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Inflation
‘Wives of Billionaire’
Market Update |
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Tax Advice
Yahoo rejects Microsoft-Icahn proposal
2G spectrum panel likely to meet today
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FM non-committal on further tax cuts
New Delhi, July 13 “The fiscal situation is under pressure, obviously you have to moderate demand of the affluent sections. That is something which we have to consider in due course of time,” the finance minister said. “Fiscal steps like cutting taxes etc. help to a point, but you cannot cut taxes indefinitely, because after a point, there is nothing to cut,” Chidambaram said in an interview. This year, the government has so far abolished or reduced duties on various food items, cement, cotton, oil and other commodities to contain inflation that is expected to result in revenue losses of about Rs 27,000 crore. Referring to a 13-year high inflation that touched 11.89 per cent for the week ended June 28, he said at the moment the government was relying on monetary steps to moderate demand. “The best instrument to reduce aggregate demand is monetary policy. That is why the RBI, the monetary authority, is the first line of defence,” he said. On fall in GDP growth prospects in 2008-09, he noted had there been no turbulence in the international market, it could have been 9 per cent. However, he said the growth during the current fiscal would above 8 per cent. Referring to soaring crude oil prices, the finance minister pointed out no one had expected oil prices to go up beyond $100 a barrel to $146 a barrel, adding the country would be able to “weather the shortage, too”. Asking the people to curtail energy consumption to fight with rising oil prices, he said: “We have to tighten our belts very seriously, we have to adopt very strong conservative measures.” On the turbulence in Indian stock markets, the finance minister said: “If the markets are rising it has to be an orderly rise, if there is a fall it has to be an orderly fall.” — PTI May touch 17 pc by Sept: Barclays Global investment banker Barclays Capital has projected that inflation may surge to 17 per cent by September on back of another round of hike in fuel prices in the same month. “We believe WPI inflation will remain in double-digit territory until May 2009. We expect WPI inflation of 17 per cent by September 2008,” the report said. According to the report, the government is likely to hike fuel prices between 10 and 20 per cent again as early as September to limit fiscal risks. Rise in the price of the Indian crude oil basket to $145-150 per barrel from the current $132 per barrel could be the trigger for another round of increase in fuel prices, it said. Barclays Capital said: “We believe the momentum in core inflation will pick up steam in the next two quarters”. — PTI
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Usha Mittal, Tina Ambani in Forbes list
New York, Jul 13 Taking about 53-year-old Tina Ambani, the magazine said: “Being famous of your one accord is often a plus.” Prior to marrying Anil Ambani, Tina Munim was a famed Bollywood actress, it noted. “Now her husband, Anil Ambani, ranked sixth-richest in the world in March, is reportedly in talks through one of his companies to become Steven Spielberg’s Dreamworks SKG’s principal financier.” At the same time, Usha Mittal, wife of the world’s fourth richest person and who has apparently worked in the steel business for 15 years, has clearly earned the trust of Lakshmi Mittal, Forbes said. “Last year, his steel company, ArcelorMittal, passed a resolution that entrusted her with temporary responsibility of managing the world’s largest steel company if the managing board of directors is permanently absent or prevented from handling duties. She apparently worked in the steel business for 15 years, at one time reportedly running a plant in Indonesia. She is also the namesake of the Usha Mittal Institute of Technology, a university that promotes the women’s education in India,” the magazine added. — PTI
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Global woes, local concerns spell doom
by Lalit Batra Market may further sink into abyss during this week on the news from the US that one of its mortgage lenders, IndyMac, has had a run on it. It is the second largest bank failure in the history of the US and fifth bank to close this year. Moreover, the news back home has also not been very encouraging with weak industrial production numbers, fears of further rise in interest rates, fluid domestic political situation and tension in the West Asia will weight on the investor sentiment. Markets remained volatile last week, but week to week indices movements remained flat or ended with marginal gains. Sensex gained 15 points to close at 13,469 where as nifty gained 33 points to close the last week at 4,049. Infosys kick-started the earning season on a positive note after it revised upwards its earnings and revenue guidance for the financial year 08-09. Political uncertainty will continue to haunt the bourses. Prime Minister Manmohan Singh is likely to seek a vote of confidence in Parliament on the July 22. Till then, bourses may continue to reel under pressure on the negative news that would eminate from around the globe. Technical charts suggest also that a support for Sensex may be in for some more correction before it stabilises. A strong support exists around the 11,700 mark. If this gives away, then a long-trem support is seen at 9,700 level, where the Sensex may finally bottom out. Banking sector The earnings of the banking companies are much awaited this season owing to the intensifying concerns over their profitability as well as the visibility of their earnings. The macro situation remains challenging with the Reserve Bank of India (RBI) continuing with its monetary tightening policy: Inflation in double digits, weakening rupee, widening fiscal deficit and rising fears of economic slowdown. As a result, the visibility of banks’ earnings growth has reduced. Despite the rising concerns at the macro level, business growth at the industry level has been surprisingly strong. The credit growth stood at 25 per cent in the year till date and was better than the 23 per cent growth seen in the comparable period last year. The healthy credit growth can be ascribed to higher working capital requirements of the oil companies on account of the soaring crude oil prices. Notably, the working capital requirements of oil companies would now be met with the RBI’s special open market operations. This along with the ongoing monetary tightening actions of the Reserve Bank is expected to moderate the credit growth to approximately 20 per cent. Though business growth has been robust, yet nearly every revenue stream of banks has come under cloud owing to the deteriorating macro environment in the recent months. Importantly, a higher MTM (mark-to-market) provisioning on investments (on account of rising yields and downturn in the equity markets) is expected to push up banks’ first quarter provisions substantially. Consequently, the profitability of banks is expected to weaken in last quarter.
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NRIs need RBI nod to buy shares
by S.C. Vasudeva Q. I am an NRI with Canadian citizenship. I am planning to buy mutual funds, stocks and shares in India. I have applied for the PAN card and then would like to open a demat account to buy funds, stocks and shares. I will appreciate it if you can address the following questions: 1. As an NRI, am I eligible to buy mutual funds, stocks and shares in India? 2. If yes, do I pay any income tax when I sell these funds, stocks and shares? 3. How is the tax decided? Is it based on a flat rate for the capital gains or calulated differently? 4. What happens if there is a capital loss? Is that claimable against capital gains in the same year or in future years? — Kamal Verma A. The answer to your queries is as under: (i) As an NRI you are eligible to buy units of mutual funds, stocks and shares in India. For this purpose, you are supposed to take permission from the Reserve Bank of India which is known as PINS permission. Under the scheme you can have one NRE/NRO account designated for the purpose in a specific bank. A demat account will also have to be opened by you. The permission can be obtained by the bank on your behalf. The above permission is not required if you are investing only in mutual funds. In both cases, you will have to obtain a permanent account number. (ii) The Income-tax will be payable in case the gain arising on the sale of units/shares is taxable in accordance with the provisions of the Act. It may be added that you have to take delivery of shares/units. (iii) The long-term capital gain arising on the sale of equity shares and units of equity oriented mutual funds is exempt from tax provided that the transaction been subjected to securities transaction tax. The short-term gain is chargeable at the rate of 15 per cent plus applicable cess and surcharge for assessment year 2009-10 (year ending March 31, 2009) provided that the transaction has been subjected to security transaction tax. The long term capital gain arises if the shares and units are held for a period of more than one year. The short term capital gain arises in respect of those shares/units which are held for less than one year. (iv) The short-term capital loss is adjustable against the short-term capital gain and/or long-term capital gain for the same assessment year. The long term capital loss is adjustable against the long term capital gain only. In case the loss under head capital gain (short-term and long term) is not so set off, the amount of loss not so set off is allowed to be carried forward for a period of eight years for set off against income arising under head capital gain. The short term capital loss can be set off against income arising under head capital gain. However, long-term capital loss can only be set off against long-term capital gain. PPF account Q. I am an income tax assessee and filing my return every year. My father-in-law, who is a senior citizen, also files the return after paying the income tax due. He is a widower and has no son except a daughter who is married to me. I have two minor daughters. My father-in-law wants to give certain amount as “gift” every year through cheques out of his taxable income to my minor daughters for investment in their PPF A/c under my guardianship till they become major. Kindly look into it and advise suitably explaining the tax liability if any. — R.P. Chawla, Panchkula A.
There will be no tax liability in respect of the money gifted by your father-in-law to your minor daughter which is invested in public provident fund account maintained in their name under your guardianship. This is because the interest earned on PPF is exempt from tax and, therefore, not includible under Section 64(1A) of the Income-tax Act, 1961, (the Act) in your income. Voluntary retirement Q. My relative has taken voluntary retirement under exit operation scheme last year from a nationalised bank. Out of the retirement benefits paid by the bank to him, please advise if income tax is payable by him or not: (a) Out of the gratuity amount paid to him, is income tax exempt upto Rs 3.50 lakh only, or is the entire amount exempt? (b) Is tax exempt upto Rs 5 lakh for the exgratia amount paid to him for the remaining years of service for which voluntary retirement has been opted for? Or is the entire amount of ex-gratia amount exempt? — Ravi Rana, Kapurthala A.
The answer to your queries is as under: (i) The amount of gratuity received by an employee on his retirement to the extent it does not exceed one half month’s salary for each year of completed service calculated on the basis of the average salary for the 10 months immediately preceding the month in which the retirement occurs subject to a maximum of Rs 3,50,000 is exempt from tax under Section 10(10) of the Act. (ii) Any amount received by an employee of an authority established under the Central, state or provincial act on his voluntary retirement in accordance with any scheme or schemes of voluntary retirement to the extent such amount does not exceed Rs 5,00,000 is exempt from tax. The nationalised banks having been established under the authority of the Centre, they should be covered within the above exemption. Accordingly, in case the above conditions are satisfied the amounts mentioned in your query should be exempt from tax. PAN card Q. I have an R/D Account in an RNBC company. On maturity after seven years, the company deducted Rs 750 as TDS. But it has not released my payment as I have no PAN card. I am also not interested in 16A Form. Is it necessary (PAN card) for release of payment? — Shakti Kant Sharma, Jalandhar A. In accordance with Rule 114B of the Income-tax Rules, 1962, every person entering into any transaction relating to the time deposit with any banking institution referred to in Section 51 of the Banking Resolution Act, 1949, is required to quote his permanent account no. It seems the company with which you have deposited the amount is covered by the above section and, therefore, the company is insisting for you to quote your permanent account no. before the amount is repaid to you. It will, therefore, be advisable to obtain a permanent account no. so as to claim the repayment of the deposit. |
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Yahoo rejects Microsoft-Icahn proposal
San Francisco, July 13 “After reviewing the proposal with its legal and financial advisers, Yahoo’s board of directors determined that accepting the proposal is not in the best interests of its stockholders,” Yahoo said in a statement last night. Yahoo had received the joint proposal from Microsoft and Icahn, an arrangement that would include the acquisition of the Internet major’s search business by Microsoft and the rest of the company by Icahn. “The proposal was made on Friday and Yahoo was given less than 24 hours to accept the proposal, the fundamental terms of which Microsoft and Icahn had made clear they were unwilling to negotiate,” Yahoo said. The terms included the immediate replacement of Yahoo’s Board and removal of top management, the statement said, terming the proposal completely “absurd and irresponsible”. “This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo’s stockholders in mind,” Yahoo chairman Roy Bostock said. “Yahoo’s board remains open to any transaction that delivers full value to our stockholders - we just do not believe such a transaction should be dictated by Microsoft and a single short-term investor,” the statement added. Yahoo said a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative. Acknowledging that the Microsoft-Icahn proposal represented “a number of improvements” over the earlier one, Yahoo said it not only repeated its offer to sell the entire company to Microsoft for at least $33 per share, but also offered to negotiate an improved search only transaction. Microsoft rejected both offers. — PTI
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2G spectrum panel likely to meet today
New Delhi, July 13 Reports suggested that the panel, headed by DoT additional secretary Subodh Kumar, was expected to recommend an appropriate auction mechanism for additional spectrum. Telecom engineering centre that had drawn up the subscriber threshold limit for acquiring spectrum beyond 4.4 MHz is also a member of the committee. 2G spectrum pricing and allocation has seen considerable controversy between the DoT and TRAI, besides the finance ministry and operators and Central Vigilance Commission also seeking answers on the methodology being adopted for the allocation. A DoT official said the panel main task was to work out a practical, revenue-generating and amicable solution on these issues. Incidentally, only two days ago the TRAI gave its consent to the DoT suggestion for raising base price for the auction of the 3G spectrum much against its wishes. The DoT has also sought to throw open the auction to all, including foreign, players. The DoT and finance ministry have been at loggerheads over pricing of the 2G spectrum with the latter wanting higher charges. The finance ministry has been pushing for auctioning 2G spectrum on the grounds that the price formula suggested by the DoT was based on spectrum charges decided in 2003 and that the scenario was quite different now.
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