The GST Council today hiked the threshold limit of the composition scheme that allows small businesses to pay taxes at a lower rate without getting any input tax credits.
Businesses with an annual turnover up to Rs 1 crore can now opt for the scheme, Finance Minister Arun Jaitley told reporters. The earlier threshold limit was Rs 75 lakh. About 15.5 lakh companies with a turnover of less than Rs 1 crore have joined, he said.
The increase in threshold would bring in many more small businesses within its ambit and decrease the compliance burden for various businesses that were previously hit by the lower threshold, said Rashmi Deshpande, associate partner at Khaitan & Co. However, to make the scheme really effective it needs to be liberalised by including all service providers and allowing them to provide inter-state supplies, PwC said in a statement.
The attractiveness of this scheme will come down to whether a big manufacturer is willing to buy from a dealer without getting any credit, said Badri Narayan, lawyer and partner with law firm Lakshmikumaran & Sridharan told BloombergQuint.
One of the problem they still face is that the composition scheme is not working as well as it is supposed to. Partly because businesses want input credit on all of the inputs they're making. The minute you're on a composition scheme you do not get any input credit at all. This is one of the reason why many people have not gone into the composition scheme. It looks attractive on paper. Badri Narayan, Partner, Lakshmikumaran & Sridharan
Under the scheme, traders, manufacturers and restaurant owners have to pay a GST rate of 1 percent, 2 percent and 5 percent of their turnover, respectively. Those who opt for this can file returns quarterly, compared to every month earlier.
The GST Council also allowed other taxpayers with a turnover of up to Rs 1.5 crore to file quarterly returns. A Group of Ministers headed by Bihar Finance Minister Sushil Modi will examine and submit recommendations in two weeks.
The GoM will look into:
- Inter-state supply of goods for those who avail the Composition Scheme.
- Sale of exempted goods by traders availing the Composition Scheme.
- Whether input tax credit can be availed if tax is paid at 2 percent.
Read all the highlights of the GST Council's decisions here .
- Cotton market will show signs of pressure, for at least a short timeframe. Looks like, there is going to be lot of cotton world over. Addressing the 95th Annual General Meeting of Mumbai-based Cotton Association of India, Nayan Mirani stated recently, “cotton prices are likely to witness a depressing trend.” The supply situation will dictate the price, while other factors may also factor into the price situation.
- Even with the losses due to recent hurricanes in the cotton belt of the United States, the size of U.S. crop is expected to be larger. Indian acreage for the current season (October 2017-September 2018) is expected to increase by about 12% compared to last year. Expecting yield to increase by about same percentage points, India will have a bumper crop. If this scenario turns out be correct, there may be a situation that will warrant Indian government to support farmers by kicking in the minimum support price (MSP) operations.
- Among many factors that have led to the increase in Indian acreage, an important aspect has been the shift from cultivating oil seeds and pulses due to lack of good prices for these commodities. There has been a stagnancy in prices of these commodities and government had to apply MSP for these products, stated an Indian market expert. Cotton price is under pressure as the mill demand is not high. To exacerbate this situation in India, a confusion is prevailing with regard to the implementation of GST system. Given that Indian rupee has slightly weakened against U.S. dollar recently, export of goods such as textiles should be on high gear, which really is not the situation on the ground.
- Weather so far has been reasonably good for Indian crop. Major cotton producing regions in Punjab, Haryana, Maharashtra, Rajasthan and Madhya Pradesh have received sufficient rainfall during the flowering season, which should translate into good crop, this season. Buyers are basically in “wait and watch” situation, which is inserting pressure on the cotton market. Hopefully, there will be some stability from January of next year, stated an experienced and reliable source from Mumbai, India.
- The cotton crop output in the country is expected to grow by 5 per cent to 36 million bales in CY 2018. There has been a 12 per cent rise in sown area in CY 2018, driven by firm cotton prices, which made it remunerative for the farmers to choose cotton against competing crops.
- While the cotton-yarn prices were holding firm till August 2017 despite demand-side pressures, those have been corrected by 5 per cent in September 2017 due to sustained demand-side pressures and in anticipation of softening cotton prices, said the rating agency.
- "However, with further correction in cotton prices expected with the commencement of harvest season in October 2017 onwards, we expect the spinners profitability to improve during the second half of the current financial year.
- In a belated move, the Gujarat government on Wednesday announced a new textile policy in order to attract cotton textile entrepreneurs to Gujarat. Once considered Manchester of India, Gujarat today accounts for 7 per cent of cotton textile manufacturing capacity of the country, though it produces 35 per cent of raw cotton. "About 90 per cent of raw cotton produced in the state goes out of the state," said state industries minister Saurabh Patel.
- Blaming the Centre for 'lack of any consistency' in textile policy, the minister said, "Gujarat's textile policy will protect the state's farmers from the Centre's anti-farmer and anti-cotton-export policy, as a result of which the farmers fail to get the required price." He said that the farmers will be allowed to continue exporting their produce, like before, to get a better price.
- The state government also plans to have dozen-odd cotton textile clusters around cotton-growing areas, especially in Ahmedabad and Surendranagar districts. According to an official calculation, the total subsidy as a result of the new policy will be to the tune of Rs 2,700 crore.
- "We will provide interest subsidy for value-addition chain from ginning to spinning, weaving, processing, garment manufacturing and technology upgrades," Patel said. "Power tariff concession will be given for new cotton spinning and weaving units and financial assistance will be extended to skill-development centres." The minister added, "The new textile policy will also increase the state's revenue and growth rate and give impetus to the textile industry." It will create fresh employment opportunities for over 25 lakh people in the next five years, he said. But he evaded questions on why the state government failed to attract investment in the textile sector over the past ten years. "It is not necessary for me to answer all the questions," he said.
- A land lease agreement was signed by an Indian company with Sohar Freezone to build a $300 million cotton yarn plant within the free zone area.
- The project, which will manufacture a wide range of cotton yarn and it is going to be the first major cotton yarn plant in the region, will be operated as SV Pittie Sohar Textile FZC LLC, which is a wholly-owned subsidiary of Bombay Stock Exchange listed SVP Global Ventures Ltd.
- Sultan Bin Salim Bin Said Al Habsi, Chairman of Sohar Port and Freezone, led a high-level delegation from Oman to Jaipur, on Saturday. They met with ShriVallabh Pittie Group (SVP), one of the largest manufacturers of cotton yarn in India and a global leader in the sector.
- The facility will eventually provide over 1,500 jobs and is expected to start commercial operations in late 2019.
- Abdullah Humaid Al Mamary, Chairman of Bank Sohar, together with Acting-CEO Sasi Kumar and other senior officials from the bank, were also part of the delegation.
- Bank Sohar has been awarded the syndication mandate to fund the entire project in two phases. An agreement to this effect was entered into with SVP Group. The bank has currently underwritten phase-one debt, to achieve financial closure. On successful completion of phase-one, the bank plans to syndicate a term debt for phase-two, along with a share of phase-one debt, to interested lenders.
- “We are honoured to be the finance partner for a project of this magnitude that is expected to have a significant impact on the development of the region. It demonstrates our commitment to collaborate as a one-stop financial services provider catering to the diverse needs of individuals and large corporate customers,” said Sasi Kumar.
- The plant will import 100,000 metric tonnes of cotton fibre annually through Sohar Port, with around 50 per cent coming from the United States and the remainder split between Australia and India. The plant will produce around 75,000 tonnes of finished yarn each year, which will be exported back through the Port to China and other global markets including Bangladesh, Pakistan, Vietnam, Portugal and Turkey.
- “With over two-hundred years experience in the textile business, our company has a highly skilled and experienced management team with a strong focus on automation and technology. We source best-in-class machinery from leading global companies to ensure the highest levels of productivity and efficiency,” said Chirag Pittie, SVP Group’s Managing Director.
- The new SVP facility will be the first step in establishing a fully-fledged textile cluster in Sohar Freezone. Downstream investments in knitting, weaving, spinning and fabric manufacturing could create a thriving industrial cluster providing thousands of new jobs for local households.
- “Today’s agreements showcase the great things we can offer to investors in Sohar Freezone: the safest haven in the Middle East for foreign direct investment combined with high levels of government support; project financing with an Omani bank; 100 per cent foreign ownership; our optimal location and seamless connectivity to key global markets through our adjacent port; highly competitive land and energy rates; and a young, well educated local workforce. Taken together, this is a sure fire recipe for business success,” said Jamal Aziz, CEO of Sohar Freezone.
- AICC Chief Executive Officer, Dr Felix Lombe said despite being the country’s number four forex earner, cotton has over the years experienced low production levels hence the need for government and private sector intervention.
- “The number of ginning companies has declined significantly from twelve in 2014 to less than six in 2016 due to among others low volume of cotton produced. Increasing production of cotton means that more ginners will be on the market to buy and gin cotton which will in turn create more jobs,” he said.
- Lombe observed that other value added activities for cotton such as spinning, weaving, knitting and garment manufacturing have also shrunk in the last decade.
- “Currently, Mapeto David Whitehead and Sons is the only spinning company in the country at the moment and utilize less than five percent of the lint produced domestically,” he said adding the country produced less than 15,000 metric tonnes of seed cotton in 2016.
- According to Lombe, by increasing cotton production to over 50,000 metric tonnes a year, the country will be able to produce edible oil than import crude oil to supplement domestic cotton seed and again, exporting jobs and draining the much needed forex.
- Government, during the late Professor Bingu wa Mutharika reign, injected K1.6 billion which resulted in 100,000 metric tonnes of cotton produced the following year and since then, there has not been any meaningful government support towards inputs.
- He said his organisation is therefore proposing an injection of US$ 4.8 million US Dollars by the government which will be out into a cotton fund.
- Lombe pointed out, “It is expected that the injection towards the input fund would rejuvenate the sector by generating US$ 60.5 million in exports, US$26.5 million annually accruing to smallholder farmers and over US$50 million accruing to various players engaged in value added services.”
- AICC is implementing programmes in the agriculture, governance and health sectors in the country.
- The Board of Pakistan Central Cotton Committee (PCCC) here on Friday approved Rs 690.65 million budget for the financial year 2017-18 in order to meet the financial requirements of the Committee.
- The 85th meeting of the PCCC held here with Minister for Commerce and Textile Industry Muhammad Pervaiz Malik in the chair to discuss the matters of committee.
- Federal Secretary Ministry of Textile Industry, All Pakistan Textile Mills Association and Pakistan Cotton Ginners Association, Karachi Cotton Association and representatives of provincial governments attended the meeting.
- Speaking on the occasion, Muhammad Pervaiz Malik said that it was an important cash crop of the country, providing raw material for the local industrial sector and main source of export earning.
- The minister asked for restructuring the PCCC in order to enhance its performance in research and development for uplift of cotton crop in the country.
- He also asked for formulating a committee comprising on the members of All Pakistan Textile Mills Association (APTMA), members of the National Assembly, farmers and other bodies involved in cotton trade and research to formulate a comprehensive policy for research and development of advanced cotton varieties to optimizing the per-acre crop output.
- Commerce Minister also directed for removing the concerns of APTMA and formulating business plan in order to make the organization more efficient.
- Meanwhile, Cotton Commissioner Dr Khalid Abdullah informed the meeting that PCCC developed 11 cotton varieties during last year, whereas 291 experiments were made and 68 varieties were tested during the period under review.
- The committee tested pesticides at 17 location and organized training courses for cotton farmers on pre and post harvest mechanism.
- He informed the committee that receivables from the 166 local textile mills in terms of cotton cess had reached to Rs 625 million, where as recovery of the cotton cess was also declined.
- The PCCC was informed that income in terms of cotton cess had also reduced as it was recorded at Rs 209.60 million in 2016-17 as against the receiving of Rs 529.76 million of 2013-14. NNI
- Some 140 textile mills have closed their operations, while another 75 to 80 mills are on the verge of closure due to high cost of doing business. According to All Pakistan Textile Mills Association (APTMA), with the closure of 140 textile mills, about one million workers have lost their jobs and further closures will add to the unemployment figure by another 0.5 million. Due to the closure of about 140 mills with various mills operating below capacity, textile exports are suffering a loss of over $4 billion per annum, he added.
- Zahid Mazhar, Senior Vice Chairman, All Pakistan Textile Mills Association (APTMA), has said in a statement that the country has already entered an era of de-industrialisation where industries are closing. "In 2005 the share of manufacturing in the GDP stood at 19 percent which has fallen to 13 percent. Large scale closures of textile spinning mills has already taken place resulting in drastic increase in unemployment as well as reduction in consumption of locally produced cotton. This will hurt both manufacturing as well as the agriculture sectors of the economy," he maintained.
- Pakistan''s textile exports have declined during the last four years because of the cost of doing business which is the highest in the region, he said and added that the textile industry has been hit hard due to high cost of energy, both gas and electricity, leaving Pakistan''s exports uncompetitive in the global market as the cost of production of both gas and electricity is about 30 percent higher than the regionally competitors - Bangladesh, India and Vietnam.
- Mazhar said both spinning and weaving sectors are the backbone of textile value chain. Both have faced the brunt of high cost of doing business, hence left unviable throughout the country. Today, spinning industry is incurring heavy losses by selling yarn below cost. The production of yarn and fabric is substantially more than the local consumption; therefore, their exports must be encouraged, he added.
- He said Regional countries are following export-friendly policies to increase their exports. In the last 10 years, Bangladesh textile exports rose from $9.8 billion in 2006 to $35.2 billion in 2016, ie, about 260 percent and China $144 billion to $255 billion, up 77 percent. In addition, India''s textile exports surged from $18.4 billion to $35.4 billion, Vietnam''s $ 6.6 billion to $30.5 billion, while Pakistan''s textile exports have gone down from $ 14 billion to $12 billion. The share of these countries in the global textile trade is increasing while the share of Pakistan has reduced from 2.2 percent to 1.5 percent.
- He demanded of the government to remove the levy of Gas Infrastructure Development Cess (GIDC) on gas. He further demanded that the government should provide gas at the regionally competitive rate of Rs 400/MMBTU as was earlier announced by the ECC in November 2016 but the decision could not be implemented.
- Senior Vice Chairman APTMA further requested that the following measures be taken on an urgent basis to improve the efficiency and viability of textile industry: Expeditious payment of outstanding sales tax refunds and other refunds to address the liquidity issue and a check on large scale influx of imported yarn and fabrics in the country to save the domestic industry. He added that Free Trade Agreements and Preferential Trade Agreements must be reviewed and revisited in such a way that the exports to those countries be increased, he maintained.
- He also demanded of the government to encourage investment in spinning, weaving and finishing sectors in such a manner that maximum cotton be converted into yarn and further downstream value added products because it will not only facilitate farmers and the spinning industry but would also help whole textile chain and the economy.
- He said that due to the lucrative investment policy in the above referred period the total installed capacity of the textile industry and the production of basic textile products rose by more than 40 percent. The Senior Vice Chairman APTMA said the textile industry of Pakistan is capable enough to bring the economy out of morass. He hoped that the new Prime Minister Shahid Khaqan Abbasi and his cabinet would take immediate steps to arrest the drastic decline in exports during last four years, as any further negligence or delay will take the economy to a point of no return.
- He urged Prime Minister Shahid Khaqan Abbasi to issue instructions to the authorities concerned to implement textile package of Rs 180 billion, announced earlier this year for the support of exports and the textile industry. Mazhar also demanded that the notification for release of refund under Drawback of Duties and Taxes Order from July 01, 2017 to June 30, 2018 be issued without the precondition of growth in exports of 10 percent in 2017-18 as compared to 2016-17. Payments under this package must also be released without further delay, he maintained.
Minister for Irrigation, Marketing and Legislative Affairs T Harish Rao on Saturday inaugurated a cotton purchase centre in the Agricultural Market at Gajwel.
Speaking on the occasion, Harish said the Cotton Corporation of India (CCI) had opened 83 cotton purchase centres in Telangana State.
He informed that the unique programme of cotton purchase through cards had been launched in the State in order to put an end to the malicious practice of middlemen purchasing cotton directly from hapless farmers at throwaway prices and make hay.
Referring to the crop loan waiver issue, the Minister pointed out that the neighbouring Andhra Pradesh had waived only Rs 7,000 crore crop loan out of Rs 28,000 crore, whereas the Telangana government had cleared Rs 8,400 crore crop loan out of a total loan of Rs 17,000 crore.
Alleging that TDP chief and AP Chief Minister N Chandrababu Naidu was trying to sabotage Telangana’s Dindi and Palamur irrigation projects, Harish said TPCC chief Uttam Kumar Reddy and CLP leader K Jana Reddy owed an explanation to the toiling farmers over their unholy alliance with the anti-Telangana TDP.
The Minister also pointed out that the TRS government had taken up construction of a warehouse to store 17,000 tonnes of food grains at a cost of Rs 1,024 crore after formation of Telangana State.
The ministry’s department of industrial policy and promotion (DIPP) has for the first time included start-ups in its FDI policy document.
- Threshold For GST Composition Scheme Increased To Rs 1 Crore
06 Oct 2017
- Cotton Market to Witness Pressure
05 Oct 2017
- Surplus cotton supply may offer Indian spinners respite
03 Oct 2017
- Gujarat moots new textile policy to ‘protect’ farmers
26 Sep 2017
- Indian firm to build $300m cotton yarn project in Sohar
25 Sep 2017
- NGO bemoans dwindling cotton industry in Malawi
23 Sep 2017
- Cotton Committee approves Rs 690.65mn budget for FY 2017-18
23 Sep 2017
- APTMA laments high cost of doing business
16 Sep 2017
- CCI Opens 83 Cotton Purchase Centres In State
08 Sep 2017
- Indian start-ups can now raise 100% funds from an FVCI
30 Aug 2017