GST TO SPUR NEW LISTINGS IN INDIA?
Up to 1,000 newly tax-compliant firms may pursue IPO on Mumbai bourse
INDIA’S introduction of a single nationwide Goods and Services Tax (GST) may have an unexpected consequence: prompting more companies to sell shares to the public.
That’s the view of Ashishkumar Chauhan, chief executive officer of BSE Ltd, the operator of the Bombay Stock Exchange, which is backed by Deutsche Boerse AG.
He said smaller firms that became tax-compliant due to the levy, scheduled for implementation on July 1, would be more inclined to go public because they no longer had anything to hide.
Some 1,000 companies would list on his bourse over the next four years, he estimated.
Some 74 companies raised 276 billion rupees (RM18.41 billion) through first-time share sales on the BSE in the year ended March, the highest since 2010, according to the exchange.
Investors and analysts have been debating how the country’s biggest tax overhaul since independence will impact the mar- kets, with some predicting teething problems.
While the levy is widely projected to boost government revenue and increase the ease of doing business in the world’s largest democracy, attention is also focusing on less obvious outcomes of Prime Minister Narendra Modi’s policy.
Once the landmark tax takes effect, an estimated 51 million small firms that do much of their business in cash will have to keep digital records, making it harder for them to under-report revenue. That means there would no longer be an incentive for them to avoid listing, said Chauhan.
BSE aimed to help companies raise US$100 billion (RM428 billion) annually over the next four years from initial and secondary offerings of stocks and bonds, up from the present US$30 billion a year, said Chauhan. Bloomberg