Alert for software developers! This tax benefit won't apply to you
The government has clarified that software development is not manufacturing, hence, it will not be eligible for the 15% tax rate cut applicable to new manufacturing companies.
The government will clarify this and other related matters in the winter session of Parlia-ment starting Monday. "The amendment bill will clarify that 15% corporate tax rate is only for new manufacturing entities and that software development is not manufacturing," a government official said.
The Taxation Laws (Amendment) Ordinance, 2019 which will be tabled in the current winter session Parliament will ratify the government's announcement in September to slash tax rates from 30% to 22% for the existing companies and 25% to 15% rate cut for the new manufacturing companies.
The amendment to the bill follows the clarification sought by the industry, if the software development comes under the ambit of manufacturing and qualifies for the reduced tax rate.
On September 20, Finance Minister Nirmala Sitharaman announced the government's deci-sion to cut corporate tax rate to 22% from 30% for domestic firms and new domestic manu-facturing companies.
She added the effective corporate tax rate for the companies would be 25.17% inclusive of all surcharges and cess. For new manufacturing companies (incorporated on or after Octo-ber 1) the existing tax was reduced to 15% from 25%. The effective tax rate after surcharges and cess will be 17%.
This reduction in tax rate has made India one of the lowest tax states in South and Southeast Asia.
The government is also expected to clarify several other things, comprising transparency on unabsorbed depreciation and accumulated Minimum Alternate Tax (MAT) credit in the pro-posed bill, the report added.
It will further elaborate that carry-over loss will also not be permitted in case an amalga-mated entity chooses the 22% corporate tax rate without incentives.
The government had issued a circular in October this year clarifying that if a company opts for the 22% rate, it will not be eligible for availing the accumulated MAT credit.
India, US bright spots for Apple Mac amid shrinking PC market globally
Amidst the focus on iPhone, Apple during the company's 2019 Q4 earning calls revealed that it has generated an all-time revenue record for Macs in India.
Luca Maestri, the Chief Financial Officer at Apple, also highlighted that more than half of the customers purchasing Macs during the quarter were new to Mac and the active installed base of Macs again reached a new all-time high.
At the time when the PC market is shrinking globally in consumer space and only registering growth in the commercial segment, India along with the US and Japan have been bright spots and growing market for Cupertino giant's Mac line-up. However, the company did not share any breakup on the individual and commercial sales.
From being preferred by professionals, Mac has over the years become a preferred work machine across genres. Industry experts suggest Mac has a broad user base in India. Even organisations are opening to what work machine -Windows and Mac -employees prefer to work on. And once an individual becomes part of the Apple ecosystem, it gets very hard to leave. Apple's Mac range offers quality, reliability and performance and easily lasts anywhere for five years or even more. To top this, Apple has constantly been releasing software updates focusing on privacy and security. And unlike Windows, the Mac platform is mostly free of bugs and virus.
"Apple has always been the aspirational brand of choice for India, be it iPhones or Macs. Whether it is students or professionals, the Mac has retained high consumer loyalty on account of performance and longevity. On the back of promotions such as "back to school" targeting students, as well as attractive financing schemes, Apple has been able to attract many first-time buyers for Mac, contributing to a significant revenue boost" says Prabhu Ram, Head-Industry Intelligence Group, CyberMedia Research (CMR).
Various factors make Mac hardware in reach for many. Apple's "back to school" is quite popular among young professionals in India. It offers a discount of between 12 to 15 per cent on Mac hardware. Even the updated MacBook Air and MacBook Pro were a part of Apple's "back to school" promotion through the Apple Education Store.
Affordability including discounts and low-cost EMIs have helped users to purchase a Mac. The entry-level MacBook Air with a 13.3-inch display, Intel Core i5 processor, 8GB RAM and 128 GB storage priced at Rs 84,900 is available for Rs 62,000 on Amazon India. Even if bank offer of low-cost EMI isn't available, users can easily convert their purchases into three to six months EMI at the time of making payment.
In the September quarter, iPhone revenue was $33 billion. While this is a 9 per cent decline over last year, it is still a significant improvement of over the 15 per cent decline Apple saw across the first three quarters. There has been a significant upswing in demand towards the end of the quarter because of the new generation devices including iPhone 11. It is in great demand in India due to aggressive pricing and cashback offers.
"With its prudent pricing strategy on the iPhone 11 and its attractive specs, Apple has been able to get increased consumer demand than before. With increased local manufacturing and new retail stores in the offing, we believe that Apple is on a stronger footing this year", adds Ram.
Of late Apple's focus has shifted to the Indian market. Currently, Apple is manufacturing hardware in China, Brazil and India apart from the few MacBook Pros in the US.
In India, iPhone 7 is being assembled at Wistron facility in Bengaluru. It started assembling the iPhone XR at the Foxconn facility in Chennai. People familiar to the matter confirmed Apple is unlikely to start assembly of the new iPhone 11 line-up in India anytime. The reason being the Chennai facility is a new plant of Foxconn and simultaneous production of new devices does not happen at a new facility. By the time the iPhone 11 starts assembling in India next year, there will be more iPhones in Apple's portfolio.
For FY2019, Apple India has seen over 70 per cent fall in net profit to Rs 262.27 crore, while revenues fell 19 per cent over the previous fiscal, as per regulatory documents. However, much has changed in the last two quarters (April to September 2019). Apple's quarterly earnings report suggests Apple is once again witnessing an upward growth trajectory in India.
Facebook to soon roll out WhatsApp Pay in India, says Mark Zuckerberg
Facebook will soon launch its payments service WhatsApp Pay in India. The social media giant has for long been in the process of testing the payments service which will be operationalised in the country in the coming days, said the company's CEO Mark Zuckerberg. He, however, did not give any specific timeline for the launch adding that more details will be shared soon.
WhatsApp Pay as and when launched, would compete against the likes of Paytm, PhonePe and Google Pay.
"We have our test going in India. The test really shows that a lot of people are going to want to use this product. We're very optimistic that we're going to be able to launch to everyone in India soon, but of course will share more news when we have that," Zuckerberg told analysts on an earnings call on Wednesday as cited by the IANS.
The payments service's launch has been delayed owing to data compliance concerns and regulatory norms in the country, the news agency stated.
WhatsApp Pay is a peer-to-peer, UPI-based payment service that will enable users to transfer money within the instant messaging app. As and when launched it could potentially reach over 400 million users in India, especially the small and medium businesses (SMBs). Users will be able to link their UPI accounts to WhatsApp and then transact with other users accordingly.
However, the government and the Reserve Bank of India have repeatedly raised concerns over some of WhatsApp Pay's features in complying with their norms before launching it in the country.
Earlier, RBI had issued a circular directing global payment service to store transaction data of Indian customers in the country itself. WhatsApp had said that it had a local system in place to store payments-related data in compliance with RBI's regulations. However, the apex bank in its affidavit submitted to the Surpreme Court (SC) had said that the payments service did not conform with its data localisation rules.
"We differentiate between payment systems that are built on top of the existing financial infrastructure like what we're trying to do with WhatsApp payments or when we make payments in Instagram Shopping, and our work with something like Libra that is trying to build some new technological infrastructure for financial services," Zuckerberg articulated during the earnings call.
Dave Wehner, chief financial officer (CFO) at Facebook told analysts that the social media company presently has 1.62 billion daily active users, up by 9% as compared to last year. He added that the surge in numbers has been led by user base growth in India, Indonesia and the Philippines.
WhatsApp which has about 400 million users in India, has been testing its payments in the country since last year with about a million users.
Pakistan to remain in FATF's grey list till Feb next year
Pakistan will remain in the Financial Action Task Force's (FATF) grey list till February 2020. The task force has directed Pakistan to take extra measures to completely eradicate terror financing and money laundering, as per reports on Wednesday.
The FATF, on Tuesday, reviewed the measures taken by Islamabad to control money laundering and terror financing. The Paris-based task force will take the final decision on Pakistan's position in February 2020.
The FATF has not made any formal announcements so far and is likely to announce the same on Friday, October 18 - the last day of FATF's ongoing session.
However, Pakistan's finance ministry spokesperson Omar Hameed Khan denied the reports, saying "it is not true and nothing before October 18 (can be confirmed)".
As per a report on Pakistani news site, Dawn News, the FATF has decided to give Pakistan a respite of four months to help the country implement the remaining recommendations of the task force. The daily also mentioned that China, Turkey and Malaysia also "appreciated" Pakistan's effort to this end. The three countries had earlier voted in favour of Pakistan that prevented it from making it to the black list.
At the Tuesday meeting of the FATF, Pakistan's Minister for Economic Affairs Hammad Azhar elaborated on the country's positive performance in 20 of the 27 parameters to check terror financing.
India, on the other hand, had recommended blacklisting Pakistan in the meeting. India said that Islamabad permitted Hafiz Saeed to withdraw funds from his frozen accounts.
The FATF meeting is being attended by representatives from 205 countries, the IMF, the UN, the World Bank and other organisations.
Pakistan was placed on the grey list in June last year. It was given a plan of action to complete by October 2019. If Pakistan continues to remain on the grey list, the country's financial position is only set to get more precarious.
Online funds transfer through NEFT to be now available 24x7: RBI
The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) Friday said that the online money transfer through National Electronic Funds Transfer (NEFT) will be available 24x7 from now onwards.
Presently, the facility is available till 7:45 pm on all working days except 2nd and 4th Saturdays of the month.
"In order to facilitate smooth settlement of these transactions in the accounts of the banks maintained with RBI, it has been decided that the Reserve Bank will extend the collateralised liquidity support, which is currently available till 7.45 pm on NEFT working days, round the clock," the RBI announced in its Monetary Policy Review meet.
The apex bank also said that round-the-clock NEFT facility will strengthen the fund management system of banks. The move is likely to reform the retail payments system in India.
In line with industry expectations, the central bank's MPC on Friday cut the key repo rate by 25 basis points to 5.15 per cent -- its fifth straight cut this year -- and maintained its 'accommodative' stance.
Repo rate is the interest rate at which the RBI lends money to banks. The repo rate cut is a great incentive for borrowers as all new floating rate loans are supposed to be linked to any of the four external benchmarks prescribed by the RBI from October 1.
In its August MPC meet, the RBI had surprised everyone by going for a 35-basis-point cut to 5.40 per cent.
The apex bank's decision to cut the repo rate further seems to be in sync with the government's recent measures, including a reduction in the corporate tax, to promote credit offtake to boost economic activity during the festive season amid the ongoing slowdown.