Good and Service Tax

Good and Service Tax (GST) is a comprehensive tax levy on manufacture, sale and consumption of goods and services at a national level. It is the biggest tax reform in India to integrate state economy and boost overall growth. Government has been making all efforts to ensure that Bill to pass and implemented in April 2016.

GST is worldwide accepted system. France is the first nation to introduce and implement the GST. Some of the Nation which follow the GST are Canada, Australia, Hong Kong, New Zealand, Malaysia, Singapore etc.

Present System

This can be better explained through an example. Suppose you buy a soap for Rs.50 per piece, it includes Excise duty, VAT/CST, custom duty on imported material etc. So currently you will have to pay multiple taxes.

Like the food you buy at hotel will have VAT as well as service Tax. So reduce this cumbersome government has to Introduce the GST.

Model Of GST

---Central Government Level

---State Government Level

---Both, Dual GST

The significant features of dual GST recommended in India, in Conjunction with recommendation by Joint Working Group are as

·         There will be central GST to be administered by the Central Government and there will be state GST to be administrated by State Government.

·         Central GST will replace existing CENVAT & Service Tax and State GST will replace state VAT.

Major Impact of GST are:-

·         Reduction in business costs

-          Special scheme to alleviate cash flow problems

-          Credit offset mechanism

-          Can claim the input tax due based on the invoice produced.

·         Lead to more competitive pricing

·         Make our export more competitive as exports are to be zero rated

·         Increase Gross Domestic Products

·         Reduce shadow economy activities.

·         It is a tool manage the economy E.g.: tourist refund scheme is proposed as a means to boost the tourism industry and tourism spending in the country, exports are zero rated to make over goal more competitive globally.

·         Cash Flow Management and Financial Operation

·         IT System

·         Legal Contracts

·         Recording Keeping, Vendors/ Suppliers

Some Critics GST as regressive tax which has a more pronounced effect on lower incomes earners, that the tax consumers a higher proportion of their income, compared to those earning large incomes.

Sources: Various websites

 Please feel Free to Comment for any Mistake and Objection. Always looking forward for your Kind support.

Regards: Keshav Kumar KC

CA Final Student

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Reason why Wealth Tax Act 1957 is abolished

Back Ground

Wealth Tax act is an act of Parliament of India which provides for levying of Wealth Tax on the individual, HUF, Company, is in possession of, on the Corresponding Valuation Date. It is applicable in all over the India including Jammu & Kashmir. It was last amended by financial Bill 2012.

Finance Minister Arun Jaitely Presented Union Budget 2015-16 for FY 16 in February 28 2015 in Lok Shaba.

The Finance Minister Believes that wealthier people should pay more. He decided to abolish wealth tax and replace it by 2% surcharge (means additional payment other than Tax). Wealth Tax used to be 1% on Net wealth exceeding 30 Lakh rupees and Non-resident Indians were exempted from the tax for several years.

   

Some of the Major drawbacks of Wealth Tax and reason behind abolishing are:-

·         Wealth should be valued by registered valuer which increase the cost and burden for assesse.

·         Assets like Jewelleries, unaccounted assets, car etc are not easily traced.

·         As we know that Wealth tax is not paid by all assesse. As per the report of 2011-12, near 1.15 lakhs people paid this tax.

·         This tax is not the main and significant tax with total collection of the Direct Tax .

So it takes hassles the filing of Wealth tax and simplifies the process of filing a return as you have to pay 12%  instead of 10% In the surcharge.

It will also lead to more people filing it as earlier a number of people  were not even paying Wealth Tax

Regards

Keshav Kumar KC

CA Final 

Thanks 

Looking forward for your comments so that i can do my best.

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Tips for first time investors in Stock Market

If you wish to invest in the stock markets and know nothing about them, one convenient way is to opt for mutual funds. If you are keen on investing directly, then do allocate the necessary time, energy and resources.

Show commitment

First spend time on understanding a company's fundamentals: sales, net profit, margins, etc.

Also study speculative markets, because sentiments play a major part in driving stock prices. Sentiments in turn are driven by expectations of what will happen in the future.

Have a long-term horizon

Like a company shareholder, give your investments time to grow. Enter the markets with realistic return expectations, and not outrageous ones. Remember that time is the best antidote to risk: the longer your investment horizon, the lower the volatility of returns.

Keep emotions in check

Do not turn euphoric when the markets surge, nor become despondent when they plumb new lows. Even if you develop a well-researched, diversified portfolio and hold it for the long term, inevitably some of your stock holdings will turn out to be duds. When that happens, respond based on your training and intellect, rather emotionally.


Be prepared to interpret data

While institutional investors have access to expensive databases, you will have to depend on publicly-available information. Quarterly results, annual reports, and shareholding pattern are available on NSE and BSE's web sites. Scout for more information in the media, and on Google Finance and Yahoo Finance. Technical market data like share prices and volumes is available on company web sites, and old research reports on brokerage houses' sites.

Analyse, then buy

Analyse the company with the same level of rigour as you would if you were the owner. Initially stick to sectors that you know best. Doctors, for instance, should invest in pharma companies first.
Compare a company's ratios with the index and industry historical averages. Look for the following ratio-based characteristics in a stock you are keen on: low PE, low PB, high dividend yield, low debt to equity ratio, and high RoCE and high RoNW. With the markets split between good but overvalued stocks and poor but undervalued ones, here are a few ratios you should look up before you
buy.


1. PRICE TO EARNINGS RATIO

The most commonly used ratio, it compares the price of a stock to the company's earnings per share (EPS). The EPS can be either for the past four quarters (historical or trailing PE) or for the coming four quarters (forward PE).

PE = Stock price/ Earnings per Share

2. PRICE TO BOOK VALUE RATIO

This ratio compares the price of a stock with its book value. The book value is the net value of the company's total assets minus its liabilities. In other words, it is what shareholders will be left with
if the company goes bankrupt.

PBV= Stock Price/ Book Valued per Share.

3. PRICE TO SALES RATIO

This ratio compares the price of a stock to the revenue earned per share. The revenue for the past four quarters is used in this calculation.

PS= Stock Price/ Revenue per share

4. DEBT-TO-EQUITY RATIO

It measures a company's leverage by comparing its debt with its equity base. The ratio indicates the proportion of the company's assets that are being financed through debt.

Debt Equity R= Total Long Term Debts/ Equity Shareholder

5. ASSET TURNOVER RATIO

The ratio measures the sales generated for every rupee worth of assets. It shows a firm's efficiency in using its assets to generate revenue.

Asset Turnover Ratio=Revenue/Total Assets

Buy, monitor, sell

Since monitoring many stocks becomes difficult, stick to 15 or 20. If derived from diverse sectors, that many stocks offer adequate diversification. Monitor your stocks' fundamentals and valuations at least once every quarter. Sell only to meet a financial obligation, to rebalance, when fundamentals deteriorate, or when the stock becomes overvalued. Also, sell if you can replace one with a better option.
Adhere to these basics and you could well surprise yourself with your performance.

Author

Keshav Kumar KC

E-mail: keshabkc6@gmail.com

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Why Share Market is good example of the perfect competition?

The stock market is an example of perfect competition in that everyone has the same chances of ups and downs in a certain market. Laws also help to ensure its perfect competition by making insider trading illegal. In theory, a stock market is perfect competition. However, in reality , it is actually an example of very poor competition. Both in laws and in  actual construction, stock market heavily favour those able to purchase super- high speed computers( and host them in the exchange itself), and also tend to restrict information to a privileged few while denying it to the majority of users.

The consequences is that a stock market actually is very imperfect competition, heavily favouring the established members of the exchange over the ordinary exchange trader.

As a technical term Economics, “Perfect Competition” is the ideal or theoretical market structure characterised by a large number of price taking producers with identical U – shaped cost curves(the minimum of the firm cost curve occurring at an outputs small in comparison with market demand), who
face no barriers to entry, producing a uniform product and selling it to a large number of price taking consumers, without collusion or price discrimination. The stock market is characterised by non-uniform
commodities ( shares in different companies) each with a monopoly supplier. If anything it’s an example of monopolistic competition, not perfect competition.

Author: Keshav Kumar KC

E-mail:keshabkc6@gmail.com

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