the weekend review
WHAT THE REVISION IN GST RATES MEANS FOR CONSUMERS
Prices of a large variety of consumer goods are expected to come down after the goods and services tax (GST) Council decided to move 178 items from the highest tax bracket of 28% to 18% on Friday.
However, restaurants are expected to increase menu prices since, despite a lower rate of 5%, they won’t be able to claim input tax credits. Items that will now be taxed less include liquid soaps, detergents, razors and after-shave products.
The changes will come into effect by November 15. Among the biggest beneficiaries of these lower rates is Hindustan Unilever Ltd, the country’s largest packaged goods firm. In the quarter ended September 2017, HUL made 33% of its total revenue from the home care segment which includes detergents and dishwashing soaps.
However, consumer durables will continue to be taxed at 28%. Manufacturers say this will not affect sales.
The biggest blow came to restaurants. The government announced that eating out will now be taxed at 5%, the lowest tax slab. The catch is, they will no longer be eligible for input tax credits.
EATING OUT GETS CHEAPER AS NEW GST RATE KICKS IN
Eating out became marginally cheaper from Wednesday as consumers now have to pay less tax on food served in restaurants.
Last week, the GST Council cut GST rates for all restaurants, except the ones located within hotels with room tariffs of ₹7,500 and above and outdoor catering, to 5%.
Earlier, the levy was 18% for air-conditioned eateries and those with liquor licences and 12% for non-air-conditioned restaurants.
However, food bills may not come down in line with the expectations of consumers as the government has withdrawn input tax credit for restaurants where 5% GST is applicable.
Under the input tax credit, restaurants could claim an offset on the tax they pay on inputs (essentially raw materials) against the tax on the final products. According to estimates by Federation of Hotels and Restaurants Association of India (FHRAI), input tax credit accounts for 3-4% of profit of a restaurant.
PUBLIC SERVICES TO BE DELIVERED AT DOORSTEP, SAYS DELHI GOVT
Residents of Delhi will soon have public services delivered to their doorsteps, according to a decision taken in a cabinet meeting chaired by chief minister Arvind Kejriwal on Thursday.
The service which will roll out in the next three-four months will include 40 services to start with.
The Aam Aadmi Party (AAP) government will add 30 schemes every month after the launch until all services are covered. “It is for the first time that such a provision is being made by any state government in the country. The government has decided that all the services under Delhi government will be home delivered. People will have to just call the government and they will come to your house at your convenience, take the required data and deliver documents,” deputy chief minister Manish Sisodia told reporters.
ICICI BANK TO OFFER SMALL INSTANT CREDIT TO PAYTM USERS
ICICI Bank Ltd has tied up with Paytm, the largest digital payments platform in India, to offer short-term credit to their common customers, the first such move by any Indian bank.
Paytm-ICICI Bank Postpaid will function like a virtual credit card and will help the country’s largest private sector lender to assess the credit profile of customers who have no or minimal credit history.
Customers who are shopping through the Paytm platform can choose the option to pay later and use the credit line offered by ICICI Bank. The product is not available for offline customers yet and only those customers who have an account with ICICI Bank and use Paytm to shop will be eligible for the product.
The credit limit has been set at ₹20,000 and the amount borrowed needs to be repaid within 45 days. “Beyond 45 days, the amount borrowed will attract a charge of 3%, similar to our credit card offerings,” said Anup Bagchi, executive director at ICICI Bank.
ITC TO TAKE FABELLE CHOCOLATE BRAND TO RETAIL OUTLETS SOON
Fabelle luxury chocolates, made by ITC Ltd and sold only at the company’s hotels, will come to retail stores across the country next year, a top executive at the company said. ITC will set up separate manufacturing facilities for this purpose.
In May 2016, ITC introduced Fabelle chocolates at boutique stores at its hotels. The company currently has seven Fabelle boutiques and plans to open its first full-fledged standalone store in Delhi by end-December.
“This is part of the plan to enter the mass (premium) segment. You establish your credibility and then you get into the mass premium segment and make it more accessible in terms of availability,” Hemant Malik, the divisional chief executive of ITC Foods said in an interview.
E-WALLETS CAN NOW BE USED AS PREPAID CARDS
Last month, the Reserve Bank of India issued e-wallet guidelines, indicating that you will have to face higher compliance standards if you want to continue using e-wallets.
As per the guidelines, e-wallets could soon become interoperable too. Currently, you cannot do a transaction between, for instance, Paytm and Mobikwik e-wallets.
Similarly, not all e-wallets are accepted at all merchant outlets and e-commerce sites.
This happens because typically, online or offline merchants accept e-wallet transaction only after signing exclusive tie-ups with an e-wallet company.
That can somewhat restrict their wider usage. To make e-wallets acceptable on a larger scale, e-wallet companies have now started offering virtual prepaid cards on apps for their customers.
Prepaid cards of most e-wallets are virtual cards. You can generate it from your e-wallet app and it will stay inside the app. Some e-wallets have started issuing physical prepaid cards too.
Like any debit card, this card will also come with a personal identification number (PIN).