BREXIT: How Will It Affect India?

BREXIT: How Will It Affect India?

The United Kingdom has held the referendum for whether to remain in or leave the 28-nation European Union (EU) on 23rd June, 2016 i.e. today; the event which is termed as the most important global event of the year and is expected to have profound implications for various economies across the world. Let us have a look at the IMPACT it would have on the Indian economy:

According to the Commerce and Industry Ministry, India’s bilateral trade with Britain stood at $14.02 Billion in 2015-16 ($8.83 Billion in exports and $5.19 Billion in imports). Thus, the trade balance was a positive $3.64 Billion. This would be affected as a possible Brexit is estimated to shrink Britain’s GDP by 360 basis points in the next two years, shrink the employment rate by 160 basis points and the pound by around 15-20%.

There are around 800 NRI owned businesses in the UK with close to 110,000 employees. Also, India invests more in UK than the rest of the Europe combined; the key factor for this investment being the free cross border access to the European markets from one of its best economies as of date. Brexit ceases them of this privilege bearing a cloud of uncertainty on future investments.

In case of a Brexit, India will not be spared of the collateral damage that it would trigger, especially in the emerging economies, which might witness a selloff, forcing most money managers to shift their exposure to safe haven currencies like the dollar and the yen, and even gold to some extent. This might push the rupee towards the 70 level, considering a short term horizon. But the positive here is that the Indian forex reserves, which stood at a record high at $363.46 Billion for the week ended 3rd June 2016, has been said to be utilized by the central bank to infuse whatever liquidity that is needed to keep a check on the market.

Lastly, the exports of the Indian IT industry which is currently at around $108 Billion, is expected to be impacted the most, by the Brexit, if it happens. As mentioned above, the pound is expected to fall by around 15-20% in case Britain decides to leave the EU. This will affect the ‘Rupee value’ of the exports made by the IT companies and they will have to bear the brunt of this major currency fluctuation.

In a nutshell, earlier, most of the Indian businesses chose to locate their European offices in the UK, to gain the ease of operating in the UK and avail the benefits of remaining in the EU. Removing this gateway would be undesirable for Indian businesses in the UK, who may then choose to relocate their offices and direct their investment elsewhere in Europe.

This might definitely cause temporary hiccups in the Indian stock market, but the bottom line is, Brexit, whether it happens or not, is not going to change the fundamentals of the companies, and the growth stories that they charted, will be continued upon no matter what happens. As a retail investor, you should look at Brexit, as an opportunity to enter into businesses, which you have yet missed, at comparatively lower valuations, as the markets will definitely bounce back when the dust settles and you can hence enjoy that rally.

Consider the following example that proves that such global events do affect emerging stock markets like India in the short run, but they in turn bounced back over the long haul. The Indian markets witnessed a heavy selloff in August 2015, when China devalued its currency Yuan, which sent shockwaves all across the globe. CNX Nifty, India’s benchmark index fell from the 8300 levels it was trading at as on 21st August, 2015 to 7800 levels in the very next trading session. It further plummeted to 7550 levels in the next couple of weeks, only to bounce back sharply to regain its former 8300 levels in the next two and a half weeks.

Retail investors, every time, tend to give too much importance to global events and forget that it is the companies that form and grow the index, and thereby the economy, and not such global events. As mentioned earlier, events like these should be looked at as an opportunity to BUY quality businesses and NOT SELL in panic and fear. Happy Investing!

BASICS OF HARYANA VAT

In era of competition every client is looking for complete solution under one roof. Many of us think that Haryana VAT is not our cup of tea. But I realized that it can be our cup of tea and it is very easy to deal in Haryana VAT. Here we will try to understand some BASIC practical provisions related to Registration, Return and payment under Haryana VAT:

 

REGISTRATION:

 When a person/dealer is liable to pay tax under the HVAT Act? Or Who is liable for registration under the HVAT Act? :

 

Every dealer liable to pay tax under the HVAT Act is liable for registration under the Act. 

Description of class or classes of person / dealers Taxable Quantum Day on and from which the person/ dealer is liable to pay tax/registration
  1. Who sells or purchases any goods in the course of inter-State trade or commerce or in the course of export of the goods out of or the import of the goods into the territory of India.
NIL On and from the day of first sale or purchase
  1. Who imports any goods into State from other States
NIL On and from the day of import of goods into State for the first time.
  1. Who purchases any goods in the State and exports out of State such goods or the goods manufactured there from.
NIL On and from the day of purchase of such goods by him in the State for the first time.
  1. Who resides outside the State but delivers for sale in the State, supplies or distributes in the State, any goods other than those specified in Schedule B
NIL On and from the day of first supply or distribution in the State
  1. Brick-Kiln Owner
NIL On and from the day his gross turnover in any year first exceeds the taxable quantum
  1. Liquor licensee under the Punjab Excise Act, 1914 ( 1 of 1914)
NIL
  1. Who deals in minerals, lottery tickets
NIL
  1. Any other class or classes of dealers
Rs. 5,00,000 On and from the day following the day his gross turnover in any year first exceeds the taxable quantum.
  1. Voluntary Registration
NIL From the date specified in the registration certificate.

            Note:

  1. Where a dealer is covered under more than one of the class or classes mentioned in the Table above, the liability to pay tax shall commerce from the earliest day he becomes liable to tax.

 

  1. A dealer who deals exclusively in exempted goods is not liable to pay tax under the Haryana VAT Act, 2003.

 

  1. Voluntarily Registration: Any dealer not liable to pay tax under the HVAT Act but who does not deal exclusively in exempted goods can apply for voluntarily registration under the HVAT Act.

 Practical aspects of Registration:


  1. Prescribed forms:

– Form A1 with Annexureà For registration under Haryana VAT (within 15 days from his Becoming liable to pay tax under the HVAT Act)

– Form A3  For registration of casual trader* under Haryana VAT (at least 3 days before Commencing his business in the State)

– Form A  For registration under CST (within 30 days of his becoming liable to pay tax under the Act)

– All application must be filed in online mode from 05/08/2015 onwards.

 

* “Casual Trader” means a dealer who imports into and sells goods in the State for a period NOT exceeding 30 days at a time.

 

  1. Fees For Registration (which is to be paid in appropriate Government treasury or in the form of Court fee stamps):

Fee for Registration under VAT act Rs. 500 (recently increased from Rs. 100 to Rs. 500)

Fee for Registration under CST act Rs. 25

 

  1. Basic Documents required for registration:
  • Latest passport size photos and identity proof* of proprietor/ALL the partners/ Karta/ Chairman, MD, Director or principal officer of the company. (*Voter ID/Passport/Ration Card (with Photo)/Driving License/Bank passbook (with photo)/any other document issued by the government having photo ID).
  • Signed Photo of the business premises on left and right sides to the ascertain its proper location.
  • 2 sureties of Rs. 50,000 each for HVAT registration and CST registration/Bank Guarantee of Rs. 50,000 for each one. The surety should be duly attested by a Gazetted officers/notary public/bank manager.
  • Attested copy of PAN of proprietor/business entity as the case may be.
  • Attested copy of rent deed/title deed as the case may be.
  • First Inter-state purchase bill for CST registration.

 

  1. Online aspect:
  2. Download e registration utility from haryanatax.gov.in
  3. Fill up the utility
  4. Register on haryanatax.gov.in
  5. Submit registration form online
  6. Submit physical copy of Application form along with documents to Local VAT department.

 

Practical aspects of VAT Returns:

 

VAT Return Forms:

 

There are different types of forms for different class of dealers/persons. Some forms are to be filed quarterly and some forms are to be filed annually.

 

The Forms and the due dates for filing returns by different class of dealers/persons are as under:-

Primary VAT return forms

S.No. Form Applicable for Class of dealer/person   Frequency Due Date
1. Form VAT-‘R1’ Registered dealers/persons holding registration certificate or whose application for registration is pending. Quarterly return On or before the last day of the month following the quarter.
2. Form VAT-‘R4’ Food grains procuring agencies who are liable to deduct tax at source under Rule 33(1) Quarterly return On or before the last day of the month following the quarter.
3. Form VAT-‘R4A’ Contractees who are liable to deduct tax at source under Rule 33(2) Quarterly return On or before the last day of the month following the quarter.
4. Form VAT-‘R5’ Casual Trader Within 3 days after closure of business in the State
5. Form VAT-‘R6’ Lumpsum Contractor Quarterly return On or before the last day of the month following the quarter.
6. Form VAT-‘R7’ Lumpsum retailer Quarterly return On or before the last day of the month following the quarter.
7. Form VAT-‘R8’ Lumpsum Bricks Kiln Owner Quarterly return On or before the last day of the month following the quarter.
8. Form VAT-‘R11’ Lumpsum ply board manufacturer Quarterly return On or before the last day of the month following the quarter.
9. Form VAT-‘R12’ Dealers required to file return through notice by the Assessing Authority Quarterly return On or before the last day of the month following the quarter.

Additional compulsory VAT return forms

10. Form VAT-‘R2’(Annual Return) Registered dealers/persons holding registration certificate or whose application for registration is pending. Annually On or before 30th November of the immediately succeeding year.
11. Form VAT-‘R3’(Annual commodity tax return) Registered dealers/persons whose tax liability exceeds Rs. 1,00,000 in the last preceding Financial year. Annually On or before 31st October of the immediately succeeding year.

 

Online aspect:

  1. Download e return utility from haryanatax.gov.in
  2. Fill up the utility
  3. Login on haryanatax.gov.in
  4. Submit return form online
  5. Submit physical signed copy of return within 15 days of filing of return to Local VAT office (if not digitally signed).

 

Practical aspects of payment under HaryanaVAT:

 

  1. A casual trader is required to make payment of tax daily on the sales made during the previous day.

 

  1. Due Dates of payment of tax by the lump sum dealer:

 

S.No Types of Lump sum dealer Due date for payment of tax
1 Brick Kiln Owner Equal quarterly instalments payable in the first 45 days of beginning of the quarter or equal monthly instalments payable on or before the 15th day of each month.
2 Ply-board Manufacturer
3 Works Contractor Quarterly within 30 days following the close of quarter
4 Retailer Quarterly within one month of the close of the quarter

  

  1. Due dates for payment of tax by the dealers other than lumpsum dealers and casual traders

 

S.No Types of Lump sum dealer Due date for payment of tax
1 whose aggregate liability to pay tax under the HVAT Act & CST Act during the preceding year was Rs. 1,00,000 or above Equal monthly installments payable by 15th day of the close of the month
2 Others Equal quarterly installments within the month immediately following the quarter

Note: If last date for payment of tax or any other amount due under the Act is a bank holiday, then the last date for payment of dues under the Act shall be the first banking day following such holiday or consecutive holidays.

 

  1. Online aspect of payment:
    Mode of payment: An assessee can make a payment in 2 way. An assessee can make payment by demand draft in favour of assessing authority (City name). An assessee can also pay electronically.
    Payment by demand draft:

Step 1 : Prepare demand draft in the favour of  Assessing Authority (City name). Please note that there must be different demand draft for VAT payment, CST payment or any other payment.

Step 2 : Prepare online challan through https://egrashry.nic.in/. Open this site. Login through using guest as user id and password both. (Assessee can also make an own login id through sign up). Fill up the challan and select manual in type of payment. Please note down the GRN number reflected on screen for future tracking.

Step 3: Take printout of challan and deposit it to local VAT office along with demand draft. (Please note that if detail of challan is duly filled in VAT return including GRN no., then no need of submission of physical copy of challan. Only demand draft can be submitted.)

Electronically Payment:

Step 1 : Login through https://egrashry.nic.in/. Open this site. Login through using guest as user id and password both. (Assessee can also make an own login id through sign up). Step 2 : Fill up the challan and select e-banking in type of payment. Select any bank. These are only collecting bank list. After proceeding with any bank there are all banks available for payment.

Step 3 : No need to submit physical copy of challan to Haryana VAT office.

 

Regards,

CA Lalit Aggarwal,
Team Connecting CA’s…
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