Manufacturers in NE and Himalayan states demand GST refund from states

Business turning unattractive in absence of refunds

by Arjit Singh Bhambra

The manufacturing units in north-eastern (NE) and himalyan states are still perplexed by the ambiguity over the continuation of tax benefits under the GST regime, as per a report in Business Standard. Key concerns include reduction of 42 per cent in the tax benefit, unavailability of an appeals mechanism, and the restriction on refunds for job work in case of third-party manufacturing contracts. Recently, the department of industrial policy and promotion (DIPP) notified guidelines allowing refunds up to 58 per cent of the CGST [see here]. The central government has further clarified that since 42 per cent of GST is passed on to states by way of devolution, it can not reimburse that portion. Manufacturing units have now approached the state governments for providing reimbursements and continuation of the tax benefits from their share of the GST. However, tax experts have suggested that the current scenario has rendered manufacturing unattractive in these states.

References
1. http://smartinvestor.business-standard.com/market/story-488888-storydet-Tax_benefit_cloud_over_plants_in_Northeast_hilly_states.htm#.Wd4BE1R95FQ
2. http://www.business-standard.com/article/economy-policy/factory-units-in-northeastern-states-under-gst-benefit-cloud-117101001113_1.html
CMIE STATISTICS
Unemployment Rate
Per cent
4.8 +0.1
Consumer Sentiments Index
Base September-December 2015
92.2 -0.4
Consumer Expectations Index
Base September-December 2015
90.5 -0.3
Current Economic Conditions Index
Base September-December 2015
95.0 -0.5
Quarterly CapeEx Aggregates
(Rs.trillion) Dec 16 Mar 17 Jun 17 Sep 17
New projects 2.32 3.77 2.02 0.88
Completed projects 1.00 1.91 1.13 0.70
Stalled projects 1.13 0.70 2.66 0.64
Revived projects 0.18 0.67 0.29 0.14
Implementation stalled projects 0.82 0.33 0.67 0.50
Updated on: 19 Oct 2017 4:20PM
Quarterly Financials of Listed Companies
(% change) Sep 16 Dec 16 Mar 17 Jun 17
All listed Companies
 Income 2.1 6.2 10.2 10.2
 Expenses 1.9 6.3 11.9 10.5
 Net profit 14.6 40.3 16.8 -18.9
 PAT margin (%) 6.9 6.1 6.1 5.4
 Count of Cos. 4,503 4,503 4,427 4,257
Non-financial Companies
 Income 0.6 5.9 11.8 10.9
 Expenses -0.2 7.2 15.5 11.1
 Net profit 26.7 24.6 -1.1 -24.3
 PAT margin (%) 6.9 6.2 6.3 5.3
 Net fixed assets -9.2 7.5
 Current assets 8.1 2.1
 Current liabilities 11.7 8.5
 Borrowings 3.1 4.9
 Reserves & surplus 8.4 6.5
 Count of Cos. 3,476 3,482 3,432 3,324
Numbers are net of P&E
Updated on: 19 Oct 2017 4:30PM
Annual Financials of All Companies
(% change) FY13 FY14 FY15 FY16
All Companies
 Income 12.6 10.0 5.0 1.0
 Expenses 12.8 9.9 5.1 1.2
 Net profit 1.0 -2.2 1.1 -15.2
 PAT margin (%) 3.5 3.2 3.2 3.0
 Assets 14.3 12.3 9.4 8.8
 Net worth 9.6 9.6 8.8 7.7
 RONW (%) 6.8 6.2 6.1 5.3
 Count of Cos. 25,932 23,621 23,131 19,375
Non-financial Companies
 Income 11.9 9.7 4.1 0.0
 Expenses 12.3 9.3 4.3 -0.6
 Net profit -8.4 -2.4 -6.3 6.5
 PAT margin (%) 2.4 2.2 2.1 2.7
 Net fixed assets 12.9 11.6 13.1 13.9
 Net worth 7.9 8.2 7.3 7.0
 RONW (%) 5.5 5.1 4.9 5.6
 Debt / Equity (times) 1.1 1.1 1.1 1.0
 Interest cover (times) 2.1 2.0 1.9 2.0
 Net working capital cycle (days) 72 69 67 67
 Count of Cos. 20,312 18,893 18,620 15,945
Numbers are net of P&E
Updated on: 21 Sep 2017 10:15AM

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