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IBP to merge into IOC by Sept
Stock market needs big correction: NCAER
Tatas offer to raise investment in B’desh
Bigger bandicoots on the prowl: SEBI
Centre to support north India common economy
FM: ADB loan in nation’s interest
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BoI, Canara Bank to foray into life insurance
Reliance to sell gas to Anil’s Dadri plant
Tax Advice
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IBP to merge into IOC by Sept
Kolkata, April 30 Mr Kannan said that the sale of shares resulted in a cash flow of Rs 97 crore, which would help the company reduce losses. IBP, however, was set to post losses during 2005-06, Mr Kannan said .He said the company had approached the government for a special compensation of Rs 150 crore to avert losses. During the first nine months of the past fiscal, the company posted accumulated losses of Rs 500 crore. Mr Kannan said the trend was the same in the last quarter of 2005-06 due to under-recovery in motor spirit (petrol) and diesel. While the under-recovery for motor spirit was more than Rs 9 per litre, in the case of diesel it was almost Rs 10 per litre. Asked whether the company would get additional oil bonds, Mr Kannan said IBP had already received Rs 425 crore in the form of such government instruments. Mr Kannan said it was unlikely that IBP would get more oil bonds. On the proposed merger of IBP with its parent Indian Oil Corporation (IOC), Mr Kannan said all formalities were complete. The parent company would also convene an EGM for this, Mr Kannan, also the Marketing Director of the IOC, said. He said IBP had convened an EGM of shareholders for May 29 for getting their approval. Mr Kannan said the merger would be completed by September this year. Kannan said the IBP Board had cleared a Rs 500-crore capital expenditure plan for 2006-07. He said the funding would be made from internal accruals. IBP recently transferred LPG business to the IOC. He said IBP would go for retail outlet expansion in rural areas, and consolidation in the urban
sector. — PTI
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Stock market needs big correction: NCAER
New Delhi, April 30 “It is important to note that the P/E ratio of Sensex stocks is almost 21, which is substantially higher than the commonly desired level of 16. This situation is continuing for more than a month and a major correction is now overdue,” the National Council of Applied Economic Research (NCAER) said in its quarterly review. The Sensex crossed the 10,000 mark on February 8 this year and since then the bull run has continued, zooming past the 12,000 mark on April 20. It said that the turnaround in foreign institutional investors (FIIs) sentiment towards the Indian market was in line with that in the emerging market economies. “The FII movement has shown high fluctuations during 2005-06,” the NCAER said. However, it said, there was an increasing trend in the amount of investment, which was flatter than the trend in the Sensex movements. “This suggests that there is something more than FII story to drive Sensex,” it said, adding that domestic investors, particularly the mutual funds, were equally bullish. The council has also appreciated the move by the market regulator SEBI and the RBI for closely monitoring the sources of funds being invested. “ SEBI and the RBI have rightly initiated closer watch on the sources of funds that are being invested to ensure the vulnerability of the financial system and protect the financial system against vulnerability,” it said. Pointing out that the Finance Minister in his Budget made fewer moves towards reforming the capital market, the NCAER said the increase in the rates of MAT and services tax could have affected the market sentiments but the sops extended to mutual funds and FIIs came as a respite. It appreciated the government’s move to set up an investor protection fund under the aegis of SEBI, funded by fines and penalties recovered by the regulator. “This will bolster confidence among retail investors who should be the key drivers of the capital market,” the NCAER
said. — PTI
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Tatas offer to raise investment in B’desh
Dhaka, April 30 One of Bangladesh’s top economists, Prof Wahiduddin Mahmud, said the latest offers demonstrated goodwill by both Tata and the Bangladesh Government. “It will have a long-term impact on Bangladesh’s foreign direct investment,” he told Reuters. In October, 2004, the Tatas proposed to invest $2 billion in Bangladesh, but it made no headway over a dispute on the price of gas. Later the investment offer was raised to $2.5 billion, Mr Mahmudur said. “Now the total project investment will be more than $3 billion,” Mr Alan Rosling, Executive Director of Tata Sons, said after a meeting with Mr Mahmudur today. The Tatas’ proposed projects in power, steel, fertiliser and coal would constitute the largest single foreign investment ever made in Bangladesh. The Tata proposals were five times the foreign direct investment (FDI) proposed to Bangladesh last year, and equal to the total in FDI that the country has received since
1972. — Reuters
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Bigger bandicoots on the prowl: SEBI
New Delhi, April 30 While naming Roopalben and Purushottam among the 24 key operators, who cornered retail portion of 105 IPOs through off-market transactions, the regulator, in its interim order on the scam, concluded that they were not the ultimate beneficiaries. “As per the data obtained from NSDL and CDSL, it was seen that the 24 key operators had, in turn, made off-market transfers to various entities during the pre-listing period,” SEBI said. It reasoned that the transfers were made by the operators to their financiers, one of whom was Roopalben’s sister, Devangi Panchal. “Since the financiers have received the shares from the key operators it would appear that these financiers are the ultimate beneficiaries of the IPO abuse,” the regulator said while banning these ‘money-lenders’ too from trading in the stock market. SEBI said the likes of Roopalben Panchal and Purushottam Dudlani were nothing but intermediaries for their financiers, “who appear to be the ultimate beneficiaries.” Among the bigger bandicoots (read financiers) barred from the market are Hashmukhal N Vora, Welvet Financial Advisors Pvt Ltd, Jayesh P Khandwala HUF, Gautam N Jhaveri, Excell Multitech Ltd, Zenet Software Ltd, Tauras Infosys Ltd, Seer Finlease Pvt Ltd, Devangi Dipakbhai Panchal (Roopalben’s sister), Dipak Jashvantlal Panchal, Shilpa Ranjan Dapki, Rajan Vasudev Dapki and Bhargav Ranchhodlal Panchal. These financiers had lent money to the master account-holders, who used the money to corner retail portion of IPOs by getting shares from other demat account- holders in off-market transactions (during the time before the listing of the shares). These shares were finally transferred to the financiers, who offloaded them soon after the listing for a
profit. — PTI
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Centre to support north India common economy
New Delhi, April 30 Addressing the summit of Chief Secretaries organised by the PHDCCI here yesterday, Mr T.K.A. Nair, Principal Secretary to the Prime Minister of India, said an integrated market for the whole country is the vision of the Dr Manmohan Singh, to which the concept of NICE is highly significant. The concept of regional cooperation received all out support of the Chief Secretaries of northern states for promoting and strengthening NICE and it was agreed to follow up a common minimum economic agenda for the states. In the immediate future, the Chief Secretaries agreed to follow grid discipline so that the power system in the northern states does not break down as many of them are over- drawing to meet their shortage. The states of the northern region were represented by the Chief Secretaries of Delhi, Haryana, Himachal Pradesh, Punjab, Uttaranchal and the Additional Chief Secretaries of Rajasthan and Jammu & Kashmir. A consensus was arrived at the summit by the Chief Secretaries to develop a common network of IT in northern region, sharing of resources of power generation and implementation of the recommendations of Empowered Committee on VAT to phase out CST and work towards a Single Goods and Services Tax. The states unanimously urged for phasing out of CST and fully compensating for loss of revenue. On the issue of inter-state barrier on movement of vehicles which are frequently detained from checking essential documents, like VAT, octroi, entry permit etc., the states agreed to minimise the difficulties at check posts and ultimately work towards removal of barriers. It was agreed to set up automatic tax collection centres along the borders of all inter-state highways.
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FM: ADB loan in nation’s interest
Hyderabad, April 30 As the country moves to a higher growth path, it would be necessary to supplement domestic resources with assistance from international institutions like ADB through investments in public sector infrastructure, Mr Chidambaram said. Disclosing that the country is expected to receive $2.65 billion by 2008 from ADB, he said these were long-term and reasonably low- cost funds. Speaking to mediapersons ahead of the 39th annual meeting to be held here from May 3 to 6, the Finance Minister asserted that India, being a founding member of the bank, was a willing partner in borrowing funds in the interest of the country's development. Asked about the concerns being voiced by some NGOs that ADB- funded programmes had a negative impact on the economies of Third World countries, he said the policies were decided keeping in view the country's interests and people would trust the government to secure the national interest. But he hastened to add, "We will listen to the dissenting voices carefully and give the NGOs the required space to express their views. We will not quell dissent." Many Indian and international NGOs have already announced their plans for protests in the city against the lending policies of the ADB. Stating that India being the largest borrower of ADB was not a sign of weakness, but of strength, he said the bulk of ADB's 2006-08 assistance programme would focus on transport and energy, reflecting the government's developmental priorities. On ADB's concerns over labour reforms, he said the government, while taking into account the opinions of various bodies in this regard, would frame the policies autonomously in the country's interests. The Finance Minister said the Centre would soon seek assistance from ADB and World Bank for Water Resources Management Project envisaging restoration of over 20,000 water bodies with an irrigation potential of 1.5 million hectares at a cost of $1billion over the next four years. The project proposals would be submitted by the end of May or early June. The annual meeting of ADB in Hyderabad would be attended by over 3,000 delegates, including Finance Ministers from 64 countries.
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BoI, Canara Bank to foray into life insurance
Mumbai, April 30 The bank is likely to firm up its desire by selecting the foreign partner for equity tie-up in the next couple of months, according to BoI CMD M. Balachandran. Kolkata: Canara Bank, will make a foray into the life insurance sector in the current fiscal. "We are exploring possibilities of a tie-up while entering the life insurance sector, and the matter is in an advanced stage," Canara Bank CMD M.B.N. Rao said here on Saturday. The bank has decided to set up a venture capital fund along with five other banks and SIDBI with a corpus of Rs 100 crore.
— PTI
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Reliance to sell gas to Anil’s Dadri plant
New Delhi, April 30 RIL will supply 28 million standard cubic metres of gas per day to Reliance Natural Resources Ltd, the Anil Dhirubhai Ambani Enterprises firm for the Dadri project. Sources said RIL on April 14 wrote to the Oil Ministry seeking its approval for delivering gas from its KG-DWN-98/3 Block for $2.34 per mBtu. Added to this would be $.12 per mBtu marketing cost and another $.72 per mBtu cost of transporting it from Kakinada to Dadri. After adding central sales tax, the burner-tip price of gas came to $3.27 per mBtu on a net heating value basis.
— PTI
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KVPs cannot be purchased in name of HUF
by S.C. Vasudeva Q. I purchased KVPs on 17.09.1999 in the name of my HUF being Karta. They matured on 17.09.2006, now the postmaster said you can’t purchase on the name of HUF, so my query is: whether HUF can purchase KVPs or not? & if not then from which date it is applicable? Please advise. — Gurpreet Singh A. The Kisan Vikas Patras cannot be purchased in the name of the HUF. However, the funds of HUF can be invested in the name of the Karta or another member of HUF, towards the acquisition of Kisan Vikas Patras. The income arising on such Kisan Vikas Patras would then be taxable in the hands of the HUF. Tax calculation
Q. I want to clear the tax calculated under the column tax liability of Mr B.S. Barwal. His total income is Rs 3.10 lakh, G.P.F. Rs 85,000 and Rs 6,000, Housing Loan instalment per month i.e. Rs 72,000 per annum (12x6,000/- = 72,000/-). Now as per my calculation, the tax liability is as under: (Rs) Total Salary 3,10,000 Less deduction 1,00,000 under Section 80C Taxable income 2,10,000 Income tax on 2,10,000 Up to Rs 1,50,000: 5,000 Between Rs 1,50,000 to Rs 2,10,000 12,000 Total tax 17,000 Add 2 pc education cess: 340 Total tax payable 17,340 You are requested to clear my doubt as how you have calculated Rs 13,770, including education cess 2%. — A.C. Sharma,
Jalandhar A. The computation given by you in your query is correct. A sum of Rs 17,340 as computed by you would be payable to the Government of India towards income tax and education cess. The amount of Rs 13,770 would be payable if tax payer is a woman who is not of 65 years of age.
Tax on GPF
Q. I have retained my GPF amount after retirement from the PSEB for a period of 5 years on which interest occurs as in case of a regular employee. Is the interest payable during said period taxable under the income tax act? — S.M. Gupta, Patiala A. Any payment from a statutory provident fund is exempt under Section 10(11) of the Income-tax Act 1961 (the Act). Accordingly, as and when you withdraw the balance lying in your general provident fund account you would not be liable to pay any tax thereon.
Stamp duty
Q. In this financial year, I am going to purchase a plot for house construction. I am going to spend Rs 40,000 for stamp duty and registration fee for plot’s purchase and want to construct house on it in next financial year. Kindly let me know if I am eligible to deduct this expense from my gross total income. My gross total income for this year will be Rs 2,10,000 approximately. If yes, then under which section of Income tax. Which documents should I furnish to the Income Tax Department while filing my income tax returns regarding purchase of plot. — Pardeep Singh A. Any expenditure incurred in connection with the purchase of the plot and construction of a house thereon is not deductible from your gross total income. Such an expenditure having been incurred for the acquisition of a capital asset, will be considered as part of the cost of such a capital asset. In fact, the income from the house property (as and when the house stands constructed) shall be taken as NIL in case the house is self-occupied. If the same is let out on rent, the income from letting out will be taxable as income from house property.
Capital gains
Q. I have sold my ancestral land of 6 kanal 5 marla at the rate of Rs 6,25,000 on 10.8.2005. The said land is agriculture and it falls within the municipality limit and its sale proceed came under the long-term capital gain. If the entire sale proceed of Rs 6,25,000 is invested in the purchase of residential plot and construction of house on the said plot within the specified time limit of two/three years from the date of sale, is the capital gain tax, if any, is NIL. I have already one self occupied residential house and propose plot/house will be self-occupy for family purposes and it will be near to (same locality) said self occupied house. I am salaried person and my salary for the current F.Y. is about Rs 2,85,000. Please advice regarding capital tax gain liability, if any. — Ajit Singh Virk A. Section 54F of the Act requires that the capital gains earned on the sale of a capital asset, other than a residential house, if invested in the purchase/construction of a residential house, would be exempt from tax if the purchase/construction is effected within the specified period. The entire amount of sale proceeds, are not required to be invested as per the requirement of the said section. The investment of Rs 6,25,000 in the purchase of residential plot and construction of the house within the specified period would definitely entitle you to claim the exemption from the chargeability of the capital gains tax. The ownership of another self-occupied residential house should not disentitle you to claim such exemption, in view of the amendment of Section 54F of the Act by Finance Act 2000 effective 01.04.2001.
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