QBiz: Services to Be Dearer With GST; Insolvency Action Against 8

QBiz: Business news from across the country.

1. Telecom to Banking, Most Services to Be Costlier With GST

For some days now, several service providers – from insurance and banking to telecom and hotels – have been sending emails to customers warning of a GST-driven increase in prices starting 1 July.

Alarmed and unconvinced, the revenue department in the finance ministry has roped in other ministries to impress upon industry to adjust input tax credit against possible increase in tax liability. The tax credit being referred to will be on taxes paid on the purchase of ACs and furniture used in the service providers' offices.

In the fast few days, banks have informed consumers that the tax burden on credit card bills will increase from 15% to 18% from July. Similarly, telecom companies have said that monthly bills will rise as the gains from input tax credit will not be be significant. The only exception is state-owned Bharat Sanchar Nigam Ltd.

(Source: Times of India)

2. Insolvency: Eight Down, Fate of Four Hangs in Balance

Lenders to Essar Steel Ltd, Bhushan Steel Ltd and Electrosteel Steels Ltd on Thursday decided to refer these cases for resolution under the Insolvency and Bankruptcy Code (IBC), bankers who were part of these meetings told BloombergQuint. These cases will now be referred to the National Company Law Tribunal.

The meetings were aimed at taking stock of recent developments in these cases, building consensus around the outstanding debt and getting a sense of the hurdles in resolving stressed accounts, the bankers said.

(Source: BloombergQuint)

3. Tata Power Offers to Sell 51% Stake in Mundra Power Plant for Re1

Tata Power Co Ltd has offered to sell 51% stake in its Coastal Gujarat Power Ltd (CGPL) unit, which runs the 4,000 mega watt (MW) Mundra power plant, for a token sum of Re1.

In a 7 June communication to state-run Gujarat Urja Vikas Nigam Ltd (GUVNL) which has been reviewed by Mint, CGPL offered the stake to the discoms that have agreed to procure electricity from the project.

The move is a tacit admission by Tata Power of its inability to run the project at the existing tariff of Rs 2.26 per unit. The project has been in a bind ever since the Supreme Court set aside a Appellate Tribunal for Electricity decision that allowed Adani Power and Tata Power to charge compensatory tariff against the increased imported coal cost from Indonesia.

(Source: Livemint)

4. Workforce ‘Reshuffle’ to Help Tata Motors Save Rs 400 Crore

Tata Motors is set to save Rs 300-400 crore in what’s termed the biggest restructuring exercise in the history of the company.

The recast of the white-collar workforce has resulted in 1,200-1,300 employees getting reassigned, shifted to other units or asked to leave. The company has also slashed 2,500 positions, by eliminating a plethora of designations, all of which will add to the bottom line.

(Source: Economic Times)

5. WhatsApp in Talks With SBI and NPCI for Payments via UPI

Messaging application WhatsApp has initiated discussions with Indian banks and other institutions to allow its users to make payments via United Payments Interface (UPI), which facilitates instant fund transfer between two bank accounts on the mobile platform.

The messaging app, owned by American online social networking company Facebook, is in talks with the State Bank of India, the National Payments Corporation of India and a few other financial institutions to integrate payments on its platform. “Due to the complexity of the architecture, WhatsApp is in discussions with the State Bank of India, NPCI and few other banks to devise ways to integrate their systems with the bank and with NPCI,” a senior SBI official said on condition of anonymity.

(Source: Economic Times)

6. RBI Expands Overseeing Committee Membership to Five for Bad Loan Resolution

The Reserve Bank of India (RBI) on Thursday reconstituted the oversight committee (OC) mechanism and increased the number of members to five from the earlier two.

The panel has mandate to vet restructuring proposals for big-ticket stressed loans. Besides taking up cases under the scheme for sustainable structuring of stressed assets (S4A), it would also consider recast proposals for entities with borrowings above Rs 500 crore.

There would be more members in the future, the central bank said.

(Source: Business Standard)

7. Darjeeling Gardens May Post Losses This Year Due to Indefinite Shutdown

Already reeling under the stress of higher cost of production and declining profitability, nearly all of the 87 tea gardens in Darjeeling are expected to post at least 3-4 percent net loss in their balance sheet for the current financial year in face of the prevalent indefinite shutdown in the hills which has stalled prime production.

While the Darjeeling Tea Association (DTA) has estimated the immediate loss to be over Rs 100 crore, other industry officials peg the number higher at Rs 150 crore if export value additions are taken into consideration.

(Source: Business Standard)

8. Air India Privatisation: NITI Aayog Recommends Unbundling Airline and Its Real Estate Assets

Government think tank NITI Aayog has recommended that the privatisation of Air India should be done only after unbundling the airline and its real estate assets.

There are some things that NITI Aayog has suggested and NITI is just a recommending body. Essentially, what it has said is that you delink all the property and sell it off. You have domestic and international operations. It has said that you just sell off these three independently.

A senior government official requesting anonymity

(Source: Livemint)

9. Modi Government's Midnight GST Launch Function to Be a Sober One-Hour Function

The Centre's GST launch on the night of 30 June will be a sober, one-hour function, reminiscent of the late night session that was held in Parliament in 1992 to commemorate 50 years of the Quit India movement and the one to celebrate India's 50 years of Independence when a special session of Parliament was held late night.

"The preparations for the GST launch are exactly like that – like we do for joint sessions," an official said. "During the 50th and 60th years of celebrations we had special sessions in Parliament with speeches and screenings of films. Same will happen during the GST launch on 30 June," the person said.

(Source: Economic Times)