Monthly Archives: May 2018

Inspiring Story of a Chartered Accountant who picked finance blogging as his career

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I became friends with Karan Batra through our online conversation over email and social media. He is the guy to whom I reach out whenever I need an expert advice on finance. He is a qualified Chartered Accountant who is trying to simplify Income Tax for the common man through his online finance community.

I started my personal finance website because I love to talk about money saving hacks and building a passive source of income. Karan started his finance website because he loves to talk about everything related to finance and taxation.

Karan cleared his CA exams with All India rank 22, and I must tell you that only less than 10% students clear their CA exams and 22 rank is as tough as reaching to the peak of Mount Everest.

Karan is also a visiting faculty member at the Institute of Chartered Accountants of India and has taken more than 200 batches and has personally mentored more than 10,000 CA Students. He even helped a lot of startups and corporates with his consultancy services.

Also, he has been featured in both TV and Print Media a couple of times and is a renowned Tax Expert.

but… He is making his living from his finance blog.

Select Your Favorite Section

Do you know how Karan started his online business?

When he was a student, he started an orkut community in 2007 because at that time Facebook was not so popular in India. He understood the power of online communities much earlier in his career. Later on he started his Facebook page in the year 2009 (that now has more than 3,50,000 likes), where he shares his insights and financial wisdom.

Early success on Facebook and Orkut convinced him to start his website in 2011 after completing his education. The initial days were of course difficult, especially when you don’t know anything about technical stuff related to websites and content marketing.

But now, Chartered Club receives 20,00,000 page views every month from more than 1 million users.

Karan has been so kind to me that he agreed to share the snapshot of his traffic when I requested him.

When I was writing my article on 100 ideas for online business in India, then also Karan had shared his research and insights on the finance industry. If you are interested in starting up something in finance industry, you can get a lot of inspiration from his ideas. I have put all the ideas that he has shared with me in my article.

Currently, Karan is making money through different channels on his website.

  • Google Adsense – The simplest and easiest way – mainly through Google
  • Selling Direct Advertisement space – Direct Advertisers want big traffic. Once you have the traffic – a lot of advertisers start approaching you.
  • On call Financial Advisory – Karan also gives his readers an option to directly talk to him over the phone and seek his personal guidance for their specific queries. This is a paid Telephonic Consultancy and he currently charges Rs. 799/- per appointment.
  • HR consultancy – Through the website, he gets a lot of leads to hire CA’s and then his wife does the HR Recruitments. (Clear case of Horizontal Business Expansion. If you have traffic – you can sell anything)

From advertisements alone, he is making $2000 every month. He usually does not share his Income Report, but on special request – he agreed to share his Google Adsense Income Report. As mentioned above – Adsense is not his only source of income, but one of the sources of Income. You can even get inspired from the following snapshot.

Some Income Streams from which Karan can make money but does not intent to make money.

  1. Content Syndication – Karan had tried both Outbrain and Taboola but was not satisfied with the experience as both of them looked spammy and could spoil the user experience.
  2. Sponsored Reviews/ Posts – Sponsored Reviews pay big money, but may hurt in the long run as your readers may not like it and therefore, Karan always stays away from sponsored reviews.
  3. Affiliate Marketing – Karan does not sell any products on his website through affiliate marketing, but feels that there is nothing wrong in doing affiliate marketing till the time the products are of use to your readers.

Let’s get some more details from Karan about his personal experience with the online business and some tips for people who want to start something in the finance domain.

Karan, I understand that anyone can make money when they have millions in traffic on their website. But, how was your first year, when you started your website in 2011?

The first year was extremely discouraging. I had skipped my Campus Placements in the hope to enter into a field for which I was passionate about, i.e. getting engaged in the Digital space.

I faced a lot of criticism during my early days and barely anyone understood what I was trying to do. Initially, it used to hurt a lot, but then I realised that it is not their fault. The thing I was trying to do was so futuristic that nobody could understand at that point of time.

The first year was full of struggles. My revenues were extremely low and that I had to opt for other part-time jobs to keep my business and myself afloat.

“Uss waqt startup word hi koi nahi jaanta tha… Uss waqt bola jaata tha – ki beta dhanda kya karte ho??”

I’m talking about the period when bringing up a startup was not considered fancy. The only people who used to opt for doing something of their own were the ones who could not get a job in the corporate field.

When did you receive your first income? How was the experience of making your first dollar from the Internet?

In my initial days – the only source of revenue for me was Advertisements. And, it took a lot of time to receive my first cheque.

Adsense does not disburse payments of less than $100 and it took me 6 months to reach to that level. But, the growth after that was somewhat fast. In fact, fast is an understatement – it was superfast.

The first few months were disheartening. I was frustrated, both with the outside world and myself. But, I kept trying and it was only after a year that I received a payment worth considering.

It was after this payment that I reduced my other part-time engagements and moved my business directly into the 5th gear. I could see a future, which others could not and I decided to run as fast as possible so as to get the maximum benefit or advantage for being the 1st mover.

How much money did you spend on your website in the initial days? And, how much do you spend now on the tools and services to manage your online business?

I had spent around Rs. 15,000 in setting up the website. This included the payment for a shared hosting and wordpress theme customisation. It was fortune enough for me that my school classmate Harsh from Shoutmeloud agreed to set up my website himself and guided me through the things. I’m not sure if he still provides this service.

My current monthly website spending is around Rs. 25,000 per month on the tools and services.

Whenever I spend money, I ensure that the product is good irrespective of the brand. I could easily pay more than Rs. 2,00,000 a month if I want to use the tools of big brands… but, I always research a lot to find the cheap alternatives that could offer almost the same quality and thereby end up saving a lot…

Was there any period in your life when you didn’t feel motivated enough to continue with your Chartered Club?

Yes, in the few initial days of the commencement of my website – I did think of quitting Chartered Club as the revenues were extremely low. But, to stay afloat – I did take up some part time work. And, this is the solution that I would recommend to everyone.

If you create any stream of cash flow (either big or small), it would reduce the pressure on you to perform in your business. Most small businesses shut their work not because they don’t have clients, but because they do not stay long enough in the business.

Can you share something that very few people know about your relationship with Chartered Club?

Our facebook page was taken over thrice by facebook between Jan 2010 and Oct 2011, because we were growing too fast and facebook’s algorithms thought that there is something fishy being going on. However, I was able to prove that all this is the organic growth without implementing any black-hat technique and then they restored the pages to me.

Although, initially I was disheartened when my facebook pages were taken away and classified as Community Pages, but getting them restored was a major confidence booster for me. If Facebook thinks you are growing too fast – it means you are actually growing too fast.

What motivates you when you feel down?

I have felt being discouraged and low a couple of times, and I think that it is a part of everyone’s entrepreneurial journey.

And, when I feel low – I usually go to my colleagues in my co-working space and try to share with them all the difficulties that I’m going through. They may or may not be able to encourage me and guide me, but at least they understand what I’m going through.

There is a very old saying, “Dukh baantne se kam hota hai”. So, I try to connect with my colleagues in my co-working space and I always feel better after that. Sometimes, they are even able to help me solve my problem.

Well, it is important to note here that a salaried employee may not be able to understand the problems of a startup founder. Therefore, I try to connect only with other startup founders, as they are able to better understand my situation.

And, this is one of the main reasons why I work out of a co-working space and don’t prefer to have my own office.

What you do (tips) to stay productive? Any tools you would like to recommend to my readers?

Indians work on deadlines. And, I’m a true Indian.

In the absence of any deadline – most tasks get delayed. Therefore, I try to set deadlines for myself. I try to break big tasks into smaller ones with a daily deadline and try hard to stick to these deadlines.

I recently found free software called Asana, which helps me, set deadlines both for my team and myself and I have personally felt an improvement in the output by setting deadlines.

Any legal hack to save income tax in India that 99% people don’t know about? It must be applicable to general salary class :).

I’ve a firm belief that the Income Tax Rates in India are not high, It’s only that people don’t know the ways to save tax legally ;). I can give one advice to salaried people and one to business class.

Salaried class citizens

A very few are actually saving tax is the deduction under Section 80CCD(2). As per this Section, an additional deduction of Rs. 50,000 is allowed for investment in the National Pension Scheme.

This deduction is allowed over and above the deduction of Rs. 1,50,000 under Section 80C. Very few people are able to claim this deduction due to lack of knowledge, but this is something, which I recommend to everyone.

Business class

If you are running a business or working as a professional, you can take advantage of presumptive tax under section 44AD. If you pick presumptive taxation option then your profits would be assumed at the flat rate of your revenue. You don’t have to maintain accounting books. There is no requirement of keeping the records of expense invoices.

For small business : Profits are assumed at 8% of sale revenue if the turnover is less than 2 crore per annum. Good option for anyone who is selling anything online or offline.

For professionals : Profits are assumed at 50% of service revenue if the turnover is less than 50 lakhs per annum.

You can also take advantage of filing your income tax return by using presumptive tax option. If you are making 10,00,000 rupees per year by selling products then you taxable profit is assumed only 80,000 rupees. It’s assumed that your expenses are 9,20,000 without asking you any proof of expenses.

What is the one most biggest/important contributor to your success? (It can be any person, event or philosophy)

There have been many people behind my success and I would like to thank all of them (especially my parents).

Apart from the people – One philosophy, which I personally believe is a sure shot way to succeed is – never do anything for others, do it for yourself. Just assume to be in the footsteps of your client – what type of service/product would you expect?

If you like it, the world will also like it. And therefore, I would advise you to make yourself your 1st Customer. And, if you can satisfy this 1st Customer – your business is a sure shot success. Sadly, I don’t think that 99% of the people would be able to satisfy this first customer.

Which business you would pick if you have to start today? (Apart from similar to Chartered Club)

Not exactly sure about the business, but one space which excites me is what I refer to as ‘Convenience’.

An interesting trend, which I have recently noticed is that people have started paying for convenience. They don’t mind paying extra if the service is good.

Take the case of e-commerce stores – In some cases, they have started charging extra for delivery and people don’t mind paying that. They can easily go to the market and buy the goods, but they prefer to get it delivered at their home and don’t mind paying the delivery charges.

Earlier, people were short of money and had excess time, and therefore, they used to spend money wisely and time excessively. Now, people have more money and less time and therefore they spend money excessively and time wisely.

I have started observing early signs of the fact that people are paying for Convenience. And, if I had to start a new business today – it would be something in this space. In fact, I’m already looking out to make some startup Investment options in this space.

Would you provide an exclusive discount to Cash Overflow readers on your services?

Oh yes… It would be my pleasure to offer my services to your readers.

Cash Overflow readers can get 50% discount using code CASHOVERFLOW on tax consultation. It’s an exclusive discount for CashOverflow readers that is not available anywhere else.

Concluding

Thank you Karan for giving us your valuable time. Your tips will definitely help me save more money on income tax this year. Presumptive tax option is looking like a gold mine for small business owners.

If you can help a finance geek like me to save thousands of rupees from income tax then I am sure you can help many people in saving tons of money. It becomes more economical for my readers to book your appointment, I think you are going to be very busy in coming days.

Here’s How the Steel Industry’s Getting Hot

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Steel is utilized in every important industry ranging from energy, construction, automotive and transportation, infrastructure, packaging and machinery. A favorable global economic scenario, commodity prices and perked up investment is expected to buoy steel demand in both developed and developing economies.

Consequently, there are plenty of reasons to be optimistic about the broader steel industry, both in the short and long term. Here, we discuss some of the key reasons and what investors in the steel sector can look forward to in the coming months and years.

The “Trump” Effect

After being in the dumps for a major part of 2016, steel stocks got a big boost following President Trump’s win that November on expectations of significant infrastructure spending. The president’s call for such spending is expected to lead to an increase in steel demand as it is a key component in many infrastructure products. Trump’s “big” spending plans have thus painted a bullish picture for steel companies.

President Trump, on Mar 8, signed proclamations imposing steep tariffs on steel and aluminum imports in a major move to protect the domestic producers of these metals, rebuild the long-struggling U.S. steel and aluminum industries as well as safeguard American jobs.

Steel Import Drops: Respite to Beleaguered U.S. Players

The tariffs are welcome news for American steel makers as it will lead to lower imports into the United States, which would in turn boost demand for American steel. This will provide the domestic players with more pricing power.

Per the American Iron and Steel Institute (“AISI”), an association of North American steel makers, total and finished steel imports have dipped 3.0% and 1.7%, respectively, in the first three months of 2018 compared with the prior-year period. For 2018, annualized total and finished steel imports is projected to decline 8.8% and 7.6%, respectively, from the prior year. Finished steel import market share was an estimated 26% in March and is estimated at 25% for the year.

On prospects of higher steel demand as a result of the latest U.S. trade measures, United States Steel Corp. (X) stated recently that it will restart one of its Granite City Works blast furnaces and steelmaking facilities. The company expects to call back around 500 employees starting this month. Both the blast furnaces of Granite City Works and its steelmaking facilities were idled in December 2015 in response to challenging market conditions, including unfairly traded imports.

Another U.S. steel major, Nucor Corp. (NUE) also recently announced that it will build a rebar micro mill in Florida. This $240-million investment will be Nucor’s second rebar micro mill.

Moreover, the tariffs are anticipated to boost production capacity of domestic steel makers amid lower imports. The U.S. Department of Commerce earlier stated that the trade actions are aimed at increasing domestic steel production to roughly 80% operating rate from its present capacity of 73%. This is the minimum rate needed for the long-term viability of the industry.

Construction Sector to Remain Key Demand Driver

The homebuilding market remains a pillar of strength for the economy, as well as the steel industry. The housing and construction sector is the largest consumer of steel, accounting for almost half of the total consumption. Positives like an improving economy, healthy job growth, low interest rates, positive consumer confidence and a tight supply situation raise optimism about the sector’s performance.

The American Institute of Architects (“AIA”) anticipates spending in the non-residential building sector to advance around 4% in 2018 and continue at that pace of growth through 2019. The recently enacted tax reform as well as Trump’s promised infrastructure package will boost demand in the sector. Nucor and Commercial Metals Company (CMC) are the leading steel suppliers to the non-residential construction sector.

Over the long haul, as the urban population increases worldwide, the requirement for steel to build skyscrapers and public transportation infrastructure should see an uptrend as well. Emerging economies will continue to be major catalysts, owing to the huge amount of steel needed for urbanization and industrialization. Hence, demand for steel is anticipated to remain robust in the years to come. Companies like United States Steel, ArcelorMittal (MT), Nucor and Steel Dynamics Inc. (STLD) would gain from momentum in construction.

Automotive Sector Drives Steel Demand

The automotive sector, which is the second largest steel consumer, is showing significant promise despite threats from other materials. The rising sales trend is anticipated to persist driven by falling fuel prices, low interest rates, enhanced job security, rising wages and household wealth. Moreover, the trend will be backed by improving consumer confidence, residual pent-up demand, attractive deals and vehicle launches.

Moreover, the high average age of light vehicles on U.S. roads is resulting in large replacement demand for cars as well as car parts. This will benefit auto parts manufacturers and retailers. The auto industry in Asian countries, particularly China and India, are also projected to flourish over the next five to seven years. China is the biggest and fastest growing auto market globally in terms of number of vehicles sold.

With automakers cashing in on strong demand, steel is anticipated to get a proportional boost in the years to come. ArcelorMittal and AK Steel Holding Corp. (AKS) generate a large portion of their revenues from auto companies. Arcelor Mittal is expanding its global portfolio of automotive steels by launching a new generation of advanced high strength steels (“AHSS”).

Steady Growth in Developed Economies

Developed economies are expected to witness growth of 1.8% in steel demand in 2018. In the United States, strong demand and investment fueled by high confidence, rising income and low interest rates will drive steel demand. While rising investment is buoying the manufacturing sector, the construction sector looks good on rising housing prices and steady non-residential sector growth.

The recent tax reform will also lead to higher investment and consequently boost steel demand. The announced infrastructure plan will be a catalyst for steel demand in the long term. In the EU, broadening recovery across countries, higher investments, pickup in non-residential construction and strong manufacturing activities will be catalysts.

Developing Countries to Support Growth

Steel demand in developing economies (excluding China) is expected to increase by 4.9% and 4.5% in 2018 and 2019, respectively. Recovery in oil and commodity prices has led to a revival in steel demand in the Middle East, and if geopolitical stability is achieved, steel demand for the region will be driven by reconstruction activities.

Recovery in Russia will be supported by credit expansion, easing monetary policy and improving consumer and business confidence. In Brazil, recovery of construction activities has been sluggish while in other Latin American countries, recovery is underway and growth is likely to accelerate if reforms are implemented.

The Indian economy is stabilizing from the impact of currency reform and GST implementation last year. India, currently the fourth largest producer of steel in the world, is anticipated to record exponential growth in the future. This will be fueled by increasing urbanization, along with projected growth in the infrastructure, automobile and real estate sectors. The country’s comparatively low per capita steel consumption and the anticipated rise in consumption owing to increased infrastructure construction, along with the thriving automobile and railways sectors, offer huge scope for growth.

How to Play the Industry

As you can see, there are many reasons to be optimistic about the steel industry over the long haul. Carpenter Technology Corp. (CRS) can be a solid addition to one’s portfolio. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Steel Dynamics can be a solid addition to one’s portfolio. The stock currently has a Zacks Rank #1 and a long-term estimated earnings growth rate of 32%. Over the past 90 days, its estimates for 2018 and 2019 have gone up 21% and 12%, respectively. The company has an average positive earnings surprise history of 3.15% over the trailing four quarters.

Ternium S.A. (TX) has an expected long-term EPS growth rate of 39%. It also carries a Zacks Rank #1. Over the past 90 days, its estimates for 2018 and 2019 have gone up 33% and 17%, respectively. The company has an average positive earnings surprise history of 50.23% over the past four quarters.

Nucor, which carries a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 20%. Its estimates for fiscal 2018 and fiscal 2019 have moved up 20% and 8%, respectively, over the past 90 days. The company has an average positive earnings surprise history of 3.78% over the trailing four quarters.

Check out our latest Steel Industry Outlook for more on the current state of affairs in this market from an earnings perspective, and how the trend is shaping up for the future.

Looking for Stocks with Skyrocketing Upside?

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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

Capex revival

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Indian crude steel production seems to be on course to finally cross the 100 million tonne mark this fiscal year

The rapidly shrinking excess capacity is also one reason why there has been a bidding war for insolvent steel firms such as Bhushan Steel and Essar Steel. Photo: Bloomberg

Indian crude steel production seems to be on course to finally cross the 100 million tonne mark this fiscal year. It now seems likely that the steel industry will hit capacity constraints unless new investment plans are finalized soon. There are also early signs of a pick-up in capex in the steel industry. The rapidly shrinking excess capacity is also one reason why there has been a bidding war for insolvent steel firms such as Bhushan Steel and Essar Steel.

All this matters in a macro sense as well. Most economists agree that India cannot have a sustainable growth recovery unless private sector investment activity picks up. The strong growth in consumer spending—backed by a surge in household debt—will also ensure that more capacity will soon have to be created in the automobiles supply chain. There are already early signs of this as well. It seems that industrial capex is beginning to bounce back—though it is for now being led by brownfield capex to increase the capacity at existing factories rather than greenfield investments to build new factories. That will come later.

Global steel industry poised for stable growth in 2018

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Last week, we reviewed the commodity prices as they are likely to behave in FY19. The available indications suggest a gradual downward trend in global prices of iron ore, coking coal and scrap from the current level.

The implication for the global steel trade arising out of US actions on steel imports under Section 232 of US Trade Expansion Act, 1962 may not be significant as the US has initiated exclusion action with a number of major trading partners.

Last week, we reviewed the commodity prices as they are likely to behave in FY19. The available indications suggest a gradual downward trend in global prices of iron ore, coking coal and scrap from the current level. This sounds good for the steel industry which sees uplift on the demand front. The short range outlook of WSA forecasts 1.8% growth in global steel consumption in 2018, led by India (5.5%), the US (2.7%), the EU (2.5%), Turkey (5%), Russia (2.1%) and South Korea (1%). China is also likely to consume similar volume of steel as in 2017.

Meanwhile, the World Economic Outlook recently brought out by IMF has predicted a reasonably good growth in global GDP of 3.9% and this would be fuelled by GDP growth of 7.4% in India, 6.6% in China, 2.4% in the EU and 2.9% in the US. Japan, a major steel producer is also likely to experience a GDP growth of 1.2% in the current year. Thus, higher global economic growth which would also require an investment growth of 11% over last year to take the share of investment as a percentage of global GDP to 26% as per IMF estimates would generate substantial steel demand in varying proportions in different countries depending on the primary focus of Fixed Asset Investment as a percentage of GDP.

The vulnerability of these positive outlook, however, hinges crucially on what is going to happen in China that not only controls nearly 50% of global steel production, but is also a major exporter (achieved 16% of global exports in 2017) of steel, dominates the iron ore prices (imported 1,075 MT of iron ore in 2017 and would gradually close down the high priced domestic iron ore concentrate producing units). It has also a major influence on global coking coal and coke prices.

As excess steel capacity was found to be the single phenomenon damaging the interests of the global steel producers during 2014-17 in terms of lowering the prices and thereby the profitability of the industry, China, having accounted for nearly 50% of the estimated surplus steel capacity, had to assure the outside world that its commitment to bring down the carbon footprint would entail elimination of some of the polluting units in steel, coal and cement. It had set a target of closing down 150 MT steel capacity during 2016-20. The record so far is good and it is likely that China would overshoot the target by 2020.

For instance, recently the city of Handan in Hebei province has announced closure of steel making capacity. This is in addition to the closure of steel capacity in the city of Tangshan. In totality, Hebei province has planned to close down steel capacity of 10 MT each in 2018 and 2019 and 20MT in 2020. Earlier, China announced closure of around 50 MT of induction furnace capacity whose pollution record was much below the norm. It is interesting to note that under the compulsion of restructuring the Chinese economy from investment-led to consumption-led promoting thereby the development of light engineering and high value producing units, China has also started 10 new wide HSM capacities in the past 18 months along with new capacities in CRGO and other special steel categories which are not indigenously available. This pragmatic policy would benefit the Chinese steel industry to face the odd challenges of fluctuating global prices, if any, in the long run.

The implication for the global steel trade arising out of US actions on steel imports under Section 232 of US Trade Expansion Act, 1962 may not be significant as the US has initiated exclusion action with a number of major trading partners. For China, however, the protectionist move by the US may extend to products other than steel and may include Chinese engineering exports. As the US is keen to improve the productivity of its manufacturing sector for job consideration and creating earning opportunities, it may restrict imports of manufactured products from China. The resultant slowdown in Chinese indirect steel exports would imply that indigenous demand for steel in China must grow by a larger extent to compensate the loss of steel market for making exportable engineering items to the US. The inability of the Chinese domestic market to grow to make up the shortfall may prompt China to enhance steel exports and this action may depress the global prices of HRC and other flat products.

Thus, apart from these few unpredictable events, the global market for steel in 2018 is poised for a stable growth for steel industry in terms of a reasonable margin and profitability for the industry sufficient to attract more investment for creation of fresh capacities in the product range where indigenous availability remains a constraint to cater to the emerging requirements of the critical sectors in the economy. This is a most likely scenario for India in FY19 which may take an interesting turn in the second half by the actions of the successful bidders for NCLT referred cases of Essar Steel, Bhushan Steel, Electrosteel Steels and Monnet Ispat.

EU countries looking at India’s GST closely to implement in their counties: PwC’s Jo Bello

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The success of the online Goods and Services Tax (GST) in India could spawn similar experiments with the uniform producer levy in the common European trading bloc, PwC’s global indirect tax leader Jo Bello told ET.

“What India has achieved on the technology part of GST is pretty amazing. Many EU countries are watching India to see whether it works for you and whether they could do it too,” said Bello.

She said that GST has started changing India’s perception not just for policy makers in other countries but also for global investors. While India’s GST implementation has come under a lot of criticism from many in the domestic industry, Bello said the indirect tax reform has in fact attracted many global investors who until now were steering clear of India.

Also with GST, India may have moved the value chain and the tax system is almost on a par with countries that have good indirect tax structures, including those in China.

“There are lots of similarities between the Chinese system and the Indian system. But the Indian system is now extremely similar to the rest of the world’s VAT (Value Added Tax) systems,” said Bello.

“India has e implemented GST and it is starting to change the country in exactly the ways they were intended to. And so I think actually India has got an awful lot to be proud of in how it has achieved its ambitions,” she said.

India moved to GST last year on July 1, where all the indirect taxes like sales tax and VAT were subsumed into a single producer tax. This did create initial problems, triggering litigations. In most cases, the government has come out with clarifications. But harnessing full benefits of the biggest tax reform since independence could be delayed if the complexities faced by the industry keep increasing.

“So there are still complexities from a technology perspective or reporting perspective… and (it would) be really interesting when everything settles down. I hope for India’s sake that it’s relatively soon,” she said.

Industry experts believe that New Delhi may also use GST data to track those who might be escaping the income-tax net.

 

Sale of ‘going concern’ exempt from GST: AAR

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Sale of a going concern by a business house will not attract Goods and Services Tax (GST), as per an order by the Authority for Advance Ruling (AAR).

The Karnataka bench of the AAR gave its ruling based on an application filed by Rajashri Foods Pvt Ltd which wanted to sell one of its units along with fixed and current assets as well as liabilities, including bank loans, for a lump sum consideration.

The AAR said that as per a government notification, any transfer of a going concern constitutes a ‘supply of service’ and ‘nil’ tax rate will apply on it.
A going concern is a concept of accounting and applies to the business of the company as a whole. Transfer of a going concern means transfer of a running business which is capable of being carried on by the purchaser as an independent business.

EY India Partner Abhishek Jain said: “The ruling should aid in offering clarity to GST implications on conventional hiving off/demerger transactions”.

AMRG & Associates Partner Rajat Mohan said, “This ruling categorising the transaction of transfer of running business as a supply of service would be a nightmare for corporate’s undertaking mergers and acquisitions, as it would entice higher compliance on account of GST and would also force amalgamating company for proportionate reversal of common input tax credits.”

Is the world simpler than it was before GST? This jury is in

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The World Bank’s March 2018 version of ‘ India Development Update’ has some critical remarks on the goods and services tax (GST). But it isn’t as harsh as headlines have made it out to be.

The headlines have largely been driven by the following, “Comparing the design of India’s GST system with those prevailing internationally, we note that the tax rates in the Indian GST system are among the highest in the world. The highest GST rate in India, while only applying to a subset of goods and services traded, is 28%, which is the second highest among a sample of 115 countries which have a GST (VAT) system and for which data is available.”

This criticism is linked to the second criticism. “Next, we assess how the number of different GST rates prevalent in the Indian system, and thus its complexity, compares internationally. The Indian GST system currently has 4 non-zero GST rates (5, 12, 18, and 28%)…. Most countries around the world have a single rate of GST: 49 countries use a single rate, 28 use two rates, and only 5 countries including India use four rates. The countries that use four or more rates of GST include Italy, Luxembourg, Pakistan and Ghana. Thus, India has among the highest number of different GST rates in the world.”

It’s extremely unlikely that India will ever have a single rate, since equity considerations override those about efficiency. We are probably headed towards three rates, with 28% declining, but 5% also increasing. One can’t have one without the other.

Since we are in a process of transition and haven’t yet reached the terminal goal, the criticisms are valid. But so is the point about incremental improvements, something that the GST Council has been attempting. While I can understand these criticisms — or those about some items and the entire chain (a function of the threshold) not being part of GST, or those about hardware, software and systemic constraints — I cannot understand how GST has made everything more complex, a criticism often levied

It may have made life more complicated for those who were outside the indirect tax system and didn’t pay taxes. But how has it made it more difficult for those who were part of the tax chain?

Legislative Outback

Resistance to change is universal. Transition to GST is always difficult. Witness Australia’s A New Tax System (Goods and Services Tax) Act of 1999 (operational from 2000). Witness the debate about exclusion of basic food items, or the dispute between the federal government and the state government of New South Wales there.

Specifically, I am a great admirer of Section 165.55 of Australia’s 1999 GST legislation, although it is not easy to fathom what it means. “For the purposes of making a declaration under this subdivision, the commissioner may: (a) treat a particular event that actually happened as not having happened; and (b) treat a particular event that did not actually happen as having happened and, if appropriate, treat the event as (i) having happened at a particular time; and (ii) having involved particular action by a particular entity; and (c) treat a particular event that actually happened as: (i) having happened at a time different from the time it actually happened; or (ii) having involved particular action by a particular entity (whether or not the event actually involved any action by that entity).”

In an ideal world, there would be no tax lawyers, no chartered accountants and no legalese. As William Shakespeare said in Henry VI, Part 2, “The first thing we do, let’s kill all the lawyers.” Actually, Shakespeare said nothing of the kind. He made Dick the Butcher say this. And we still don’t know what Shakespeare intended — cracking a joke about Dick, or cracking a joke about lawyers.
In a less-than-perfect world, there will be tax lawyers, chartered accounts and legalese, the last necessary step to reduce litigation. GST, in Australia or in India, doesn’t make the world perfect. Is the world simpler than it was before GST? That is the question.

I can’t leave you itching to know what the mysterious Section 165.55 is about. An entity is a legal entity: individual, body corporate, partnership trust, etc. Schemes give entities GST benefits. All Section 165.55 means is that a commissioner making a declaration can disregard a scheme.

A scheme is linked to an event that happens at a specific time and to an action taken by the entity. Since the commissioner has the right to disregard a scheme, he disregards the event (which leads to the scheme). Therefore, an event that has actually happened is treated as not having happened and vice versa.

The Great Barrier Brief

I guess the time and the action bit are also obvious now. But this still begs the question. There is a Plain English movement that is not unknown in Australia. Couldn’t the language of 165.55 have been simplified to make it comprehensible to the non-lawyer? It should have been possible. It isn’t gibberish, nor is it gobbledygook.

I suppose the desire to avoid litigation overrode the desire for simplification. But if we accept this logic, that rationale is also equally applicable in India. I haven’t yet found the counterpart of 165.55.

Best 5 Business Opportunity for Chartered Accountants in India

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After the completion of Chartered Accountant course, the aspirants can become either employed in a firm as an employee or can start their own private practice. If you want to start-up your own business, then firstly you need to learn about the important terms and conditions of Business. Before getting started, the first thing that you should keep in your mind named Hard Working and Patience. These are two important factors of business that will bring you to the new height of success. There are various business opportunities in the country that a Chartered Accountant can start without investing huge money. The Chartered Accountant played an important role in the various departments of the organizations such as auditing, assurance, tax consultancy, accounting services, accountants, finance outsourcing and financial reporting. Here, we describe best five business start-up strategy:

  • You can take a franchise of Taxation Software Company
  • Tax Consultancy Services
  • Audit Expertise Services
  • Outsourcing Services
  • Open an Academic for Chartered Accountancy Course

1. You can take a franchise of Taxation Software Company

You can become a dealer by taking a franchise of Taxation Software. You can earn money by selling the taxation software on your behalf as you can create your own sources of income with an unlimited potential. Thus, taking a franchise of Taxation Software is easier and less expensive. Each passing day, the number of taxation software is increasing day by day in the country as there are a number of organizations who are using taxation software for online e-filing.

2. Tax Consultancy Services

Every business today needs an adviser to guide them to track their income and expenses. If you are an expert in tax law, planning and compliance then you can start your own business of taxation services, through which, you can maximize your value by providing Tax Advice to a person or organization. Starting Tax consulting will enable you to meet the global requirement of the clients, which gives you the flexibility and security you deserve. The Tax Adviser can also offer more valuable services to their clients. Tax Consultant, it is a small business that you can easily start.

3. Audit Expertise Services

If you are an expert in accounting and auditing matters, then Auditing Expertise would be a good option to start-up it on your own way. Thus, the audit services allow you to make well-informed business decisions, to better assess the opportunities and risks your business might face, and to boost your company’s credibility with lenders, investors and clients.

4. Outsourcing Services

A chartered accountant can also start up a business of outsourcing and recruit those students who have completed their article-ship and waiting for their final exams. With this, you can manage various conditions of accounting, taxation, legal, compliance, research, financial data management, documentation, ERP implementation, etc.

5. Open an Academic for Chartered Accountancy Course 

The academic is a good option to make your business sprout. Each passing day, the Institute of CA and CPT course are increasing rapidly in the country. The top-notch faculties and positive outcomes will help the institute to grow up in a better manner.

 

Mumbai dotes on its Theobroma. Now, it’s time to fall in love with its owner!

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With the Gateway of India and the Taj gallantly guarding its left, the shopping passageway with typically Indian trinkets piercing through its centre, and Mumbai’s most iconic vintage brands adorning its right, Colaba Causeway is one of those places in Mumbai that invoke the most profoundly fervid feeling of nostalgia. And when there cropped up a charming little cafe and desserts place at the end of the street in 2003, most of us instantly knew that it shall fit right into that reminiscence-heavy frame, and stand the test of time to become as iconic as its neighbours. Twelve years since,Theobroma became a city-wide chain and a household name. Considering this irreplaceable role that Theobroma has played in every Mumbaikar’s culinary exploits, I am sure one is anxious to meet the one who gave us mortals the ‘food for gods’. Without any further ado, meet one of our generation’s most talented pastry chefs – Kainaz Messman.

Kainaz’s lifetime has been about finding the joie de vivre through a happy tummy. Born into a merrily gourmand household, the family’s ties with serving up edible glee go way back. “I grew up in a sweet-smelling house. My family is obsessed with food. Our lives revolve around what we make and what we eat. My passion for baking has been my lifetime in the making,” she fondly recollects.

Her mother would supply cakes and desserts from home, and they were everyone’s absolute darling. “Theobroma is still an extension of that home business,” maintains Kainaz. But between that catering business and it turning into a commercial bestseller, was a series of assortments.

She was determined to pursue law academically, until a summer in France led her to her true-calling. “At the age of 16, I went to France as a Rotary Youth Exchange Student. That year changed my life and career. I fell in love with simple, classic, unpretentious patisserie. Upon my return I proceeded to study French literature, but I already knew I was going to become a chef.”

She procured a formal education in the field from IHM Mumbai, and then went on to OCLD Delhi. A strikingly passionate young woman, she was snatched up immediately by the Oberoi Udailvilas at Udaipur, where she had a rather delicious stint. Her plate was filled with success and progress, until a back injury abruptly threatened to end her career. The doctors broke it to her that being a chef would be implausible, as standing up for long hours and indulging in rigorous work could cause permanent damage. Adamant to create another way after the most convenient one had caved in, Kainaz had already started nurturing a new dream; of starting her own cake shop someday.

Her grit made sure that the day wasn’t far. In 2003, Kainaz boldly decided to start up, albeit with next to no experience to handle the business end of a culinary enterprise.

“I knew how to bake cakes, but not much else. I went from having the responsibility of making one product in a comfortable five star environment to being responsible for everything and totally unprepared for the retail market, the demands, and challenges that lay ahead. Whatever went wrong and whoever’s fault it was, I had to learn that the buck stopped at me, I had to set it right. Running your own business in India can be a minefield of permissions, approvals, bribes, and bureaucracy.”

And indeed, Kainaz had to navigate through the warped side of the spectrum to get what she wanted. “F&B is a male-dominated industry, in India and around the world. Women are in the minority for many reasons. The jobs are physically demanding, hours are unsociable, role models are few. The outside world – government agents, landlords, suppliers, employee candidates –is also disproportionately male. The obstacles are many but largely they are cultural.”

But not even systemic forces managed to provide a strong enough resistance to her spirit. The connoisseur, who initially started out intending to just give you your neighbourhood corner cafe, welcomed the risks with open arms. And today, she can proudly say that “no matter where you are in this vast city, you won’t have to travel too far to catch my signature brownies freshly out of the oven.” She does so with no less than nine wildly popular outlets across the map of Mumbai, each flawlessly retaining the fundamental ability of their love-laced desserts of deluding you into thinking life is bloomin’ awesome!

“When we started, we did not know what to expect. We didn’t even know if we would recover the costs of starting our business or whether we would be able to fill the four small tables we had ordered. We were making the things we liked to eat, we hoped to do well but we could not have ever predicted or dared to hope for the success that Theobroma would become. We have received so much love and warmth and blessings and encouragement that we are humbled and grateful in equal measure,” says Kainaz.

Considering that Kainaz ran an eatery with largely world-cuisine inspired dishes, her success and her brand’s popularity also pointed toward a maturity in our food – fare and culinary sense. “Mumbai has gastronomically evolved over a decade. The customer today is far more knowledgeable, better traveled, has a more developed palette, and is willing to experiment with new products and flavours. People routinely eat chocolate cake for breakfast or have a trio of desserts for dinner. I love that I have been able to be part of this evolution!”

Having been dealt such a serendipitous hand, Kainaz has never once moved her eyes from the goal. Spoiler alert – the icy grip of winter on the north would feel more warm and fuzzy in the years to come, as the best hot chocolate might be coming to your town! “We are in expansion mode. We have nine outlets open and a few in the pipeline. And Delhi is in our sights. It is our biggest market after Mumbai, we courier our products to the Capital all the time. We would love to be there but need to work out how to finance the growth, manage the operation, and maintain quality. I do not have a time frame to offer at this stage, but we are working on it,” she reveals, and I can already feel 10 million northerners hold their breaths.

And Kainaz isn’t all that different from that signature spicy hot chocolate. She serves you sinfully delicious dessert with a smile that makes your day at your favourite corner cafe, but at the same time, stands tall as a remarkable example for everything women can be, in this steadfastly changing food and beverage space.

“Riyaaz Amlani, the President of the National Restaurant Association of India (NRAI), has predicted a rise in the number of female chef owners opening restaurants in the larger cities throughout India. And I find this forecast to be absolutely palatable. The number of female chefs is set to grow.  Women chefs have been under-represented, but the balance is slowly reversing,” she concludes confidently.

 

This man is trying to deliver organic products to customers on a budget

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In his crusade to encourage organic products, Chennai-based Abdul Shukoor is bridging the gap between organic farmers and customers.

In recent years, we have seen a growing demand for organic products across households in the country. There is no doubt that the organic industry is making its way into the lifestyles of many, but expensive products are a concern. In Chennai, one man is trying to eliminate this concern by delivering fresh, affordable, and organic produce straight from the farmers to the households

Abdul Shukoor (34) is happy to have left his high-paying job in the telecom industry about two-years-ago to start making a difference. Stumbling upon a farmers’ market where he saw them selling organic products (vegetables, lentils, oils etc), Abdul was prompted to an idea that would benefit both organic lovers and farmers.

“After leaving my full-time job, I wanted to start something on my own. I sold A2 milk with a friend for about two years, and then I happened to chance upon the farmers’ market, where they were selling organic products. I felt like promoting this in more public places,” Abdul says.

Abdul then decided to procure, pack, and deliver organic products on a small scale to his small but potential customer base. To do this, he associated himself with a small association of organic farmers in Erode called Uyir. It has been a year since Abdul began his journey with the association, and he feels a lot is yet to be done.

“People love organic products and there is a growing demand for it because everyone is realising the ill-effects of chemicals used in farming. Uyir in Tamil means ‘life,’ and this small community of farmers are known for producing genuine organic products. With the culture of home delivery enticing more customers, I decided to start this venture on a small scale. Currently, I have 20-25 customers,” Abdul says

Owing to small customer base, Abdul is restricted to sell organic grocerieslike lentils, cold press oils, and rice along with salt, millets, sugar, jaggery and honey. To avoid wastage of vegetables which he would have to procure in bulk, Abdul is waiting for his customer base to increase, so that he can help the farmers by selling their vegetable produce as well.

Selling his products in public spaces, word-of-mouth marketing, and keeping constant touch with his existing customers has earned their trust in Abdul’s venture.

“The products I procure now are need-based. Customers give me a week’s notice on the products they require, so I buy the exact amount from the farmers. This way I can also ensure the quality of the product I am delivering to the customer. For the farmers, it’s a big deal that their products are sold in the city. I also courier these products across India with minimal shipping charges, based on the distance,” he adds.

Huge profits not important

Abdul realised one of the main reason for consumers to refrain from buying organic products was the cost. He felt the brunt of this when he approached several commercial spaces to sell his products.

“It is great that there are so many stores selling organic products, but they are too commercial. I sell my products by adding a margin of 15-18 percent, but the market adds more than 30 percent margin on the actual cost of products. My venture will make no sense if I added the same margin to my products. The idea is to provide quality products at affordable rates to consumers, so they can keep coming back,” Abdul says

The challenge

Leaving a well-paying job was not the only challenging decision Abdul had to make before setting up YSA Farms. Everyday is a challenge for Abdul who is now struggling to expand his venture with not much support. A one man army trying to do good to farmers as well as his customers, Abdul faces disappointment on a daily basis when he tries to encourage people at home to switch to organic products.

“Charity begins at home, but no one in my family is encouraged to take up farming or even switch to organic products. They tell me that I should rather sell my car, go abroad and work there so that I can earn more money. But that is not what I want to do. I think of this as God’s work, and a little relentless hard work from my end has helped reach at least an entry level in this sector.

Future plans

While Abdul is optimistic about his venture scaling up, he has set his mind on YSA Farms. He aims to set up his own spinach farm, and has been doing extensive research in the area of organic spinach farming. Currently in talks with land owners across Tamil Nadu, Abdul believes he can soon give many farmers an opportunity to grow spinach and other vegetables in these farms.

“I want to take this to farmers beyond Uyir. There are farmers in Pondicherry, Ooty and other places who can benefit from this system. For this I need to be able to buy more. I chose Uyir because they are very cost-effective compared to the rest of Tamil Nadu. But there are many farmers who have heard about what I am doing and want me to buy from them as well. I can’t do that now, but hopefully soon enough,” Abdul says.

Abdul Shukoor can be contacted on [email protected]