B U S I N E S S

Commodities’ regulator okays NSEL settlement plan
New Delhi, August 17
Commodity markets regulator Forward Markets Commission (FMC) has asked crisis-ridden NSEL to go ahead for the time being with its plan to settle Rs 5,600 crore of dues to investors and questioned the credibility of the accounts and information provided by the exchange.

BlackBerry CEO to get $55 m if co is sold
Toronto, August 17
BlackBerry CEO Thorsten Heins could receive almost $55.6 million if the company is sold and he is ousted from the top job. Heins would receive $48 million in equity awards, based on the company's share price at the end of its latest fiscal year, according to a regulatory filing earlier this year.

Gold jumps by Rs 700 to eight-month high
New Delhi, August 17
Gold today scaled eight-month high of Rs 31,860 per 10 grams in Kolkata on strong buying trends after stocks and money markets melted. Traders said upcoming festive and marriage season may further fuel demand for the precious metal pushing the prices higher.

investor guidance
Long-term capital gains cannot be set off against losses
Q: Please advise whether long-term/short-term capital loss arising out of equity sale is applicable for offsetting long-term/short-term capital gains arising out of property. Can the long-term loss and short-term loss arising out of equity sale be carried forward for five years?

Commodities’ regulator okays NSEL settlement plan
Exchange asked to appoint auditor to establish credibility of accounts

New Delhi, August 17
Commodity markets regulator Forward Markets Commission (FMC) has asked crisis-ridden NSEL to go ahead for the time being with its plan to settle Rs 5,600 crore of dues to investors and questioned the credibility of the accounts and information provided by the exchange.

On August 14, the National Spot Exchange (NSEL) had submitted the plan to the (FMC) to clear dues to 13,000 investors over a period of seven months.

Noting that the NSEL's settlement plan does not inspire confidence, the FMC asked the exchange "to go ahead with your settlement plan for time being as the payouts are already delayed, which is causing anxiety and resentment among the sellers."

The FMC came down heavily on the NSEL for not taking guarantees for the financial settlement and providing different sets of information at different times.

"The credibility of information given and the books of account/records maintained by NSEL have raised doubts on its authenticity. You (NSEL), are therefore directed to appoint a forensic auditor firm to establish the credibility of books of account, record maintenance by the exchange in next seven days," the regulator said in a letter to the NSEL.

The FMC directed the exchange to appoint the auditor with its consent. The NSEL has also been asked to update the amount deposited in the escrow account on a daily basis to the regulator and on its official website.

While the exchange is required to guarantee the settlement of all financial obligations, the NSEL mentioned in its settlement plan that the dues would be cleared subject to realisation of funds from payers.

To this, the FMC said, "As such, exchange appeared to have disowned its responsibility of guaranteeing the financial settlement. Whereas the exchange has the sole responsibility of settlement of trade on the exchange...It cannot simply depend upon the realisation of pay-in obligation from buyers."

The NSEL, promoted by Jignesh Shah-headed Financial Technologies India Ltd (FTIL), was engulfed in a crisis after its suspended trade on July 31, raising concerns about possible default of Rs 5,600 crore due to investors, including 7,000 small investors.

FMC said the settlement plan submitted by NSEL to the regulator is different from a payment schedule announced on August 4 and this "has raised doubts on credibility of the commitments made by buyers."

Also, the exchange hasn't given details of post-dated cheques collected from these participants or any bank guarantee against their financial obligation, it added.

According to the original payment schedule, NSEL had said that eight buyers had agreed to pay Rs 2,181 crore before September 13, while 13 buyers had agreed to pay 5 per cent of their total dues of Rs 3,107 crore every week, it added.

The regulator also directed the exchange to submit the list of members who failed to meet their pay-in obligations and the reasons for not initiating default proceedings against such members, if any. — PTI

Damage control

• The NSEL was engulfed in a crisis after it suspended trade on July 31, raising concerns about possible default of Rs 5,600 cr due to investors
• On Aug 14, the NSEL had submitted the plan to FMC to clear dues to 13,000 investors over a period of 7 months
• The exchange has also been asked to update the amount deposited in the escrow account on a daily basis

BlackBerry CEO to get $55 m if co is sold

Toronto, August 17
BlackBerry CEO Thorsten Heins could receive almost $55.6 million if the company is sold and he is ousted from the top job. Heins would receive $48 million in equity awards, based on the company's share price at the end of its latest fiscal year, according to a regulatory filing earlier this year.

He would also get $7.5 million in compensation for his salary and bonus under the change of control provisions in his contract.

The company would pay $72,000 in benefits and retirement savings. The plan was approved by shareholders at its annual meeting on July 9.

BlackBerry announced that a sale of the company was one option that would be considered under a strategic review of the company, which has lost market share to Apple and Android-based phones.

The long-awaited debut of its new phones this year has failed to turn around the struggling smartphone maker.

The company's strategic review is being headed by Timothy Dattels, a BlackBerry director and a senior partner at TPG Capital, one of the world's largest private equity firms. — AP

Gold jumps by Rs 700 to eight-month high

New Delhi, August 17
Gold today scaled eight-month high of Rs 31,860 per 10 grams in Kolkata on strong buying trends after stocks and money markets melted. Traders said upcoming festive and marriage season may further fuel demand for the precious metal pushing the prices higher.

Gold rose by Rs 700 to Rs 31,760 in Kolkatta, followed by in Delhi where it gained Rs 515 to Rs 31,525 per ten gram, the levels last seen on December 18, last year.

In Chennai, gold climbed by 695 to Rs 31,505 and in Mumbai by Rs 640 to Rs 31,470 per ten grams.

Yesterday gold had jumped the most in two years by Rs 1,310 due to meltdown in stocks and money markets. — PTI

investor guidance
Long-term capital gains cannot be set off against losses
A.N. Shanbhag

Q: Please advise whether long-term/short-term capital loss arising out of equity sale is applicable for offsetting long-term/short-term capital gains arising out of property. Can the long-term loss and short-term loss arising out of equity sale be carried forward for five years?

— Deepak

A: 1. a. The long-term capital gain (LTCG) for shares sold on recognised stock exchanges and equity-based units of MF sold to the MF is exempt and therefore, it cannot be setoff against any other losses, including the carried forward losses of yesteryears. Consequently long-term capital loss (LTCL) is also exempt and is not available for any setoff.

b. The short-term capital gain (STCG) enjoys the concessional flat rate of tax @15.45%.

2. Short-term capital loss can be adjusted against either taxable LTCG or STCG earned from selling any other property. LTCL can be set off only against taxable LTCG. Unadjusted loss (LTCL or STCL) cannot be setoff against business income or income under any other head. It can be carried forward for similar setoffs for as many as eight years.

In the case of debt-based MFs and equities, which have not been sold on a recognised stock exchange in India, an additional option of paying the tax @10.3% of the profit (without indexation) is also available, if more beneficial.

Q: I have a doubt regarding filing of income tax return. I have no other income except for short-term capital gains (say Rs 4 lakh) and I have saved Rs 1 lakh in instruments that are eligible for tax exemption u/s 80C. What will be my total taxable income? Whether whole of Rs 4 lakh will be taxed under a special rate of 15% or Rs 1 lakh [(Rs 4 lakh minus Rs 2 lakh (no tax) minus rebate under Sec. 80C (Rs 1 lakh)] will be taxed at the rate of 10%?

— Arohi

A: The answer to your query would depend upon the type of asset from which the capital gains flow.

1. In the case of capital gains arising out of securities (including shares) and equity-based units of MFs sold on a recognised stock exchange in India or equity-based units repurchased from MFs, STCG is taxed @15% flat u/s 111A and 115AD.

2. In the case i) listed securities, or units or zero coupon bonds not sold on a recognised stock exchange in India or repurchased from the MF and consequently have not suffered STT and ii) units of debt-based MFs, STCG is treated as normal income of the assessee and charged to tax at the rate applicable to his slab of income.

Where STCG is taxed at concessional rates, the assessee will not get any deduction u/s 80C, 80D etc., against these gains which will be treated as a separate block.

3. For all other assets like real estate, jewellery, etc., STCG is treated as normal income of the assessee and charged to tax at the rate applicable to his slab of income.

For a resident individual or an HUF, where the total income which is charged to tax, falls below the tax threshold applicable to the assessee, the gains can be reduced by this gap between the total income and the threshold. The balance of the gains would be taxed at the rates applicable.