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RBI justifies hike in repo, reverse repo rates
TCS plans Rs 5 billion investment in Pune
Arcelor Board meeting today
Narayana Murthy to step down
AVIATION NOTES
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INVESTOR GUIDANCE
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RBI justifies hike in repo, reverse repo rates
Pune, June 10 "Several Central banks have raised interest rates globally. Our monetary policy cannot be out of sync with the policies of major economies...We are now in sync with global policies," RBI Governor Y.V. Reddy told reporters here. He said global factors were now accorded greater weightage. "We wanted to put an end to uncertainty regarding the monetary policy." The RBI hiked repo and reverse repo rates by 0.25 per cent on Thursday in a bid to contain inflation, but this move has triggered hike in interest rates by commercial banks, particularly the home loan rates. On the liquidity situation, he said there was a significant turnaround in the liquidity conditions. The Reserve Bank has hiked reverse repo rates by 0.25 per cent twice so far this year to suck out excess liquidity in the market in a bid to check money supply thereby controlling prices. He said the government's objective is to contain inflation within the projected 5-5.5 per cent in the RBI's annual policy statement. "Our objective is to contain inflation within 5-5.5 per cent... in medium term we would like it to be below 5 per cent," he said. On the stock market, he said, " We have no view on stock market price." He said the government only sees if there is any excess volatility in the stock market so that there is no spill over to the forex market. Elaborating, he said the government should also watch that the banking system is not "unduly exposed" and added that there was every evidence to show to the contrary. "There is no question of advising banks on margin issue as it is an issue between banks and borrowers," he said. He also said that rupee weakness was not related to the stock market. Referring to the borrowing situation, he said the oil bonds issue did not form part of the Government borrowing programme and that the Central bank was of the view that the borrowing programme can be conducted smoothly. — PTI
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TCS plans Rs 5 billion investment in Pune
Mumbai, June 10 The company has signed a Memorandum of Understanding (MoU) with the Maharashtra government to set up a 50-acre campus in Pune. The MoU was signed by TCS Chief Executive and Managing Director S. Ramadorai and Maharashtra Chief Minister Vilasrao Deshmukh, here today. The company also said it planned to hire 9,000 persons by March 2007 for its existing units in Mumbai and Pune. The Pune unit, to be housed in a special economic zone, is expected to start operating within two years. TCS plans to start with 5,000 seats in Pune and double the capacity later. “This will gradually be scaled up to 10,000,” Mr Ramadorai said. “We will continue to expand in Mumbai and Pune, and are also looking at other destinations in Maharashtra,” he told reporters. TCS, a part of the salt-to-steel Tata business group, plans to add a total of 30,500 persons this year to a payroll of 63,832 employees. It plans to expand in Nagpur, Indore, Chandigarh, Coimbatore, Kochi, Bhubaneshwar and Ahmedabad in India, and also build infrastructure in Brazil’s Campinias and Beijing. — Reuters, TNS
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Arcelor Board meeting today
London, June 10 The Board is expected to urge Mittal Steel to come up with a bid matching the 44 euro-a-share valuation it claims the Severstal deal is worth, The Guardian reported from Brussels. Mittal has so far offered 34.50 euro per share and said it had no plans to raise it. Arcelor's advisers have, meanwhile, denied reports that the Board would scrap its heavily criticised plans to hold a shareholders' meeting on June 28, requiring a 50 per cent majority to vote out the Russian deal.
— PTI |
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Narayana Murthy to step down
Bangalore, June 10 Meanwhile, the shareholders of the company today approved the company's plan to increase its authorised capital from Rs 150 crore to Rs 300 crore at the 25th AGM here. The shareholders also approved the company's plans to issue 1:1 bonus shares and the final dividend along with the Silver Jubilee dividend.
— PTI
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Airport at Hyderabad to have see-off village
by K.R. Wadhwaney Hyderabad is rising in the civil aviation sector more stoutly and loudly than most other centres in the country. The state-of-the-art international airport, with ultra-modern facilities for passengers, visitors and airline officials will be humming with operational activities on scheduled time of November 2007. The work on world-class airport is progressing on a war footing. The airport will be the most unique in the sense that it will have a village, like in Olympic Games, for visitors to see passengers off. This facility has been created to avoid congestion at arriving and departing concourses as also maintain Indian traditions. Situated at the entrance of the terminal building, it will have a huge airconditioned hall, along with restaurants, snack bars, shopping arcade and even entertainment centres for visitors to utilise their time in the event of delayed flights. Had the organisers constructed a mini (nine-hole) golf course, it would have been immensely popular with the Japanese, Thais, European and American to travel to Hyderabad for combining leisure with tourism. Six months before commissioning passenger operations on a trial basis, the complex will begin cargo operations in March 2007. Those who have had an opportunity to see rising of the world-class airport, are of the view that many foreign airlines will start operations from here instead of functioning from Delhi and Mumbai. First pre-requisite first. The runway will be 4,260 metres. This will be ideal for A-380, a mammoth jumbo, to land and take-off. Double-deck aero-bridges will be in place for passengers to embark and disembark. Ten of the 30 will be aerobridge parking bays. There will also be parallel taxiway, which will be a subsidiary runway and will be put into use, if and when required. In a T-design, the tower will be spacious enough to handle all, domestic and international, flights with ease and comfort. Initially, seven million passengers and one lakh tonnes of cargo will be handled from the new complex. After the completion of the second phase of construction, the terminals will be ready to handle 20 million passengers. The modern airport stands on 5,000 acres of land. Unlike India’s aviation history, this is the first airport, according to analysts, which is being built for ‘tomorrow’. Believe it or not, the Indira Gandhi International Airport became obsolete by the time it was commissioned. This messy situation at Delhi arose because of ‘political hurdles’. Luckily, there is no interference in raising Hyderabad Airport. The airport is being raised through private agencies. The modernisation plans for Delhi and Mumbai airports are in place and soon these two airports will wear a new look. There are, however, a few road-blocks but things are shaping up well. A majority of the staff of the Airports Authority of India (AAI) is still uncertain of their future.
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Long-term gains from equity shares tax-free
by A.N. Shanbhag
Q: I am a retired person (not a senior citizen). After my retirement from PSU in April 2003, I am not filing income-tax return. For the assessment year 2003-2004, I got income tax assessment order. Now I have the following yearly income: Against item 3 above, out of Rs 2,50,000 an amount of Rs 1.5 lakh matures in the month of June after period of 3 years and balance in August and December of this year and I was asked to furnish Form-15G, in case I wish to withdraw the principal amount. I was also told that if I do not furnish Form-15G, they will deduct TDS for the past three years. Can I furnish the above form and avoid TDS. Kindly advise. I have PAN. I also have a monthly pension of Rs 997 (out of PF contribution by company). Can I file Form-15G and avoid TDS on behalf of my minor son? Should I file income-tax return for the income which I think is below the taxable limit? I am doing share trading in my wife’s name (housewife) where I am the second signatory. (Joint account). Last financial year, she had a short-term income (i.e. shares purchased and sold in the same year) Rs 15,000 and in this financial year i.e. 2006-2007, she had a total income of Rs 30,700 out of which Rs 17,500 is long term income i.e. shares purchased and sold after a year. Is income-tax payable on this income? My wife was working up to end January 2004, but her salary was below taxable income and now she does not have any income. She has not been assessed for income tax so far. In joint account what is the role of second signatory as far income-tax is concerned (joint account) while opening the demat account, I had given my PAN. As per the latest directive for share market operation, my wife is going to apply for PAN. Please also advise whether wife’ s income will be considered as my income in joint account? — Vivedh A: Sec. 197A read with Rule 29C provides for furnishing declarations by the payees in Form-15G (Form-15H for senior citizens) in order to enable the payer make the payment without deduction of tax at source if the tax payable on his estimated total income is nil. The declaration under Form-15-G can be filed only if both the following conditions are satisfied — 1. The tax on estimated total income of the applicant is nil. 2. The income from taxable dividends, interest, withdrawals from NSS does not exceed the tax threshold applicable to the assessee (Rs 1 lakh for males and 1.35 lakh for non-senior females). The second condition is not applicable to senior citizens (tax threshold Rs. 1.85 lakh). This facility of using either of the Forms is not available to NRIs. The income on your minor son is clubbable in your hands. If you can satisfy both these conditions, you may submit Form-15G. In the case of joint accounts you will have to keep a track of what belongs to her and what belongs to you. It is always better to have two joint accounts with the second holder meant for safety. Long-term capital gains from equity shares, sold on recognised stock exchanges in India, are tax-free. Incidentally, using wife as a name lender is not very much approved by the department. Her income from shares (short-term capital gains from equity shares are taxable @ 10.2 pc) will be treated as clubbable in your hands, unless you can prove that she used her savings out of her earnings. Buying debentures Q: I purchased 150 debentures (face value Rs 100) of a company at Rs 72 from the market in 1992. The debentures were to mature in 1998, but the company offered an option to the debenture holders to accept the extension of the maturity date up to 2002, with an increased rate of interest. I opted for the redemption as per the original date of 1998. The company did not reply either to this letter, or to number of my letters about the nonreceipt of redemption amount. However, the company paid me accumulated interest on 15 Nov 2002. Now the company sent me redemption amount of Rs 15000 on 3 May 2006, without any further interest. My queries are : 1. Whether the excess over the purchase price would amount to capital gain, or would it be treated as capital receipt. 2. If the excess amounts to longterm capital gain, whether the indexation benefit would be available. 3. What would be the effective date of ‘transfer’ for calculating the long-term capital gain? - The original date of redemption, i.e. 1998, - The extended date of redemption i.e. 2002, or -The actual date of receipt of redemption amount i.e. 2006. Kindly advise. — Shradhnand A: Since you have purchased the debentures in the market, the redemption value less your cost will be treated as long term capital gains, by virtue of the holding period being over 3 years. The effective date of redemption does not matter because in the case of bonds and debentures (other than indexed bonds issued by the government), the benefit of indexation is expressly not available on long-term capital gains (LTCG). You will do well by making a complaint to SEBI and CLB: The address of SEBI: Investor Grievance and Guidance Division P. B. No. 19972, Nariman Point P. O., Mumbai- 400 021. Company Law Board 5th Floor, A-Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi-110001 email: clb@sb.nic.in. Section 80C Q: I have invested in an ELSS fund 3 years ago. On and after 3rd of November of 2006, I am eligible to redeem my units as the period of 3 years is getting complete. My question is instead of redeeming, if I simply switch from the growth option to dividend option and continue with the scheme, will I be subject to capital gains tax? And if yes, will it not be treated as a fresh investment? — Jagmohan A: You are correct. Any switch from the dividend to growth option or vice versa constitutes a transfer and hence liable to capital gains tax. That the long-term capital gains is exempt (because the scheme is equity oriented) is besides the point. Since the transaction constitutes a transfer, the switch will be treated as a fresh investment and hence will be eligible for Section 80C deduction. Similarly, from the date of the switch, the three year lock-in will apply all over again.
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