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HDFC, CBoP agree on merger
Budget
All India bank strike on Feb 25-26
Canadian firm to supply parts for Nano
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TN releases new industrial policy
Investor
Guidance
Aviation Notes
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HDFC, CBoP agree on merger
Mumbai, February 23 “The two boards have resolved to pursue the merger, subject to satisfactory due diligence, a fair share-swap ratio and all the requisite statutory, regulatory and corporate approvals, including those from the Reserve Bank of India (RBI), the stock exchanges, and the respective boards and shareholders of both banks," said a joint statement by the two banks. The boards of both banks will now meet on February 25 to consider the swap ratio after receiving the valuation reports, the statement said. A decision with regard to the draft scheme of amalgamation and any other matters as required would be taken on February 28, it said. With the merger, the combined branch network would go up to 1,348 against the existing private sector leader ICICI Bank’s close to 955 branches. Country’s second largest lender HDFC Bank has about 754 branches while CBoP is having 394 branches across 180 locations. However, in terms of assets, ICICI Bank is much larger than the proposed new entity. While ICICI Bank has assets of Rs 3,76,700 crore, the proposed combined entity would have over Rs 1,10,000 crore. HDFC chairman Deepak Parekh told mediapersons that if the board approved the merger proposal, then another meet would be called on Monday. The share swap ratio would be decided at that meeting, Parekh said. CBoP, which had its board meeting in New Delhi, also gave an in-principle approval to the merger proposal. HDFC Bank has a promoter holding of 23.28 per cent, held jointly by HDFC Ltd, HDFC Investments and HDFC Holdings. CBoP is promoted by Bank of Muscat, HSBC Finance and Sabre Capital. Bank of Muscat holds the maximum equity of 14 per cent in the bank.Rana Talwar promoted Sabre Capital holds about 3.4 per cent stake in the bank. Following inorganic route of growth, Centurion Bank had in the past acquired Bank of Punjab and Lord Krishna Bank. HDFC Bank had earlier acquired the Times Bank. The combined entity could have a market capitalisation of about Rs 63,000 crore, based on their current market values. While HDFC Bank is the third most valued bank in India with a market cap of over Rs 52,000 crore, CBoP is the tenth most valued bank with a market cap of about Rs 10,500 crore. — PTI |
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Cut import duty, rationalise VAT: SMEs
Ruchika M. Khanna Tribune News Service
Chandigarh, February 23 The small and medium enterprises (SMEs) wish list for finance minister P. Chidambaram, as he gives the final touches to the Budget-2008, includes a rationalisation of value added tax (VAT), cut in import duty and certain benefits to exporters. The industry in the region wants the government to honour its commitment of doing away with varied tax structure to be replaced by a goods and services tax (GST). Talking to The Tribune here today, Amarjit Goyal, chairman and managing director, Modern Steels, Khanna, says lower taxes will generate more income, and hence the government should announce a cut in most taxes. “We would prefer that the overall duty is reduced from 16 per cent to 12 per cent, custom duty should be abolished and personal tax and corporation tax is reduced. Since GST has to be imposed from April 2010, we want lower duties,” he says. Yashovardhan Saboo, CEO, Ethos Swiss Watch Studios, says it is time that the real movement begins towards GST and central sales tax, excise and VAT is replaced. “Since we are in luxury retail business, we would like that the indirect taxes on imported goods are reduced. This would greatly affect the business here, as we loose out business and people buy these luxury goods from abroad,” he said. Supporting his views, Anoop Bector, managing director, Cremica Foods, says the finance minister should reduce the excise and import duty on food processing sector. “SMEs in food processing sector should get due benefit so that these benefits can percolate down to the farmer. A lot of agriculture produce goes waste, but if the government builds infrastructure and gives a boost to setting up of world class food processing plants, we can contribute significantly to the agro-economy.” Taking up the case of the engineering exporters, S.C. Ralhan from the Engineering Export Promotion Council said the only way that the government can come to their aid was to impose a cess on export of steel, just as has been done by the governments of China and Taiwan. “This will ensure that a proper supply of iron ore and steel is maintained and the prices of steel are kept in check. “Because of the dollar depreciation, engineering exporters have suffered. A five-year tax holiday on this sector will give them a big boost,” he added.
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All India bank strike on Feb 25-26
New Delhi, February 23 Call for the strike has been given by the United Forum of Banks Union (UFBU), an umbrella organisation of all the nine bank unions. The forum entered into negotiations with Mukhopadhya yesterday and a draft was prepared relating to a probable solution. However, this was not signed either by the chief labour commissioner or the UFBU due to some snags, V.K. Gupta, Delhi convenor of the UFBU and general secretary of national confederation of bank unions said. The union leaders said employees of private sector banks would also join the strike. — UNI |
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Canadian firm to supply parts for Nano
Ottawa, February 23 Samco has partnered India’s leading business conglomerate Tatas to produce parts for the Rs 1 lakh ($2,500) car, export development Canada’s chief representative (India) Peter L. Nesbitt said while addressing the Telfer India Forum at the University of Ottawa yesterday. Samco president said Tata would source roll-forming equipment and technology from his company. — PTI |
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TN releases new industrial policy
Chennai, February 23 The policy entailed schemes for establishment of new industrial estates, infrastructure development like establishment of “multi-storied flatted industrial estates” for micro industries and “liberal floor space index” for construction of industrial sheds and multi-storied industrial units, and 50 per cent stamp duty exemption for such units. It also offered sops like capital subsidy, cut in power tariff and VAT concessions to set up micro industries anywhere in the state. The government also announced capital subsidy schemes subjected to a maximum of Rs 40 lakh per industry and power subsidy for micro, small and medium industries established in 251 backward blocks and industrial estates and agro-based industries set up in all 385 blocks in the state. The industrial policy also announced a special capital subsidy for 10 thrust sector industries like electrical and electronic industry, drugs and pharmaceuticals etc. It also announced new schemes for technology development, including “back-ended interest” subsidy for technology upgradation, subsidy on the cost of filing a patent application and for trademark registration. |
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No stripping restriction against bonus shares
by A.N. Shanbhag Q. I need some clarity on bonus stripping in equity shares. For example : Reliance Power is contemplating to issue bonus shares. My questions are : a) Can I strip my losses arising out of sale of his original shares (post bonus issue) against STCG. b) If so, what is the catch? Should I wait for three months before the record date and stay invested for nine months after the record date? — Dr. Katdare A. There is no stripping restriction against the bonus shares. The long term losses are exempt and short term loss can be set off against any short-term or long term capital gains. These restrictions are only for mutual fund schemes. Interest on PF
Q. Recently, I received instructions from my head office that on the interest accrued on providend fund (PF) for the period beyond the date of retirement, tax is to be deducted at source. The explanation for this is given as under: “As per Clause 2(f), of part ‘A’ of the Fourth Schedule, accumulated balance due to an employee means the balance to his credit or such portion thereof as may be claimable to him under the regulations of the fund, on the day he ceases to be employee of the employer maintaining the fund.” “On reading Section 10(12) in conjunction with the definition of ‘accumulated balance due to an employee’, it is apparent that once the employee-employer relationship cease to exist, the interest payment, subsequent to that date will attract the provision of Section 194A, as if interest payable to a third party.” It has been further clarified that there is no TDS for amount of interest below Rs 5,000 and also in case the recipient is other than the ex-employee, i. e, a nominee in case of deceased ex employee, there is no TDS. In the reply given by you, there is no mention of such situation either in clause a) or b). Kindly clear my doubt on this issue,. — Hotchand Punjabi A. Your office is taking the view expressed in the case of ONGC Ltd. v Income-tax Officer (TDS), Dehradun ITAT Delhi Bench ‘A’. Understandably, if the interest is to be treated as taxable income, TDS will be applicable, as provided by the ITA. Dividend reinvestment plan
Q. Do reinvested dividends from an ELSS scheme of a mutual fund under ‘dividend reinvestment plan’ qualify for rebate under Section 80C? — Samirr Shah A. Yes. It is a fresh investment in the ELSS and will be entitled to the deduction under Section 80C within the overall ceiling of Rs 1 lakh in the FY during which the investment is made. Each such dividend reinvested will have a lock-in of three years. We do not like any reinvestment plans. These rob us of the flexibility to invest the dividend in some better scheme available at that particular juncture. It is always advantageous to receive the dividend and reinvest it on the same scheme if better opportunities are not available at that particular juncture. ‘Reinvestment plan’ robs you of this opportunity. Short-term capital asset
Q. I am an NRI and PIO. In December 2005, I purchased two residential properties and a commercial one. I paid through my NRE account. What is the tax implication when I sell these properties and how can I bring gains outside India in foreign exchange, US dollars? What is the rate at which I would be taxed on capital gains/loses, if any? — Barton A. ‘Short-term capital asset’ is a financial asset held for three years or less immediately preceding the date of transfer. An asset which is not ST is a long-term asset. Long-term capital gain (LTCG) is to be computed by deducting from the full value of the consideration i) any expenditure incurred in connection with the transfer, ii) indexed cost of acquisition, and iii) indexed cost of improvement LTCG is taken as a separate block and charged to tax at a flat rate of 20.4 per cent. No deductions are allowed under Chapter-VIA like under Section 80C and 80D for LTCG. The tax on all long-term capital gains, which are chargeable to tax, can be saved by investing within six months the amount of capital gains in infrastructure-related bonds of NHAI or REC under Section 54 EC. The lock-in period is three years. The current interest rate is around 5.5 per cent and this is fully taxable. The indexed cost is computed by multiplying the cost of acquisition with the ratio of the cost inflation index of the year of sale by that of the year of acquisition. STCG is included in the other income of the assessee and taxed at the normal rate applicable to him. Section 6(5) of FEMA allows a person, resident outside India, to hold, own, transfer or invest in Indian currency, security or any immovable property situated in India if such currency, security or property was acquired, held or owned by such person when he was a resident in India or has inherited it from a person who was a resident of India. As per FEMR (acquisition and transfer of immovable property in India), repatriation of the sale proceeds of immovable property other than agricultural land, farm house, plantation property in India by a resident outside India, who is a citizen of India or a person of Indian origin, is allowable provided the property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of FEMA. The amount allowed to be repatriated should not exceed the amount paid for acquisition of the property i) in forex through normal banking channels, or ii) out of in FCNR account, or iii) the forex equivalent, as on the date of payment, of the amount paid out of NRE account. The repatriation of sale proceeds is restricted to not more than two residential properties. There is no restriction on the number in the case of commercial properties. The authors may be contacted at wonderlandconsultants@yahoo.com |
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Need to act tough against ‘night curfew’
by K.R. Wadhwaney The curfew on night flying between 11 p.m. and 6 a.m. in certain countries in Europe and the US is nothing but ‘Whites’ mindset to prove that they are more equal than others. This also demonstrates India’s lack of attitude and formidability in raising its voice against continued injustice in the world of aviation. If westerners need sleep and peace of mind during nights, so do Asians. Mere presenting a working paper in the International Civil Aviation Organisation general assembly in Montreal will not move mountains as ‘Whites’ do not want their monopoly to be infringed. An ordinary situation, made vex and complicated by the vested interests, will improve if minister of state for civil aviation Praful Patel and his ministry acts tough. This toughness can be achieved only if India imposes curfew on foreign airlines flying through India during nights. The mere arm-twisting will not help; but vigorous jolt will be essential to achieve the desired results. Statistics scream that more foreign carriers are seeking to operate flights through India than Indian carriers are wooing for foreign operations. This is the most appropriate time when India should insist on level play-field on international skies instead of staying ‘passive’. In modern aggressive world, ‘passivity’ means weakness. Praful’s contribution in aviation sector is better than almost all his predecessors. He should take a leaf out of his senior colleague Sharad Pawar’s book. Pawar acted tough and secured justice in cricket in Australia. He would not have called his team back from Australia but he made it clear that his board could not be treated as pushover or taken for granted. Rajya Sabha Member of Parliament Tarlochan Singh, in the aviation consultative committee, said it was Air India commander’s skill that he was able to land at Heathrow within 15 minutes before the deadline of 11 p.m. sometime ago. Had he not achieved his target, the nine-hour delay would have become 20-25 hour torture at Heathrow airport. The curfew malady is age-old disease when India had slipped considerably in the world of international operations. Now, India is an important hub in both aviation and tourism industries. India should press for lifting of the ban on night flying in certain countries. All human beings are equal regardless of the territories they stay in. The aviation analysts are of the firm belief that India’s overall performance will be considerably improved if level playfield is gained. The curfew of seven hours from 11 p.m. to 6 a.m. is one of the important causes for undue congestion at two important airports at Delhi and Mumbai. In the world of equality, no race is superior to other. China and Singapore are already rubbing shoulders with the US and Europe in aviation sector. Regardless of persistence of certain man-made problems, India is a rising aviation sector. This is for sure.
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