The Tribune, Chandigarh, India

	Provisioning norms for banks relaxed Move likely to push up banks’ profits New Delhi, April 24 The Reserve Bank's recent decision to relax provisioning requirement for banks will improve the profitability of lenders in the short run, bank officials have said. Responding to representations of banks on mandatory provisioning of bad assets, RBI has said that till the time it introduces a more comprehensive methodology of countercyclical provisioning taking into account the global standards, lenders are required to set aside stipulated capital with reference to NPA position as on September, 2010. Welcoming the decision, a senior banker said the initiative will help in improving the bottomline of banks as they will not have to make additional provision towards bad assets. Thus, operating profit will not be drained out for making additional provision for rise in bad debts, another banker said. As per the current prudential norms, banks are required to set aside capital to the tune of 70 per cent of their bad debt on running basis. This is called as provision coverage ratio (PCR). Country's largest lender State Bank of India's profitability has been impacted as the bank had to set aside capital each quarter to meet the 70 per cent provision coverage ratio as prescribed by RBI. The bank has been given additional time till September this year to meet requirement. RBI decided to hike the provision level in the aftermath of financial downturn with a view to enhance the asset quality in the banking system as additional provisioning would give more cushion to banks against the rise in bad loan levels. Majority of the banks achieved the PCR of 70 per cent and have been representing to RBI whether the prescribed PCR is required to be maintained on an ongoing basis, RBI said in a notification. "The matter has been examined and till such time RBI introduces a more comprehensive methodology of countercyclical provisioning taking into account the international standards as are being currently developed by Basel Committee and other provisioning norms," it said, adding banks are required to set aside stipulated capital with reference to gross NPA position as on September 30, 2010, it said. Besides, banks have been allowed to utilise the additional PCR beyond the 70 per cent for making provision against bad assets. "The surplus of the provision under PCR vis-a-vis as required as per prudential norms should be segregated into an account styled as countercyclical provisioning buffer," it said. This buffer, it said, will be allowed to be used by banks for making specific provisions for non-performing assets (NPAs) during periods of system wide downturn, with the prior approval of RBI. — PTI
	Tax Advice Rebate allowed on amount deposited in wife’s PPF account by SC Vasudeva Q. If I deposit some amount in my wife’s PPF account, can I claim rebate under Sec 80C for myself. Please clarify. — Varanasi V Srinivas A. An assessee can claim deduction in respect of amount deposited in the PPF account in the name of his wife or his children. Section 80C(4) of the Income-tax Act, 1961 provides for such a benefit. Tax liability Q. My income from pension, interest, bonus on MIS, exemption admissible and TDS refund is as follows: Income from pension Rs 1,69,386, interest from PO in MIS account Rs 43,200. Interest on SCD account Rs 9,000, arrears of pension 29,000, interest on deposit with bank Rs 30,700 less paid Rs 1,575 - net Rs 29,125, interest on term deposit Rs 1,612, bonus in MIS account Rs 45,000. I am entitled to deduction of Rs 50,000 u/s 80U and Rs 58,463 under 80C. According to me, the tax liability is nil and I am entitled to a refund of TDS of Rs 6,247. Please let me know whether tax computations as above are correct. — Sudarshan Kumar A. The computation of tax as given in the query has been looked into. The computation seems to be correct except that deduction of Rs 1,575 in respect of interest paid may not be allowed. The total income in such a case would work out at Rs 2,19,357. Even this is below the taxable limit of Rs 24,0000 applicable to a senior citizen. I hope you are aware that claim for deduction under Section 80U of the Income-tax Act, 1961(The Act) is subject to certain requirements. I do hope compliance of such requirements has been taken into consideration before making a claim of deduction under the said section. It may be added that you will have to file the return of income in view of your income being higher than the amount on which tax is not chargeable in case of a senior citizen without claiming deduction under Section 80U and 80C of the Act. This is in accordance with the requirements of Section 139 of the Act. Service tax return Q. Is it necessary to file service tax returns if income is below the service tax exemption limit when service tax registration is already done? Please guide us. — Vinod S. Bihani A. It would be essential to file ‘Nil’ return under service tax rules in such a case. Tax on trading firm Q. Please clarify the definition of Section 44AB(a) of a person in business for audit. (a) Does total sale, turnover or gross receipt mean total sale & purchase price (40 or 60 lakh)? (b) Turnover in relevant years (say FY 10-11) to be taken or even in any previous year (say 08-09, 09-10) for AY 11-12 return? — P.K. Aggarwal A. Your queries are replied hereunder. (a) Total sale, turnover or gross receipt refer to total sales effected during the year in case of a trading/manufacturing concern. The purchase price is not relevant for ascertaining the aforesaid figure. (b) Turnover is to be looked into for the relevant assessment year. For example, in case turnover is to be ascertained for assessment year 2011-12, the relevant period would be turnover for the year April 2010 to March, 2011. Turnover for the preceding years is not be looked into for the purpose of ascertaining the limit of 60 lakh. Contribution to son’s PPF a/c Q. My adult son was in India when he opened a PPF account with a bank in his name. After some years, he emigrated to Canada. Now, I contribute to his PPF account to keep it alive. Can I avail of this contribution under Section 80C in my income. — Tara Singh Hundal A. Yes, you can avail the benefit of such deposit in PPF account of your son. It may be added that your son’s account can be maintained till the date of maturity. This is in accordance with the requirements of the Public Provident Fund Scheme 1968. Gifts to relatives Q. I opened a PPF account in SBI on 20-4-1982 for 15 years, i.e up to 1997, the year of my retirement. On my retirement, I decided to continue the account for another 15 years. I have been contributing to it the maximum amount every year. According to me, the account matures on 20-4-2012. My queries are:- (a) What is the exact date of maturity and when shall I get my amount back? (b) Out of this total amount I want to give Rs 3 lakh to each of my dependants, i.e wife, sons & daughters as gift. What is legal procedure to do this so that there is no legal deviation or complications? (c) Is this gift taxable? If so, who will pay, the donor or the recipient? — D.R. Sharma A. Your queries are replied hereunder: a) You can continue to maintain PPF account till the time you decide to close the same. b) There would be no gift tax on the amount gifted to your wife, son and daughter. c) These amounts would not be taxable in the hands of the aforesaid persons. d) It would be advisable to exchange letters for the gift so made and accepted by the recipients.
	SingTel violated ILD norms: DoT New Delhi, April 24 The Telecom Ministry has pulled up SingTel for violating ILD licence norms by acquiring and billing customers in India without a licence between 2005 and 2009, while giving a clean chit to airtel and Tatas which provided international private lease circuits to the foreign firm. "The committee constituted by DoT recommends that it is a mistake solely on the part of Singapore Telecom Ltd (SingTel) which invoiced the customers at the Indian end. "Accordingly, the committee opines that Tata Communications and Bharti airtel are not liable to pay any penalty in response to the show-cause notices issued by DoT for violation of the terms and conditions of ILD license," the Department of Telecom (DoT) said. As per the licencing norms, the Indian ILD operators are authorised to provide the Indian circuits to a foreign carrier (like SingTel in this case) so that they are able to provide end-to-end services to their customers in their territories. Airtel paid the applicable licence fee on the revenue earned by providing the Indian half circuit. — PTI
	SEBI to set up toll-free helpline New Delhi, April 24 To resolve investors' grievances and spread financial literacy, market regulator SEBI will set up a toll-free helpline to respond to queries of investors and help track the status of their complaints. The investors, according a strategic action plan approved by the SEBI Board earlier, will be able to communicate in different languages. The investor awareness and education plan also includes a web-based centralised investor grievances tracking system to help investors track their complaints. The proposals to establish a helpline for investors and have a grievances tracking system, among others, were approved by the SEBI in a Board meeting held in February. Besides, the market watchdog will offer financial education programmes to schoolchildren, and launch an investor awareness campaign for mutual fund investors directly and jointly through Association of Mutual Funds in India (AMFI). — PTI
	RIL eyes over Rs 1.5 lakh crore investment in 5 yrs New Delhi, April 24 Setting its sight on a number of new businesses and expansion of existing ones, billionaire Mukesh Ambani-led Reliance Industries group may invest more than Rs 1,50,000 crore over the next five years. The group is sitting on a huge cash pile of over Rs 42,000 crore that has nearly doubled in one year, and further money influx is expected in the next few months, while it might raise further funds from the market, mostly through overseas bonds and partly through project equity, sources said. There might be major investments, totalling nearly Rs 1,00,000 crore, in the group's core businesses of petrochemicals and energy exploration and production over the next five years, they added. Besides, business initiatives in telecom, power and financial services sectors would also witness investments worth at least Rs 50,000 crore in the next few years. The group is working on various business expansion strategies for different segments and a consolidated view of these initiatives could be announced by the group chief Mukesh Ambani at RIL's AGM on June 3. RIL's cash balance stood at a record high level of Rs 42,393 crore at the end of last fiscal ended March 31, 2011. Besides, its debt-to-equity ratio is very low at 0.17 (meaning Rs 17 debt for every Rs 100 equity capital), which could allow it to raise significant debts whenever needed. RIL's revenue rose by 29 per cent in the fiscal to Rs 258,651 crore, while its net profit increased by 25 per cent to Rs 20,286 crore. Sources said the group would look at both organic and inorganic growth opportunities in various businesses. It also said that it had a "investment programme of over $10 billion to cater to domestic market" in petrochemicals business. — PTI
	Analysts predict volatile market this week New Delhi, April 24 Stock market is likely to turn volatile this week amid derivatives (F&O) expiry and not-up-to-the-mark quarterly results by Reliance Industries, even as it awaits quarterly results of various companies, including India's third largest IT exporter Wipro. "Markets may turn volatile in the coming days amid F&O expiry (on Thursday). Traders and investors would also look forward to results to be announced by the Corporate Inc," IIFL Head of Research (India Private Clients) Amar Ambani said. Wipro is likely to announce its quarterly results on April 27. The Bombay Stock Exchange 30-share index Sensex rose by 1.11 per cent to settle at 19,602.23 points last week on disappointing quarterly income posted by industry heavy weights Reliance Industries and IT giant TCS. Reliance Industries reported 14 per cent rise in stand alone net profit at Rs 5,376 crore for quarter ended March 31 and TCS posted 31.1 per cent net profit growth of Rs 2,623 crore for the fourth quarter ended March 31. However, the results failed to enthuse the Dalal Street's sentiments. "With derivatives expiry this week, markets would continue to remain volatile and with many results to be announced, there will be stock-specific movements with markets rewarding those who deliver good numbers and punishing the bad ones," said Motilal Oswal Securities Associate Director, Broking & Distribution Manish Shah said. According to Ashika Stock Broking Research Head Paras Bothra, even as RIL's less-than-expected quarterly numbers may lead investors to go for profit booking, the overall market momentum is likely to be positive, given the strong global market scenario. — PTI
	No end in sight for pesky calls New Delhi, April 24 The menace of pesky calls is likely to continue for another year at least as state-run BSNL has said that it will take 10 months after getting necessary approval to upgrade its network - vital to implement TRAI's idea of identifiable number series to tele-marketing firms. BSNL's upgrade of its network is essential as all calls are inter-connected irrespective of their origin and end. The Telecom Regulatory Authority of India (TRAI) in its regulation to put a check on unsolicited calls and SMSes has directed telecom service providers to allocate easily identifiable number series for tele-marketing companies. On a request from TRAI, the Department of Telecommunication has issued a number series starting with '140' to tele-marketing companies for mobile phone numbers but not for landline connections. Adding three digit series to landline numbers will take total digits to 13. And to transmit a 13-digit number to telecom network, especially for caller line identification, BSNL and MTNL need to install modern equipment in exchanges. "Private companies have said that they can upgrade their network in few weeks time but BSNL and MTNL will need time as government rule mandates them to procure equipment for upgrading network through tenders," DoT official who did not wish to be named said. — PTI