, 03:01 AM IST
India
5 min read

1. States Seek GST Compensation Beyond 2022 to Tide Over COVID-19 Crisis

Opposition-ruled states including Punjab, Kerala and Delhi pitched for extension of goods and services tax compensation to the states for two years beyond 2022 to tide over the crunch they may face in the post-Covid-19 scenario.

State finance ministers, during a video conference on Monday, also discussed issues arising out of the lockdown, including the urgent requirement of some form of aid for micro, small and medium enterprises, which have been affected the most, besides relief for the services sector.

(Source: The Economic Times)

2. Crisil Downgrades India Growth Forecast by Half to 1.8%

Domestic rating agency CrisilNSE -1.68 % said on Monday nearly halved its GDP forecast for India to 1.8 per cent for 2020-21 while projecting total losses of Rs 10 lakh crore or Rs 7,000 per person due to "disastrous" lockdowns to control COVID-19 pandemic. The agency, which blamed the government response to the crisis to being measured and asked it to drastically up the support, had a GDP growth estimate of 6 per cent for FY2021, which was last revised to 3.5 per cent in late March.

Another rating agency India Ratings and Research (Ind-Ra) has also revised the FY2021 economic growth forecast for the country further down to 1.9 per cent, the lowest in the last 29 years.

3. Govt Considers Proposal to Guarantee Rs 3 Lakh Crore of Small-business Loans: Report

India is considering a proposal to guarantee as much as 3 trillion rupees ($39 billion) of bank loans to small businesses as part of a plan to restart Asia’s third-largest economy reeling under the impact of a 40-day lockdown, people with knowledge of the matter said.

Under the proposal, small businesses will be eligible for an additional 20% of their outstanding credit limit, which will be fully backed by Prime Minister Narendra Modi’s administration, the people said, asking not to be identified as the discussions are private. The loans will be extended by banks, financial institutions and shadow lenders, the people said. The government will set up a special fund to pay for any defaults, the people said.

(Source: Livemint)

4. Meeting Fiscal Deficit Target of 3.5% to be Very Challenging: RBI Governor Shaktikanta Das

The Reserve Bank of India (RBI) has not yet taken a view on monetising the Budget deficit, which is set to surge due to government’s ongoing fight against the Covid-19 pandemic, governor Shaktikanta Das said. Das told news agency Cogencis in an interview, whose transcript was released by RBI on Monday, that going beyond the 3.5% target for fiscal deficit for the current year becomes “unavoidable”

“Fiscal measures are important and the government is working on a package of measures. I expect that the government will take a judicious and balanced call on the question of fiscal deficit, while addressing the Covid-19 challenges.”

(Source: Financial Express)

5. SEBI Reduces Broker Turnover Fees, Filing Charges for Draft Papers

In order to help market participants, tide over the current situation due to COVID, the Securities and Exchange Board of India announced a reduction in broker turnover fees. At the same time, the market regulator also announced reduction in filing fees on offer documents for public issues, rights issues and buyback of shares.

Sebi in its circular on Monday stated that benefits of reduction in broker turnover fees will automatically be passed to the investors as well. The broker turnover fee will be reduced to 50% of the existing fee structure for the period June 2020 to March 2021.

(Source: Financial Express)

6. PhonePe Raises Rs 214 Crore in Fresh Funding From Singapore Parent

PhonePe has received $28 million (Rs 214 crore) in fresh capital from its Singapore parent, according to the company’s RoC filings. In February, the Walmart-controlled digital payments firm had received about $60 million (nearly Rs 430 crore) from the entity. Founded in 2015 by Sameer Nigam, Rahul Chari and Burzin Engineer, PhonePe was acquired by Flipkart in 2016. It is the first payments app to be built on United Payments Interface (UPI). PhonePe, which competes with others like Amazon Pay, Google Pay and Paytm, claims to have more than 8 million merchants across 215 cities.

PhonePe had received Rs 585.66 crore in fresh capital from its Singapore parent in December 2019. In July 2019, the Singapore-based entity injected Rs 697.91 crore into the Flipkart-owned digital payments firm, which was preceded by an infusion of Rs 743.6 crore earlier in the year.

(Source: Financial Express)

7. COVID-19 Lockdown: With No Reimbursement, Get Ready to Pay More Tax

The salary structure of employees may have many components, like salary, allowances, perquisite, reimbursement etc. In fact, reimbursement is an expense incurred solely in performance of duties and no benefit can be derived by the employee out of the expense made by the employer. For example, paying an amount to an employee, who had spent the amount for hiring a car to perform an official duty, is treated as reimbursement.

So, reimbursement is paying back an employee the amount he/she has already spent for performing an official duty and cannot be treated as an allowance or perquisite in the hands of the employee and hence is not a taxable income.

(Source: Financial Express)

8. RBI’s Credit Window for Mutual Funds Calms Market

While the Reserve Bank of India’s Rs 50,000-crore special line of liquidity for mutual funds (MFs) calmed the markets on Monday, experts believe there could be some redemptions by investors from debt schemes.

RBI announced the exclusive facility following the nervousness in the markets and apprehensions of large redemptions on Friday after Franklin Templeton wound down six debt schemes late on Thursday.

Experts, however, pointed out the RBI’s special window would not necessarily convince banks to buy illiquid paper from mutual funds. Ananth Narayan, professor-finance at SPJIMR told FE that, at best, it would help provide funding for mutual funds via banks against good quality paper. “Banks are likely to remain averse to credit risk in these uncertain times. Effectively the credit transmission has broken down due to risk aversion and hence liquidity itself will not solve the issue, “Narayan observed.

(Source: Financial Express)

9. Panic Buying of Drugs Down Since Mid-April

Panic buying of medicines appears to be on the wane, with wider availability of drugs now. Medicine purchases surged after the lockdown was announced last month as customers anticipated shortages.

However, buying has been on the decline since mid-April, according to data from AIOCD AWACS, a market research firm formed by the All Indian Origin Chemists & Distributors.

Sales of anti-infective medicines in the April 1-22 period eased to 62% from levels seen from March 1 to 22. While sales of antidiabetes drugs touched 106% of the March 1-22 levels in this period, during April 16-22 they dropped to 83% from levels in the corresponding week in March

(Source: Economic Times)

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