About: India Briefing
By Srinivas Raman
With the festive season around the corner, companies in India are particularly vulnerable to risks arising out of the breach of anti-corruption laws. It is customary to give and receive gifts during major festivals in India, and firms typically incur various forms of hospitality and promotional expenditures in the course of business operations.
However, in certain cases, this conduct could potentially trigger serious fraud investigations into the company, even resulting in criminal liability. The compliance regime gets further convoluted in the case of multinational companies operating in India or having business interests in India due to the extra-territorial application of certain foreign statutes.
This article highlights how foreign firms can be implicated in such cases, and suggests international best practices to mitigate liability.
By Dezan Shira & Associates
India is a land of cultural diversity. It is one of the oldest civilizations in the world, and is a complicated mixture of old and new traditions from the West and East. The vivacity of its large cities, the variety of people, the mêlée of sounds, the richness of colors and smells, and the unpredictable nature of day-to-day life – all defines India. If you are planning to do business with or in India, it is important to try and understand the astonishing richness of this vibrant culture.
Given India’s complexity, it is important to avoid generic conclusions on how to do business here. Regionalism, industry, and people are all factors to be taken into account when doing business in India. One’s behavior, etiquette, and approach may need to be modified, depending on whom you are working with.
Ayurveda and natural consumer segments expand in value
Competition in the natural and Ayurveda segments in India’s consumer goods industry is heating up. Natural products now account for an estimated US$3 billion (Rs 185 billion) or 41 percent of India’s total personal care market. Ayurvedic health products alone are forecast to cross US$1 billion by 2021 in value.
While many foreign companies are familiar with natural consumer goods, Ayurveda is a system of ancient Indian medicine that is now integrated into general wellness applications, aside from being practiced as a type of alternative medicine.
Fast moving consumer goods (FMCG) companies leading India’s natural and Ayurvedic segments are: Patanjali, Hindustan Unilevel Ltd (HUL), Colgate-Palmolive, Emami, Himalaya, and Dabur.
Last year a consumer research survey highlighted that over half of Indian consumers looked for ‘natural’ or ‘organic’ ingredients when choosing their hair and skin products. A growing awareness of the harsh effects of chemical constituents showcase an increasingly health conscious Indian consumer.
By Srinivas Raman
The new Goods and Services Tax (GST) regime has brought about a slew of reforms to the indirect tax system, which affect firms doing business in India. One such change pertains to the introduction of reverse charge mechanism (RCM) and the taxation of import of services via RCM.
What is RCM under GST?
Usually, the registered supplier of goods or services is required to pay GST to the government after collecting the same from the recipient. RCM is a process used in case the supply of goods or services is by an unregistered supplier. In such transactions, the recipient is required to directly pay GST to the government instead of the unregistered supplier. It is important to note that in all cases subject to RCM, the recipient must be registered under GST.
By Srinivas Raman
The introduction of the Goods and Services Tax (GST) regime has increased the demand for temporary jobs and organized flexi-staffing firms in India. The flexi-staffing industry in India is worth approximately US$280 billion (Rs 27,000 crores), and is expected to develop in a positive way due to the impact of GST.
How does the flexi-staffing model work in India?
Flexi-staffing or contract labor refers to an employment model where employees are hired by a staffing agency (contractor), and lent out to work at and under the supervision of a user company (principal employer). In such a model, the principal employer does not have any direct employment relationship with the flexi-employees, although they may be liable to fulfill certain limited legal obligations.
In India, the flexi-staffing industry employs more than two million workers in the organized sector – the majority of whom are aged 21-30 years. Most flexi-employees are employed in jobs such as data operations, accounts, sales, back end operations, administration, and marketing.
GST relief for exporters, SMEs among key GST Council decisions from October 2017
A host of concerns raised by exporters and small businesses over the Goods and Services Tax (GST) refund mechanism and increased compliance burden were addressed by the GST Council meeting on Friday.
For exporters, the finance minister, Arun Jaitely, confirmed that refund of GST for July will be secured by October 10, and for August by October 18. Further, exporters will have access to a digital wallet by April next year, in which a nominal amount will be deposited for tax credit purposes. Until then, exporters will be subject to a nominal GST of 0.1 percent.
For small businesses, the option to file returns and pay taxes by quarter will ensure ease of compliance – instead of the monthly requirement. Nonetheless, the GST-3B form will have to be filed monthly till December this year.
Further, the composition scheme will be extended to businesses with a turnover of up to US$150,000 (Rs 1 crore), instead of the previous US$110,000 (Rs 70 lakh) limit.
In other decisions, the GST rates were revised for selected goods and services.
By Bradley Dunseith
Bitcoin trading in India peaked to over US$3.5 million this September, following a steady rise in domestic usage. While a monthly trading volume of US$3.5 million may seem insignificant in juxtaposition to global trends – the U.S. bitcoin trading volume for the same month exceeded US$36 million – the figure demonstrates India’s growing interest in cryptocurrency.
India’s financial institutions are digitizing at a time when nearly 40 percent of the country’s 1.3 billion population own smartphones. Indians, furthermore, are becoming skeptical of keeping the entirety of their savings in banks – a sentiment exacerbated by the recent demonetization of 86 percent of the country’s paper currency.
These trends all make India ripe for a spur in cryptocurrency usage, and trading. Looming government regulations, however, may turn this boom into bust.
By Ramya Bodupalli
Over the past two years, Prime Minister Modi’s government has introduced a slew of measures to prevent money laundering, counterfeiting, hoarding, and tax evasion – all popular modes of operating in the black economy. Ending these practices was, at least partly, responsible for two of the government’s flagship initiatives – GST and demonetization.
Relatedly, making the Aadhaar biometric identification number mandatory for banking transactions and filing returns, also aims to bring transparency in the Indian economy.
As part of this crusade, the government is now actively targeting shell companies.