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Barring China, major Asian stock markets have opened the day on a positive note. The stock markets in Hong Kong and Japan are trading higher by 0.6% and 0.5% respectively. Benchmark indices in US ended their previous session on a positive note. The rupee is trading at 66.93 per US$.
Indian stock markets have opened the day on a positive note owing to the passage of Goods and Service Tax (GST) bill. The BSE Sensex is trading higher by 108 points (up 0.4%) and the NSE Nifty is trading higher by 40 points (up 0.5%). While BSE Mid Cap and BSE Small Cap are trading higher by 0.8% and 0.7% respectively.
The Rajya Sabha passed the constitution amendment bill for the goods and service tax (GST) yesterday. The dream for one nation one tax is finally coming true.
GST is a destination-based tax that will subsume various indirect taxes at the central and the state level including excise duty, service tax, value-added tax, entertainment tax and luxury tax. GST is designed to remove the cascading impact of taxes, bring in efficiency, check tax evasion and expand the tax payer base.
The government has given in to the demand of Congress to remove the 1% additional tax on supply of goods for two years with these proceeds going to the manufacturing states. Further, the government has also addressed key concerns of states regarding full compensation for five years for any revenue losses arising out of the transition to GST.
However, the GST rate has not yet been decided. We have prepared a chart pertaining to the GST rates applicable in various countries. Click here to access it.
The bill now will have to be ratified by 50% of the states. The process of implementation of GST will be a cumbersome one. Though, the government has stated that it will adhere to the roll out guideline of 1 April 2017. However, looking at the complexity of the entire process it will be a daunting task for the government to implement it by April 2017.
Moving on news from IT sector. As per an article in Livemint, HCL Technologies Ltd reported its result for the quarter ended June 2016. The company's net profits grew by 14.8% YoY to Rs 20.5 billion. While, the revenues grew by 15.9% YoY to Rs 113.3 billion. Comparing in dollar terms, the net profit and revenues grew by 9.5% YoY and 10% YoY respectively. The revenues grew on the back of broad based growth across service offerings.
Further, the deal with Vovlo's IT service division in February added over US$ 40 million to the revenues in the June quarter. The company has given a guidance to grow at 12-14% in terms of revenues in the ongoing fiscal.
The management stated that the company signed 13 "transformational" deals during the quarter across service lines and industry verticals. Reportedly, the broad-based business wins were driven by next-generation integrated offerings-Next-Gen ITO, BEYONDigital and IoT WoRKS-reflecting investments in Internet of Things, digital technologies, cloud, automation and artificial intelligence.
As the company is losing its pricing power it enjoyed before, margins and topline growth will be the key things to watch out for going forward.
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