brokers

Choosing An Ecommerce Consultancy

Wed, 26 Jan 2011 17:54:56 +0100

Over the past decade, as the internet has grown exponentially, companies have increasingly used it to sell their goods and services online and there are many large companies, such as Amazon and eBay, who successfully conduct all their business on the Web. Of course, selling online has a number of advantages compared with more traditional methods. The Internet is a global marketplace, so an online shop has the potential to reach a worldwide audience.

Your business can be open 24 hours a day, 7 days a week, accepting and processing orders throughout the night without your intervention. And the lack of supervision allows you to cut costs, which can translate into savings for your customers, giving your business a competitive edge. Finally, because you can store the goods in a large warehouse away from the city center, you will be able to keep your stock up to date and in greater quantities, so that any orders can be shipped without delay. Your ecommerce wing will only be successful if it is managed effectively, however.

If your operation is a large one and has its own IT and marketing teams you should be able to set up an online commercial wing without difficulty. Building your own ecommerce operation allows you to maintain close links with your existing ordering and inventory systems and permits a greater level of customization both in terms of the features and look of the store and the back-end interface. However ecommerce is quite a specialized field requiring a level of expertise and can take a considerable amount of time to implement properly. The level of ongoing maintenance that is required can also be a drain on your internal resources. An alternative might be to have your ecommerce software hosted by an external company, although this might result in your site having a generic look and there being restrictions about how much you can change it.

A better way of launching an ecommerce service is to hire a consultant to give you advice and assistance regarding the implementation and day to day running of the site so it can be easily maintained without any special skills being required. But which consultant to choose? Well, perhaps the best way of selecting a consultant to suit your needs is to run through a checklist of the various services they offer and establish what is included in the standard consultancy fee.

At the very least, an ecommerce consultancy should offer the following:
# Advice about the software necessary to build the site you want and whether you will be able to manage and update it on your own once the software is implemented. It is no good if, having contracted a consultant to do a specific job, you feel the need to contact them every time something goes wrong. A consultant';s job should also involve giving your employees the proper training so that they will be able to handle problems as and when they arise.

# An overview of the various features your site should have in order to put the customer at ease and encourage them to buy as many of your products as possible. Have a look at the way Amazon works, giving you recommendations based on products you have bought or previously looked at, offering quick and advanced search capabilities and suggesting that if you buy goods over a certain value you will be eligible for free shipping. Other features you should ask about include the provision or a help desk, the management of items that can be pre-ordered and saved for later and a gift wrapping service.

# Consumer concern about internet security is considerable and the ecommerce consultancy should have a way of making users feel comfortable about submitting personal details and sending funds online. Equally it should have a fail safe method of saving payment details in a secure facility to ensure the minimum amount of user input is required for returning customers.

# The option should be available to change multiple product prices simultaneously and enable integration with third party databases so that product details and prices can be automatically updated.

# Check that the sales activity is provided online and in full. Features such as overall sales, sales per category and sales per product over defined periods can help give direction to your marketing campaign. In addition, the ecommerce consultant should be able to optimize your product pages for search engines, so that your site is just a click away from a prospective customer.

# Does it understand what your requirements are, what your company offers and what your customer's needs are? The consultancy will only help you build the site you want if they understand exactly what it is you do want.

# Look into the length of time they have been in business and their track and solvency record. Ask them to provide some sample sites to look at and request a copy their client list is, so you can conduct your own research.

# Assess whether their level of customer support is sufficient. For example, do they have a twenty four hour help desk that provides assistance by email and over the telephone. Find out about the tariff for this service and the average resolution time.

What's Day Trading?

Wed, 26 Jan 2011 11:42:18 +0100

What is Day Trading?

Day Trading involves taking a position in the markets with a view of squaring that position before the end of that day.
A day trader typically trades several times a day looking for fractions of a point to a few points per trade, but who close out all their positions by day's end.
The goal of a day trader is to capitalize on price movement within one trading day.
Unlike investors, a day trader may hold positions for only a few seconds or minutes, and never overnight.

What day trading really means.

The term "day trading" is a widely misused and misunderstood term. Real day trading means not holding on to your stock positions beyond the current trading day; in other words, not holding any position overnight. This is really the safest way to do day trading because you are not exposed to the potential losses that can occur when the stock market is closed due to news that can affect the prices of your stocks.

Unfortunately, many people who claim to be "day trading," hold stocks overnight because of fear or greed, thus setting themselves up for the catastrophic elimination of their capital. When day trading currencies, the term "day trading" changes slightly. Since currencies can be traded 24-hours-a-day, there is no such thing as "overnight" trading. Thus, you can have open positions for longer than a day with active stop losses that can be activated at any time.

Day trading can be further subdivided into a number of styles, including:

Scalpers: This style of day trading involves the rapid and repeated buying and selling of a large volume of stocks within seconds or minutes. The objective is to earn a small per share profit on each transaction while minimizing the risk.
Momentum Traders: This style of day trading involves identifying and trading stocks that are in a moving pattern during the day, in an attempt to buy such stocks at bottoms and sell at tops.

Advantages of Day Trading

Zero Overnight Risk: Since positions are closed prior to the end of the trading day, news and events that affect the next trading day's opening prices do not effect your portfolio.
Increased Leverage: Day Traders have a greater leverage on their trading capital because of low margin requirements as their trades that are closed in the same market day. This increased leverage can increase your profits if used wisely.
Profit in any market direction: Day trading often will utilize short-selling to take advantage of declining stock prices. The ability to lock in profits even as markets fall throughout the trading day is extremely useful during bear market conditions.

About TradersEdgeIndia.com Day Trading Picks Newsletter

Tradersindia.yolasite.com Day Trading Picks Newsletter specializes in finding day trading opportunities for both the scalper and momentum day trader using technical analysis and the Chaos Theory. Our trading system in based on chart formations, technical analysis, chaos algorithms, fractals and volumes....one that has been used to successfully day trade the Indian stock and derivative markets for years.
Only Tradersindia.yolasite.com Day Trading Picks Newsletter can accurately predict the support and resistant zones for the day. This combined with our trend analysis, intra-day volatility and stop loss levels can help any day trader extract maximum profits from the markets with great regularity.
Each day we will email you our list of Indian stocks to watch for significant movement in our Day Trading Picks Newsletter. We will supply you with precise support, resistance, entry, exit and stop-loss levels on all stocks.
Our picks generally are among the most actively traded stocks. We only recommend stocks that are in a STRONG trend and have what we believe to be sufficient resilience, liquidity and momentum.

At Tradersindia.yolasite.com, we work hard to help you preserve your trading capital and avoid many of the pitfalls that most day traders can fall prey to.

Vat and the Central Taxes in Mumbai, India

Sat, 13 Mar 2010 14:32:57 +0100

1. INTRODUCTION:

1.1 VAT Council of States, the body of State Finance

Ministers and Standing Council of Commissioners have agreed that the VAT should be implemented all over India from 1-4-2001. However, subsequently, after taking into consideration the fact that the groundwork is still in progress, the date has been extended to 1-4-2002. One thing is certain that the word ‘VAT’ [Value Added Tax] is a symbol of Globalisation and Liberalisation, which is a universal phenomenon for the current age is bond to be implemented in India.

2.SUCCESSFUL TAX SYSTEM:

2.1 Among many other things, the successful tax system always tries to avoid cascading effect of the tax. The VAT, being Value Added Tax, it presupposes that, if the tax is levied on sale value, all the taxes paid while making purchases as well as all the taxes paid during the process of manufacture or import are to be refunded. The CREDIT method or INVOICE method of VAT system ensures that the taxes shown in the purchase bills are given the credit to the dealers. The uncontrolled incidence of tax always shrinks the industry and trade and keeps away from the developing process of the national economy. The tax system has to be neutral so far as its effect on the choice of inputs and outputs for the manufacturer and choice of the goods for a consumer is concerned.

2.2   At the same time multiplicity of the rates has to be removed in a model system of taxation. That’s why the Finance Ministers Committee has agreed to keep the number of rates to four. Widespread taxation encourages the vertical integration of industries and thus discourages small-scale ancillary industries. Heterogeneity in the structure of tax, that is having different taxes like Sales Tax, Turnover Tax, Surcharge, Additional Tax, makes the system so much complicated that either there is tendency towards evasion or it makes a way for clashes between the administration and the assesses.

3 STEPS TOWARDS VAT:

3.1 As pointed above VAT Council of States, and Standing Council of Commissioners have agreed that the VAT should be implemented from 1-4-2002. It was also agreed that there should be floor rates common to all the States. Though Maharastra State had introduced the floor rates from 1-1-2000.

But due to the pressure from people they were corrected on 13-1-2000 and 22-1-2000. However some fine-tuning of the classification has yet to be done giving another look at the grouping of the goods in to four-rate categories and floor-rates.

3.2 Abolition of the tax-related incentives scheme is another step in the direction of bringing VAT in to operation. In fact the States have taken this opportunity to stop the incentives to be given in the name of Backward Area. This will not only raise the revenue of the States but will also put end to the war among the States in the form of harmful competition of reducing tax rates to give tax incentives.

3.3 Draft model of VAT legislation has been prepared by the National Institute of Public Finance and Policy. The circulation of papers on VAT will certainly be creating the atmosphere towards readiness to accept VAT.

4. EXPERIENCE OF VAT IN MAHARASTRA:

4.1 During the period from 1-10-1995 to 31-3-1999 Maharastra had VAT in a limited sense. Initially the limit covering the dealers under VAT was Rs. one crore but was brought down on 1-7-1997 to Rs. 40 lacs. Though the additional tax and Turnover Tax was abolished, the rates were over all increased to cover those taxes [most of the goods taxable at 10% were taxed at 13%]. Some 12 industries and 100% export units were allowed the full set-off of the sale tax paid on inputs.

4.2 It is said that the VAT was abolished from 1-4-1999 due to fall in the Sales Tax revenue. But the Economists do not agree to such reasoning. Since there was a general recession in the industry during 1996 to 1999, the govt could not have expected the increase in the tax revenue on implementation of VAT. In fact the fall in the tax revenue augmented by the set-off policy of giving refund to manufacturers manufacturing tax-free goods, 100% exporting Units, 12 preferred industries and reduction in the burden of taxes on inputs from 4% to 3% to all manufacturers. The decision to abolish Vat in Maharastra was thus a non-economic one, tinted with political surroundings.

5. CENTRAL SALES TAX:

5.1 Central Sales Tax was introduced in India in 1957. Every one knows the chaos created by the different basis for levy of tax on interstate sales, like situs of sale, manufacture or consumption criteria etc. With a view to provide the levy and collection of taxes on interstate sales and to put restrictions on the goods declared as of special importance the Central Sales Tax was brought in. But the main and indirect object of the Central Sales Tax Act was to keep watch on the movement of goods sold in interstate sales and thereby regulate and monitor the interstate trade so as to avoid the evasion of taxes. That is why the rate of tax was only 1% in case of transactions between the registered dealers.

6. HAS CENTRAL SALES TAX OUTLIVED ITS UTILITY?:

6.1 The rate of Central Sales Tax is now increased to 4%. Thus instead of regulatory object of the Central Sales Tax Act, it has turned in to revenue earning tax. Because of higher rate of tax there is more evasion. The availability of bogus ‘C’ forms and misuse of ‘F’ forms by taking shelter of branch transfers or consignment sales, is the direct result of the higher rate of Central Sales Tax. The higher rate has also affected the national economy, as the goods produced in Indian state are costlier than the goods imported from foreign countries.

6.2 The levy of Central Sales Tax on the inputs has tendency to increase the cost of production. This also has a cascading effect because the finished goods of one state may be the raw materials for goods being manufactured in other state. Thus the final product has heavy tax burden because no state is willing to refund the tax burden levied by other state. This also results in unbalanced growth of industries without having any relation to the best-suited environment for the production of goods.

6.3 The incidence of Central Sales Tax is discriminating against the consuming states. The consumers of industrial backward states have to pay the Central Sales Tax on the goods purchased from other states. This tax is collected in the coffers of the developed states. Within the semi-federal feature of the Indian Constitution, it is socially unjustified to burden the poor people of the backward state with the tax going to the industrially developed state.

6.4 Obtaining ‘C’ or ‘D’ forms from any Sales Tax office is very difficult processes. In fact obtaing the ‘C’ form is itself a topic for separate and independent article. Misuse of ‘C’ forms has another story towards evasion of tax. Instead of smoothening the interstate trade, the ‘C’ form hampers the free flow of trade from one state to another.

6.5 The advantage of the situation like one that is available to the European Common Market is denied to Indian states because of Central Sales Tax. The Central Sales Tax does not allow the states to unite to form the common market that is essential in the wake of Globalisation and Liberalisation.

6.6 The export trade of India is also affected by the levy of Central Sales Tax. The export is exempted from tax but the inputs required for the goods to be exported is not exempted. The penultimate sale of the goods to be exported is exempt, but the raw materials used for manufacture of the goods to be exported are not exempted. This results in increasing the cost of production which directly affects the export trade.

6.7 The penultimate sale in the course of export is exempt under Central Sales Tax Act. But to claim such exemption form ‘H’ has to be produced. It is very difficult for the dealers selling the goods to exporters to obtain ‘H’ form.

Ordinarily the exporters do not have a confirmed order in hand unless the samples as drawn from the bulk are and shown to the foreign buyers. More over the exporters are reluctant to give ‘H’ form as the details about the foreign importer, mode of dispatch and destination are to be mentioned in ‘H’ form.

7 VAT AND CENTRAL SALES TAX:

7.1 As discussed in para 6 above the Central Sales Tax needs to be abolished. If it cannot be abolished before 1-4-2002, that is before coming in to force the VAT, the provision to grant refund of the Central Sales Tax paid on the inputs must be made in the VAT. In Canada, the country on whose pattern the ensuing VAT is said to be drafted, there is no tax on the sales made in the course of interstate trade and commerce. Inter state sales are exempt from taxes. It will be also in consonance with the basic idea of VAT that it is a tax on the ‘value added’ and once the tax is levied on the higher value of the sale point, the credit for the all kinds of taxes paid on the purchases should be refunded.

8. SERVICE TAX:

8.1 For the first time in the year 1994 the Service Tax was introduced in India as an associate of Central Excise Act. The telephone service, non-life insurance and Stock Brokers were the first to be brought under the purview of the Service Tax. Since then the net of Service Tax is being widened and today about 41 services are on the list of taxable services. The rate of tax is uniform at 5% of the receipts for the value of taxable service provided by the service provider. The separate registration by the service provider is necessary, which is given by the Central Excise authorities. The Service Tax can be colleted from the clients and has to be paid quarterly to the govt. Failure to follow the procedure and late payment of taxes attract interest, penalty and punishment.

8.2 The trader or the manufacturer, who will be paying VAT, will ordinarily be paying the Service Tax on the expenses for following services that are directly utilized by him in the process of value addition.

i]   Telephone and Telegraph Charges, Fax charges, Property,Insurance, Courier charges;

ii] Advertising expenses, Photography and Video shooting charges;

iii] Charges of Consulting Engineer, Architect, Interior decorator, Security agency;

iv] Charges of Management Consultant, Chartered Accountant, Cost Accountant, Company Secretary, Market Research Agency, Scientific or Technical Consultant, Banking and Financial Institution charges, On-line Information Service charges;

v]   Custom House Agency charges, Shipping Line and Container charges, C & F Agency commission paid, Air Travel Agency charges, Automobile Service charges.

8.3 When all such charges going into the manufacturing or trading expenses bear the Service Tax burden of 5%, levy of VAT on the sale price comprising the said charges will have a cascading effect on the price structure of the commodities. Therefore in a perfect VAT system there is no place for the Service Tax. It has to vacate the place for VAT. If that is not possible, in the larger interest of economic growth, the refund of the Service Tax paid on all kinds of inputs must be given credit in full.

8.4 In Canada there is GST, which means Goods and Service Tax. It is about 7% and is collected by the Federal or Central Govt. States used to levy RST or VAT at 8%. Now there is only one tax system known as HST [Harmonised Sales Tax]. It is levied at 15%. It is comprehensive tax covering as much as possible at the bases. The tax on services is also included in HST.

9    CENTRAL EXCISE DUTY:

9.1 The levy of excise duty is undoubtedly claiming the substantial share in value addition process. The present scheme of Modvat is only restricted to the credit and refund of the excise duty paid on the raw material used in manufacture or process resulting in new commodities.

9.2 When VAT comes into existence, the levy of tax being on the sale price that is on the increased value, to avoid the ill effects of multi-taxation it is essential that the Central Excise Duty paid on the inputs is given credit or is refunded when the VAT is paid on the output.

10 CONCLUSION:

Since VAT will be comprehensive tax levied on the sale price, to avoid its ill effects on the growth of the economy, the abolition of Central Sales Tax and Service Tax must be given a serious thought. If its abolition is not possible then, to be in conformity with the optimal tax theory, it is very essential that all kinds of taxes paid on the inputs must be given credit or be refunded. In this article, the taxes levied by the Central Acts are only considered. What is true of Taxes under Central Acts is also true of the other taxes levied by the States, like Works Contract Tax, Lease Tax, Luxury Tax, Motor Sprit Tax etc. But that will be another story.

Traders India | Forex Trading Tips

Sensex India

Mon, 08 Feb 2010 18:50:28 +0100

It is the investors' world and many industry honchos, be it in India or at the global level, are more or less dependent on shares. The ultimate source of information on the money market, stock trading, market upbeat, downslide and related regalia, is the sensex. A partial industrial community representing brokers, share traders rely on the sensex for their source of revenue. Almost all nations and states display their sensex, exhibiting the up-to-the minute economy trends. With the economic downfall, it is not only brokers and companies but also investors hailing from majority of households that are inhaling the 'opium of downbeat'. The complete economic scenario engulfing the common masses is witnessed at large leaving many jobless and bankrupt. This is the effect of the sensex index displaying a great fall during the last quarter of the year 2008. Thanks to the initiatives taken up by governments in several nations; the sensex is climbing but at a low rate.

Sensex India has mixed results to offer with thousands of stocks losing and hundreds gaining. The US, of late, has been witnessing deepening recession, also affecting Asian markets with Canada based Nortel filing for bankruptcy. While on one day, the BSE sensex showed high volumes with increased index figures, on another day, again the figures go neutral or lower. The most highly affected trading companies on the BSE sensex that have been on a declining rate are Tata Consultancy Services, Infosys, Wipro and more. The sectors that are faring well at present with very little gains are realty, banks and metal stocks.

The thirty primo companies listed on BSE sensex saw major rises and falls, the IT sector being the most affected with the Satyam fraud revelations and Nortel bankruptcy. The market, especially inflation, in addition to the downslide, has also been declining for ten consecutive weeks now and it is further going to show lower figures by the end of the current fiscal. Despite the Sensex India showing mixed results, the Indian government with its innovative and corrective measures still hopes for a 7% growth rate.

Forex Trading India

Mon, 08 Feb 2010 19:08:19 +0100

Forex Trading A Great Investment Decision

Today the Forex Market makes for one of the best investment decisions an investor or trader can make. With the trillions of dollars daily being exchanged on the Forex market today’s trader has no problems with liquidity issues. Having seen the meltdown of many equities markets in the past 12 months this has also helped see many new Forex Traders
emerging. The Forex market almost never sleeps, which means that the trader can get in and out with ease and without fear of a company collapsing.

So here are 4 reasons why you too should be investing in the Forex Market.

1. Almost anyone can start trading in the forex market as the minimal capital requirement with many Best Forex Broker is around $100, despite popular belief that you need large amounts of capital. As long as you follow the correct trading principles you can start making income from your capital.

2. The forex market is massive, there is trillions of dollars being traded every day, so you don’t have to worry about being able to exit a trade, unlike what has happened in recent times with stocks.

3. Larger volatility. Forex is the most volatile market in the world. What this means? The ability to make large profits every single day, as it does move extremely quickly!

4. Ability to make money
even in times of a recession. Unlike stocks which are very hard to profit from during recessions, you can profit no matter which way the market goes. As you have the ability to be able to long or short on the Forex Market. While once the stock market melts, it can be difficult to make profits in these markets.

Now you have the reasons to start trading the Forex Market, now what you need to do is educate yourself so that you can benefit from this amazing market. A great place to start to learn more about the Forex Market is with the CFD FX REPORT, they offer a host of educational lessons and can help you find the best Forex Broker in the market to start trading with.

You never know this maybe the article that gets you started on the greatest market in the world.

CFD Brokers

Tue, 19 Jan 2010 18:51:24 +0100

Today as the world economies slow down people are now seeking out extra ways to generate income. What has grown with a great deal of popularity in the past few years has been CFD Trading. CFD turns over in excess of $2 trillion dollars per day how much of that are you currently making?

A CFD broker with experience with preferably with a lot of happy clients and experience is the CFD Broker that you want to be using. Once you've found the ideal CFD broker, all that's to be done is, keep a regular check on your investments and it is advised to do it independently to avoid scams, because one can never know. So, how to find the right CFD broker, is that the question? Well, the great news for you is, this article was written just for you.

Every single on of us will prefer different levels of risk and depending on that factor you might like to check how different CFD broker work and then select the one from them. Now before you start the search, remember to strike down brokers promising huge profits, they are scams without doubt and same for brokers who are promising huge profits or no risk. Trading always involves some level of risk because of the nature of the market which you must be prepared to incur and also understand that losses can and will occur. You must understand no one can pick the market 100% of time.

Here are some important things to consider when you are choosing a CFD Broker. Make sure to check the spread of the CFD broker as that's where they earn their money, read their terms of service carefully and check the services offered. So the bigger the spread the more money they are making, therefore the less you are making.

There might be a lot of services being offered upfront at no cost but you might be billed for them later on, so make sure to sign up only for the services that are required.

A CFD broker is a long term partner for financial success so, make sure to research their background well. All that's to be done is put in a little effort by checking the credibility of the CFD broker or company upfront for peace of mind in long term.

So if you don't have the time to research CFD Brokers yourself the CFD FX REPORT has recently researched all of these brokers and come up with what they believe to be the Best CFD Brokers in the Market.

In order to become a successful CFD Trader the key is education and the best place to continue to learn from is the CFD FX REPORT they offer a host of Free education lessons. This is a must visit site if you are serious about making money from trading.

Charting Your Way to Higher Forex Profits

Tue, 19 Jan 2010 18:51:46 +0100

The FOREX market is growing in popularity at a rapid rate, because of the money that can be made by traders. The popularity can be attributed to the money that can be made, the availability of being able to trade almost 24 hours a day 6 days a week and anyone can do it. It is also a world wide market that affects everyone. It is also very easy to get started in.

So how can you be successful in the world of FOREX Trading?

To become successful you must firstly understand the FOREX Charts, what is known as Technical Analysis, is described as the study of price and trading history of a particular currency pair.

Technical analysis stands on the opposite sidewalk to what is known as Fundamental analysis, which is defined as the study of the actual nature and characteristics of the stock or of a particular currency pair in the case of FOREX.

It is possible to incorporate both technical analysis and fundamental analysis when it comes to making trading decisions. The technical analysis techniques come from studying the past prices on charts and trading action during long periods of times which then allows the technical indicators to come into play to make the future trades possible. To learn more about technical indicators and technical analysis it is worth visiting the tradersindia.yolasite.com they specialize in educating traders to become more educate.

Technical analysis relies on the empirical evidence to assert that prices will trend. The most important aspect of technical analysis is that prices must trend in the FOREX market

Technical analysis has lots of different methods and tools in its arsenal; they all share the characteristic of relying on the assumption that price patterns and trends exist in the markets. They also rely on the fact that history will repeat itself in the fact that past trends will occur again. Of course, technical analysis is not 100% accurate, nothing can be 100% accurate but a correct analysis by these methods and techniques will give results that are correct much more often than they are wrong. And this is the basis for building a profitable FOREX trading system.

By understanding that nothing can be 100% correct is where money management skills come into play, you must understand this. When you are trading you must have rules and use things such as stop losses.

When finding a FOREX Broker to use you need a FOREX Broker that offers guaranteed stop losses, to find the Best FOREX Broker visit the tradersindia.yolasite.com they have recently reviewed all the brokers and can point you in the right direction.

Vat and the Central Taxes in Mumbai, India

Wed, 06 Jan 2010 18:00:29 +0100

1. INTRODUCTION:

1.1 VAT Council of States, the body of State Finance Ministers and Standing Council of Commissioners have agreed that the VAT should be implemented all over India from 1-4-2001. However, subsequently, after taking into consideration the fact that the groundwork is still in progress, the date has been extended to 1-4-2002. One thing is certain that the word ‘VAT’ [Value Added Tax] is a symbol of Globalisation and Liberalisation, which is a universal phenomenon for the current age is bond to be implemented in India.

2.SUCCESSFUL TAX SYSTEM :

2.1 Among many other things, the successful tax system always tries to avoid cascading effect of the tax. The VAT, being Value Added Tax, it presupposes that, if the tax is levied on sale value, all the taxes paid while making purchases as well as all the taxes paid during the process of manufacture or import are to be refunded. The CREDIT method or INVOICE method of VAT system ensures that the taxes shown in the purchase bills are given the credit to the dealers. The uncontrolled incidence of tax always shrinks the industry and trade and keeps away from the developing process of the national economy. The tax system has to be neutral so far as its effect on the choice of inputs and outputs for the manufacturer and choice of the goods for a consumer is concerned.

2.2 At the same time multiplicity of the rates has to be removed in a model system of taxation. That’s why the Finance Ministers Committee has agreed to keep the number of rates to four. Widespread taxation encourages the vertical integration of industries and thus discourages small-scale ancillary industries. Heterogeneity in the structure of tax, that is having different taxes like Sales Tax, Turnover Tax, Surcharge, Additional Tax, makes the system so much complicated that either there is tendency towards evasion or it makes a way for clashes between the administration and the assesses.

3 STEPS TOWARDS VAT:

3.1 As pointed above VAT Council of States, and Standing Council of Commissioners have agreed that the VAT should be implemented from 1-4-2002. It was also agreed that there should be floor rates common to all the States. Though Maharastra State had introduced the floor rates from 1-1-2000.

But due to the pressure from people they were corrected on 13-1-2000 and 22-1-2000. However some fine-tuning of the classification has yet to be done giving another look at the grouping of the goods in to four-rate categories and floor-rates.

3.2 Abolition of the tax-related incentives scheme is another step in the direction of bringing VAT in to operation. In fact the States have taken this opportunity to stop the incentives to be given in the name of Backward Area. This will not only raise the revenue of the States but will also put end to the war among the States in the form of harmful competition of reducing tax rates to give tax incentives.

3.3 Draft model of VAT legislation has been prepared by the National Institute of Public Finance and Policy. The circulation of papers on VAT will certainly be creating the atmosphere towards readiness to accept VAT.

4. EXPERIENCE OF VAT IN MAHARASTRA:

4.1 During the period from 1-10-1995 to 31-3-1999 Maharastra had VAT in a limited sense. Initially the limit covering the dealers under VAT was Rs. one crore but was brought down on 1-7-1997 to Rs. 40 lacs. Though the additional tax and Turnover Tax was abolished, the rates were over all increased to cover those taxes [most of the goods taxable at 10% were taxed at 13%]. Some 12 industries and 100% export units were allowed the full set-off of the sale tax paid on inputs.

4.2 It is said that the VAT was abolished from 1-4-1999 due to fall in the Sales Tax revenue. But the Economists do not agree to such reasoning. Since there was a general recession in the industry during 1996 to 1999, the govt could not have expected the increase in the tax revenue on implementation of VAT. In fact the fall in the tax revenue augmented by the set-off policy of giving refund to manufacturers manufacturing tax-free goods, 100% exporting Units, 12 preferred industries and reduction in the burden of taxes on inputs from 4% to 3% to all manufacturers. The decision to abolish Vat in Maharastra was thus a non-economic one, tinted with political surroundings.

5. CENTRAL SALES TAX:

5.1 Central Sales Tax was introduced in India in 1957. Every one knows the chaos created by the different basis for levy of tax on interstate sales, like situs of sale, manufacture or consumption criteria etc. With a view to provide the levy and collection of taxes on interstate sales and to put restrictions on the goods declared as of special importance the Central Sales Tax was brought in. But the main and indirect object of the Central Sales Tax Act was to keep watch on the movement of goods sold in interstate sales and thereby regulate and monitor the interstate trade so as to avoid the evasion of taxes. That is why the rate of tax was only 1% in case of transactions between the registered dealers.

6. HAS CENTRAL SALES TAX OUTLIVED ITS UTILITY?:

6.1 The rate of Central Sales Tax is now increased to 4%. Thus instead of regulatory object of the Central Sales Tax Act, it has turned in to revenue earning tax. Because of higher rate of tax there is more evasion. The availability of bogus ‘C’ forms and misuse of ‘F’ forms by taking shelter of branch transfers or consignment sales, is the direct result of the higher rate of Central Sales Tax. The higher rate has also affected the national economy, as the goods produced in Indian state are costlier than the goods imported from foreign countries.

6.2 The levy of Central Sales Tax on the inputs has tendency to increase the cost of production. This also has a cascading effect because the finished goods of one state may be the raw materials for goods being manufactured in other state. Thus the final product has heavy tax burden because no state is willing to refund the tax burden levied by other state. This also results in unbalanced growth of industries without having any relation to the best-suited environment for the production of goods.

6.3 The incidence of Central Sales Tax is discriminating against the consuming states. The consumers of industrial backward states have to pay the Central Sales Tax on the goods purchased from other states. This tax is collected in the coffers of the developed states. Within the semi-federal feature of the Indian Constitution, it is socially unjustified to burden the poor people of the backward state with the tax going to the industrially developed state.

6.4 Obtaining ‘C’ or ‘D’ forms from any Sales Tax office is very difficult processes. In fact obtaing the ‘C’ form is itself a topic for separate and independent article. Misuse of ‘C’ forms has another story towards evasion of tax. Instead of smoothening the interstate trade, the ‘C’ form hampers the free flow of trade from one state to another.

6.5 The advantage of the situation like one that is available to the European Common Market is denied to Indian states because of Central Sales Tax. The Central Sales Tax does not allow the states to unite to form the common market that is essential in the wake of Globalisation and Liberalisation.

6.6 The export trade of India is also affected by the levy of Central Sales Tax. The export is exempted from tax but the inputs required for the goods to be exported is not exempted. The penultimate sale of the goods to be exported is exempt, but the raw materials used for manufacture of the goods to be exported are not exempted. This results in increasing the cost of production which directly affects the export trade.

6.7 The penultimate sale in the course of export is exempt under Central Sales Tax Act. But to claim such exemption form ‘H’ has to be produced. It is very difficult for the dealers selling the goods to exporters to obtain ‘H’ form.

Ordinarily the exporters do not have a confirmed order in hand unless the samples as drawn from the bulk are and shown to the foreign buyers. More over the exporters are reluctant to give ‘H’ form as the details about the foreign importer, mode of dispatch and destination are to be mentioned in ‘H’ form.

7 VAT AND CENTRAL SALES TAX:

7.1 As discussed in para 6 above the Central Sales Tax needs to be abolished. If it cannot be abolished before 1-4-2002, that is before coming in to force the VAT, the provision to grant refund of the Central Sales Tax paid on the inputs must be made in the VAT. In Canada, the country on whose pattern the ensuing VAT is said to be drafted, there is no tax on the sales made in the course of interstate trade and commerce. Inter state sales are exempt from taxes. It will be also in consonance with the basic idea of VAT that it is a tax on the ‘value added’ and once the tax is levied on the higher value of the sale point, the credit for the all kinds of taxes paid on the purchases should be refunded.

8. SERVICE TAX:

8.1 For the first time in the year 1994 the Service Tax was introduced in India as an associate of Central Excise Act. The telephone service, non-life insurance and Stock Brokers were the first to be brought under the purview of the Service Tax. Since then the net of Service Tax is being widened and today about 41 services are on the list of taxable services. The rate of tax is uniform at 5% of the receipts for the value of taxable service provided by the service provider. The separate registration by the service provider is necessary, which is given by the Central Excise authorities. The Service Tax can be colleted from the clients and has to be paid quarterly to the govt. Failure to follow the procedure and late payment of taxes attract interest, penalty and punishment.

8.2 The trader or the manufacturer, who will be paying VAT, will ordinarily be paying the Service Tax on the expenses for following services that are directly utilized by him in the process of value addition.

i]   Telephone and Telegraph Charges, Fax charges, Property,Insurance, Courier charges;

ii] Advertising expenses, Photography and Video shooting charges;

iii] Charges of Consulting Engineer, Architect, Interior decorator, Security agency;

iv] Charges of Management Consultant, Chartered Accountant, Cost Accountant, Company Secretary, Market Research Agency, Scientific or Technical Consultant, Banking and Financial Institution charges, On-line Information Service charges;

v]   Custom House Agency charges, Shipping Line and Container charges, C & F Agency commission paid, Air Travel Agency charges, Automobile Service charges.

8.3 When all such charges going into the manufacturing or trading expenses bear the Service Tax burden of 5%, levy of VAT on the sale price comprising the said charges will have a cascading effect on the price structure of the commodities. Therefore in a perfect VAT system there is no place for the Service Tax. It has to vacate the place for VAT. If that is not possible, in the larger interest of economic growth, the refund of the Service Tax paid on all kinds of inputs must be given credit in full.

8.4 In Canada there is GST, which means Goods and Service Tax. It is about 7% and is collected by the Federal or Central Govt. States used to levy RST or VAT at 8%. Now there is only one tax system known as HST [Harmonised Sales Tax]. It is levied at 15%. It is comprehensive tax covering as much as possible at the bases. The tax on services is also included in HST.

9    CENTRAL EXCISE DUTY:

9.1 The levy of excise duty is undoubtedly claiming the substantial share in value addition process. The present scheme of Modvat is only restricted to the credit and refund of the excise duty paid on the raw material used in manufacture or process resulting in new commodities.

9.2 When VAT comes into existence, the levy of tax being on the sale price that is on the increased value, to avoid the ill effects of multi-taxation it is essential that the Central Excise Duty paid on the inputs is given credit or is refunded when the VAT is paid on the output.

10 CONCLUSION:

Since VAT will be comprehensive tax levied on the sale price, to avoid its ill effects on the growth of the economy, the abolition of Central Sales Tax and Service Tax must be given a serious thought. If its abolition is not possible then, to be in conformity with the optimal tax theory, it is very essential that all kinds of taxes paid on the inputs must be given credit or be refunded. In this article, the taxes levied by the Central Acts are only considered. What is true of Taxes under Central Acts is also true of the other taxes levied by the States, like Works Contract Tax, Lease Tax, Luxury Tax, Motor Sprit Tax etc. But that will be another story.

Sensex India

Tue, 19 Jan 2010 18:51:52 +0100

The Emergence of the Stock Markets in India

Tue, 19 Jan 2010 18:51:58 +0100

The equity markets in India have been evolving and evolving rapidly. The Bombay Stock Exchange Of India was the pioneer in bringing about the concept of share trading in India and this happened more than 100 years ago. However, the National Stock Exchange Of India laid the foundation of a technological environment which gave a boost to the growth of the Indian Stock Markets.

The Indian Stock Markets have been witness to a gradual shift from the outcry system of trading to a seamless environment wherein stocks are now being transferred from the seller to the buyer in the electronic mode.

The shift to the online transfer of securities have been the result of the introduction of depositories into the landscape of the Indian stock markets. In the earlier times, Stocks shifted hands through physical delivery of certificates from the seller to the buyer through a registered stock broker
. This transfer was authenticated when the seller signed the
transfer deeds and passed on to the buyer through the stock broker which in turn was sent by the buyer to the company for registration.

However, this process of buying and selling securities has now gone into the archives as the depository participants have given a new meaning to the transfer of securities through advanced technological implementations.
The depository participants in India have systems in place to facilitate online transfer of securities.

Another important factor to fasten the process of the share trading cult in India is the growth of online broking platforms to faciliate the
trading of stocks.

In effect, online stock trading in India can boast of innovations in share trading as well as share transfer and this has resulted in a new breed of technologically savvy investors and traders who are now instrumental in driving the equity cult in India.