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M&M to set up vocational centres
ICICI Bank, Infosys, Wipro in Forbes list
Gillette-P&G merger okayed
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IA’s hand-me-down aircraft may go to Alliance Air
ESOP shares long-term assets if held for more than a year
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M&M to set up vocational centres
New Delhi, October 1 Twenty-two corporate czars, led by Ratan Tata, had recently given a commitment to Prime Minister Manmohan Singh to come up with direct intervention plans, perhaps, as a measure to stall the increasing pressure from the UPA coalition partners to make reservation for SC/ST in private sector mandatory like the PSUs and government jobs. President APJ Abdul Kalam will inaugurate the programme tomorrow on the occasion of Gandhi Jayanti. Under that, industry led by M&M will empower the SC/ST youth, and enrol one lakh girl students in good quality schools. The group has decided to devote one per cent of its net profits annually to the social cause. “With a desire to create opportunities for the weaker sections of the society, particularly for the SC/ST, M&M is starting Mahindra Pride schools in Mumbai and Hyderabad. These livelihood schools will equip youth with skills and capacities to get employment in the private and public sector and will support 1,200 students,” said Mr Anand Mahindra, Vice-Chairman and Managing Director, M&M. Mr Mahindra, a former chairman of the CII, asserted that instead of supporting reservation in private sector, the industry would undertake direct intervention to empower the youth from socially and economically weaker sections to compete on merit basis to gain employment. He said under the Nanhi Kali project, the group has plans to mobilise the industry to put one lakh girl students in good quality educational institutions, especially in the SC/ST dominated areas in the next three years. The group will also offer 600 scholarships of Rs 5,000 each to the students of weaker sections annually. Further, said Mr Anand Mahindra, “around 24,000 employees of the group would be offered Employees Social Options scheme that would enable them work for a week in a year on the community development programmes.”
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ICICI Bank, Infosys, Wipro in Forbes list
New York, October 1 ''Unlike the Forbes annual Global 2000 companies, this list was not a ranking by size or necessarily a measure of brand wattage,'' the magazine said. Forbes considered companies with at least $5 billion in revenue or market value and around 500 made the grade and met the magazine's definition of ''big''. Out of these, 50 were chosen on the basis of the best aggregate score for long-term profitability, sales and earnings growth as well as projected earnings and stock price gains. Forbes said N R Narayana Murthy's Infosys Technologies has a market value of $14.7 billion with sales at $1.6 billion. Azim Premji-owned Wipro has a market value of $11.7 billion and sales of $1.9 billion while ICICI Bank has respective figures of $8.1 billion and $3.9 billion. However, none of the three firms could find a place among the top 10. Japan topped the list with 13 firms followed by Australia (10), South Korea and Taiwan (8 each), China and Hong Kong (7), India's three and Thailand (1). Among the top five are two Chinese companies and one each from Japan, Australia and South Korea. Japan's Toyota Motors , with a market value of $146.2 billion and sales worth $173.1 billion ranks one while China's Petro China with respective figures of $143.9 billion and $46.9 billion finds the second place. It is followed by Australian BHP-Billion with market value of $ 93.3 billion and sales of $ 29.6 billion. Telecom company China Mobile is placed fourth with market value of $ 85.3 billion and sales amounting to $ 23.3 billion while the fifth place is occupied by South Korean giant Samsung Electronics with market cap of $ 77 billion and sales worth $ 79.2 billion.
— UNI
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Gillette-P&G merger okayed
Mumbai, October 1 Announcing this to the BSE, Gillette India said as per the terms of the merger, the
separate corporate existence of Aquarium Acquisition Corporation has ceased to exist and the Gillette Company, USA continues to survive. This in turn effectively means that the Gillette India's entity will also remain unaffected by the merger of its parent company in the USA. Meanwhile, the US anti-trust authorities have cleared a planned merger between Procter and Gamble and Gillette to clear the way for the creation of the world's biggest consumer goods firm, P and G said today. Also, by virtue of the merger, each share of the Gillette Company, USA shall be converted into the right to receive 0.975 shares of Procter and Gamble, USA. Thus, the Gillette Company, USA becomes a subsidiary of the Procter and Gamble Company,
USA. — UNI
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ESOP shares long-term assets if held for more
Q: I have a question related to ESOP taxation to which I am not able to find a clear answer. Would appreciate if you could provide some details.
I am with an American MNC and have got stock options (ESOP), which have a lock-in period of four years. The company is listed on Nasdaq. As part of the ESOP, I have not paid anything to buy shares from the company and am eligible to get the profit from the sale of ESOP. What is the rate at which this profit would be taxed? I am in the highest tax bracket. — Ranjeet
A: The ESOP shares, if held for more than 12 months, qualify to be a long-term capital asset as per Sec. 2(29A) read with Sec. 2(42A) of the Income Tax Act. Now as per Sec. 48 of the Act read with Sec. 112, the long-term capital gain would be taxed @20 per cent with indexation benefits. The flat 10 per cent rate is not available to a share listed abroad. Trust this meets your requirement. Section 80C Q: I am a housewife having income only from sale and purchase of shares. For the current financial year, my estimated income from short-term capital gains (sale/purchase of equity shares) is likely to touch nearly 1.2 lakh. I am aware that I shall have to pay short-term capital gain tax @ 10 per cent in addition to normal STT. But if I go by the new ruling of 80-C rebate, I do not have to pay any tax as by reducing Rs 1 lakh (80C deductions) from my gross income, my net income will come down to Rs 20,000 only. Please advise whether my understanding is correct. If not what is going to be the exact calculation in the case. — Neelam Verma
A: You have not given any details about your normal income from other sources. I presume you have no other income from any other source. There may be some interest earned from bank account. However, income up to Rs 1,35,000 is exempt from tax for non-senior women (below 65 years of age). If your total income including short-term capital gains does not exceed this threshold, you do not have to pay any income-tax. Please note that no deduction u/s 80C is available against short-term capital gains from equity shares sold on recognised exchanges in India.
Short-term gains Q:
I am a housewife. I have Rs 60,000 in my savings, which I received in gifts on my marriage and am investing in shares. All my gains are short-term capital gains. For the shares which suffered STT on both sides, can I take it to my income or should I pay 10 per cent capital gains tax ? My total short-term capital gains are around Rs 10,000. What is the tax applicable on those transactions where STT is paid only on sale ? — Manali
A: On shares sold on a recognised stock exchange on which STT is paid, the short-term gains would be taxed at 10 per cent and the long-term gains would be tax free. Just follow this simple rule. It doesn’t matter when you bought the shares, whether STT has been paid on purchase etc. As long as the shares are sold on the exchange and STT is paid, you get the benefit. Bonus stripping Q: I regularly read your responses to queries of investors, but do not appear to have come across any view taken by you on the following: 1. When units of the bonus plan of a mutual fund are purchased less than three months before the record date for bonus and redeemed (after issue of bonus units but less than three months from the date of purchase (both purchase and redemption having taken place) during AY 2004-2005 (FY 2003-2004): a) Is there any rule under which short-term loss can be disallowed by IT authorities? If so, kindly mention the notification / Rule reference. b)
If no tax free dividend has been declared, can short-term loss be disallowed under Section 94 (7), IT Act, 1961? c) Was Section 94 (8) of IT Act 1961 introduced by F.A. 04 precisely because Section 94 (7) does not cover the Bonus Plan of Mutual Funds? If so, stripping of Bonus Units up to 31.3.2004 is not covered by Section 94 (7). Is this sustainable? 2. If the aforesaid investment was in units of the Growth Plan of a Mutual Fund (instead of a Bonus Plan) would the short-term loss be disallowed: a) If so, under which rule? b) Would disallowance under Section 94 (7) be attempted even thought there is neither a tax free dividend nor a Record Date? 3. Are there any notifications or case laws or rulings benefiting such an investor? I look forward to a personal response in case this query does not merit publication. — Melvyn J Rebeiro
A: The four conditions applicable for Section 94(7) to be operational are 1. The purchase of units has to be within three months before the record date for dividends. 2. The sale of these units has to be within three months after the record date for dividends. 3. The dividend has to be tax-free. 4. The transaction has to result in a loss. If all these conditions are simultaneously satisfied, the loss arising to the taxpayer on the sale to the extent it does not exceed the income has to be ignored for computing the income. There was no provision for bonus stripping in FY 2003-04. Bonus stripping provisions were introduced by FA 2004 applicable to 2004-05. FA04 also extended the period of three months after the record date to nine months. Moreover, the loss on sale of original units where bonus units have been issued, will be ignored. The amount of such loss shall be considered as the cost of acquisition of the bonus units. If no tax free dividend is declared, then no dividend stripping takes place and Section 94(7) is not applicable. It doesn’t matter whether the plan is a bonus plan or a growth plan for applicability of the above provisions.
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