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FM directs banks to aid tsunami-hit fishermen
Banking software sector bullish on growth
Chinese tractor Angad to set its foot on Punjab soil
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ADB team interacts with Punjab farmers
VSNL files suit against government
Opec may meet to consider output cut
Clean-slum order irks corporate sector
No Securities Transaction Tax on off-the-market deals
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FM directs banks to aid tsunami-hit fishermen
New Delhi, January 29 “At a meeting with CMDs of public sector banks yesterday, I have directed all public sector commercial banks to get ready to receive applications with effect from February 1, 2005,” Finance Minister P. Chidambaram said today. The banks have been asked to dispose of the applications within 48 hours, as far as possible, the Finance Minister said while making a statement on Rajiv Gandhi Rehabilitation Package for tsunami-hit areas. The rehabilitation programme will also have a subsidy component that too will be disbursed by the banks, Mr Chidambaram said. The loan will bear an interest of seven per cent, with the interest subsidy of two per cent in the case of regular payment by the borrower. It may be recalled that the government had earlier announced Rs 2,731.04-crore relief package for tsunami-affected states of Tamil Nadu, Andhra Pradesh, Kerala and the Union Territory of Pondicherry. The Government has advised all tsunami-affected fishermen to apply at the nearest branch of any PSU commercial bank for taking advantage of the Rajiv Gandhi Rehabilitation Package. The government has also advised the Chief Secretaries and Relief Commissioners and District Collectors in the affected states, and the union territory to take immediate steps to assist the fishermen in making applications. “I may assure the affected fishermen that I shall personally monitor the implementation of the rehabilitation package by the public sector commercial banks,” Mr Chidambaram said in a statement here. The package includes assistance up to Rs 1,50,000 with 35 per cent subsidy for purchase of boats with motors and fishing net and assistance up to Rs 20 lakh with 35 per cent subsidy with a ceiling of Rs 5 lakh for mechanised boats. The package also includes a subsidy of 60 per cent with a ceiling of Rs 3 lakh and the balance 40 per cent as loan for repair of boats.
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Banking software sector bullish on growth
Chandigarh, January 29 This need is also pushing up the profit graph of banking software manufacturers. IDC (International Data Corp) estimates that IT spending in the BFSI sector, which touched $11 billion in the Asia-Pacific region in 2004, is expected to cross the $50-billion mark by 2006. Riding high on the IT-in-banks wave, Laser Soft Infosystems Ltd., a banking software products company, intends to set up a unit at Mangalore with an exclusive BPO division for banks. Nucleus Software core product, FinnOne, generated revenue of Rs 677 lakh, which was 25 per cent of total revenue of Q3 for FY 04-05. Market grapevine has it that Infosys Ltd, a software behemoth also known for Finacle banking solutions, plans to come out with ADR (American Depository Receipt) soon. According to Mr Suraj Pai, director, financial services industry, Oracle India, the banking and financial sector is adopting IT to achieve corporate governance, improvement of business intelligence, securely manage business communication and run applications at a lower cost. “The last two years have been exceptionally good for us due to the ability of banks to assimilate IT solutions. This includes assets and liability management for the SBI, funds transfer pricing for ICICI Bank, datawarehousing for the Bank of India, HRD management for HDFC and the IDBI Bank, besides UTI and Kotak Banks,” Mr Pai says. i-Flex, another banking software solutions company, earned revenue of Rs 300 crore from its software Flexcube, Reveleus and Daybreak for the third quarter. “The future for banking solutions is bright. The largest banks will have to replace their existing technologies to be globally competitive,” says an i-Flex official spokesperson. He says that the replacement market is growing at 15 to 20 per cent each year. i-Flex is now considering a movement into the insurance sector and has set up a group to explore the potential. “The banking industry that has been tapped is just a fraction of the market. Financial services sum up to be the largest users of IT solutions today,” says Mr Vishnu Dusad, Managing Director, Nucleus Software Exports Ltd. The result of phenomenal growth, according to Mr Dusad, is that there has been a growing need to implement banking solutions in every bank today to bring about standardisation in processes and eliminate discrepancies. “Therefore the market for the banking solutions is just opening up and I would say we have just got a bite of the pie so far,” Mr Dusad adds.
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Chinese tractor Angad to set its foot on Punjab soil
Chandigarh, January 29 Based on appropriate technology for Indian conditions, Angad is a basic functional tractor, which has been designed for marginal and small farmers with fragmented land holdings. Since it would be priced at Rs 1.10 lakh, almost 40-50 per cent cheaper than any other tractor available in the domestic market, it may find a good market in Punjab after its successful launch, both in Andhra Pradesh and Maharashtra. At present, no tractor is available in India for less than Rs 2.25 lakh. Though agricultural experts maintain that agriculture in Punjab is heavily mechanised and the number of tractors already available are far more than the requirement, the need of a smaller and economical tractor has been felt for a long time. At present, Punjab has a little more than two lakh tractors. Angad would be the first such machine from China as tractor technologies from Holland and a few other countries are already available in the country. Most of the foreign collaborators have assembly lines in India though most of the components come from overseas. Like them, Angad would be assembled in Ghaziabad by SAS Motors.
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ADB team interacts with Punjab farmers
Chandigarh, January 29 Led by agri-business specialist, Mr Fracesco Goletti and Mr Gokul Patnaik, Business Development Services Specialist from ADB’s Indian team, the team will tour four more states of Himachal Pradesh, Jammu and Kashmir, Sikkim and Chhattisgarh with a view to invest $100 million, the Managing Director of PAIC, Mr Himmat Singh, said. “We are here to identify areas where agro-business can be profitable for the state and bring in income and employment opportunities through increased and sustainable commercialisation of agriculture,” Mr Goletti stated. The ADB project is aimed at giving technical assistance for aiding the government in designing an investment project for greater efficiency in agro-business. “We would also like to initiate diversification through the funds. This investment would be a soft loan package for the state which would be something on the lines of a grant,” Mr Patnaik stated.
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VSNL files suit against government
Mumbai, January 29 In its petition filed on Thursday, the Tata group company said the government failed to keep its commitment that VSNL would be allowed to retain its monopoly in ILD telephony market till March 31, 2004. The Department of Telecommunications, through a letter dated July 28, 2000, had terminated VSNL’s monopoly in voice telephony by 2002, two years ahead of the promised date, the petition said. The DoT had offered a compensation package to VSNL for early termination of monopoly and had admitted that premature termination of monopoly would cause severe prejudice and monetary loss to the Tata group company. The department had also offered additional compensation in case loss in revenues was proven by an independent consultant, the petition said.
— PTI
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Opec may meet to consider output cut
Vienna, January 29 The 11-nation Organisation of Petroleum Exporting Countries is due to meet in Vienna tomorrow, where it is expected to maintain the powerful cartel’s current level of crude oil production. It then is scheduled to meet in Isfahan in Iran on March 16. Fahd al-Sabah said “this March will be too late to cut for the second quarter and there’s a proposal to start some conversation between the (Opec) ministers between now and Isfahan.” Fahd al-Sabah said Opec ministers appear agreed on maintaining the current production quotas in tomorrow’s meeting. “Now I start to believe that almost all the members will support the idea of sticking to the same production,” of 27 million barrels per day, about a third of world oil production, he said.
— AFP |
by A.N. Shanbhag
No Securities Transaction Tax on off-the-market deals
Q: Please inform tax implication in following case:
I transferred shares, held for more than 12 months, from my demat account to my childrens’ demat accounts as off-market trade. 1) Do I incur any Securities Transaction Tax
(STT)? 2) Can the DPs charge any brokerage other than service/transaction charges? 3) If the child is a major and sells the shares within one year through NSE/BSE, then is the profit clubbed with parents income or is it considered child’s’ income? In any case is the profit exempt from tax, as the parent had held the shares for more than 12 months. 4) In the above case, if child is minor, what is the income and tax implication? 5) For shares purchased years back and accumulated through rights/bonus/merger etc. and subsequently dematerialised and wherein no record of physical shares available then please inform how to calculate profit/loss margin and what documents can be submitted as proof of purchase to the IT authorities. — Ranade A: 1. There is no STT on off-the-market deals. 2. The DPs charge a little higher rate for handling off the market deals. 3. There is no clubbing since the child is major. Yes, LT gains are exempt. 4. A minor cannot be a shareholder. The minor’s income is clubbable in the hands of the parent whose income is higher than that of the other. 5. Thankfully, such problems have now been solved by making the LT gains exempt.
TDS on rent
Q: I have the following queries and I will be grateful to you if you can give your valuable opinion on them: 1) I am a 5 per cent co-owner in FCI godowns let out at a rent exceeding Rs.1,20,000 per annum. As a matter of fact, the FCI should not deduct TDS from my share of rent. But FCI is deducting TDS on the whole of the rent paid by it and is issuing a single TDS certificate for the entire TDS deducted. Please inform whether I can claim TDS of my share on the basis of photostat copies of the TDS certificate, which is being sent to me by the main co-owner (on the basis of second proviso to Section 199 (1) ) FCI does not take the botheration of issuing separate 16 A Forms to each of the co- owners. Please suggest a suitable remedy? 2) Section 94 (7) of the IT Act, 1961, as amended by Finance Act, 2004, is effective from April 1, 2004. Please inform whether the amended section applies only to shares purchased and sold after April 1, 2004. — Ankit Gupta, Ludhiana A: My initial reading of the law seems to suggest that FCI is justified in deducting tax on rent. Section 194-I states: “Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of: 1. Fifteen per cent if the payee is an individual or a Hindu undivided family; and 2. Twenty per cent in other cases. Provided that no deduction shall be made under this section where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the aforesaid person to the account of, or to, the payee, does not exceed 1,20,000 (One hundred and twenty thousand rupees).” Firstly, FCI is not an individual or an HUF and secondly, the rent is over Rs 1,20,000. Do correct me if I am wrong? Yes, as per your admission, you are a 5 per cent co-owner. Is this ownership a partnership firm or an Association of Persons (AOP). If this is the case, the firm or the AOP should file returns and pay tax, if any. Once this is done, the balance after-tax rent distributed amongst its members is not eligible to tax. The other option is that you make the adjustment with the other co-owner. If he is taking full credit for the tax deducted, you should get the full amount /gross amount of your share of rent due to you. Photocopies are not acceptable to the department for obvious reasons. 2. Your observation that this amendment is applicable from April 1, 2004, is absolutely correct. However, you have to realise that the pivotal point is the sale, which alone can give rise to the loss or the gain. Therefore, if the sale has taken place on or after April 1, 2004, the provision bites its teeth into the assessee if the following two conditions are simultaneously satisfied — 1. The record date of the dividend was within three months prior to the sale of equities (nine months in the case of units of MFs) and 2. The purchase was affected within three months prior to the record date for both equities and units.
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