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ECB norms may be reviewed
Banks told to hike credit flow to SMEs
Tax Advice
BSNL to share network with private telcos
Hindujas may make cars
BT may exit Tech Mahindra
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Forex reserves fall by $6.5 billion
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ECB norms may be reviewed
New Delhi, September 14 ECB is the money raised abroad to fund projects for modernisation, construction or for acquisitions or purchases abroad. To revive the slowdown in the ECBs, the adviser to finance minister has suggested modifications to the ECB regime so as to balance twin objectives of reviving medium-term growth and managing domestic liquidity so as to allow projects to be funded with foreign capital. Earlier, the government along with RBI had put curbs on the ECBs due to excess liquidity in the markets fuelling further inflation. The first suggestion given by the adviser to FM is that there should be no cap on corporate India’s borrowing abroad, which are spent abroad, especially on infrastructure creation and health. The second suggestion, on borrowings abroad that are spent domestically, says that there should be an overall cap on ECBs, allowing issue of permits that can be bid by the companies. This is to suggest that there should be a large cap on ECBs, and RBI should issue permits for these. Any commercial bank or financial institution can buy these permits and companies can bid for the same. This will allow commercial system of allocation, preventing the big players from cornering, as is presently the case. In addition to modifying the ECB rules, the adviser has also advocated Sterilisation Tax on ECBs so as to prevent companies from using money for round tripping and other activities. This system of bidding will make the system more transparent since banks will be competing with each other and prevent the RBI from deciding on ECBs on a case-to-case basis. The suggestion also includes allowing permits to be valid for only one year and making them non-transferable once bought. The companies raising capital through ECB route has witnessed a plunge by 54.29 per cent, with only 128 companies going abroad to raise funds this year as against 280 companies who went abroad last year in the first four months of the financial year 2007-08. |
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Banks told to hike credit flow to SMEs
Mumbai, September 14 "Banking institutions need to improve their credit assessment capabilities to improve the flow of credit to SMEs. It is necessary to scientifically assess the small-scale enterprises and not to equate SSIs with high risk," RBI said in its Currency and Finance report. The share of SME credits in total non-food bank credit declined almost consistently from 15.1 per cent in 1990-91 to 6.5 per cent in 2006-07. Similarly, the SME credits in total priority sector advances declined sharply to 17.9 per cent at end-March 2006 as compared to 43.6 per cent at end March 1998, the report said. RBI said a steep decline in SME-credits was largely owing to increased loan flow to the retail and corporate sectors over the past years. "This suggests that it is the large corporates that have increased their dependence on the banking sector...The major development that has taken place over the last decade is the diversification of credit in India towards retail credit," it said. The share of retail credit comprising housing loans, personal loans, credit cards and consumer durable loans rose to 22.3 per cent of the total credits in the system in 2007 as against 6.4 per cent in 1990, RBI said in the report. Notwithstanding a pick-up in SME credit growth to the agriculture and SME sectors in recent years, there is a need for more concentrated efforts to increase the flow of credit to these sectors given their significance in the economy, the apex bank said. "On the whole, agriculture, large corporates and retail sector benefitted from credit expansion, while credit growth to the SME sector remained tepid until recently," RBI said. Besides, given the rising exposure to infrastructure, banks need to guard against asset-liability mismatches and should consider transferring the risk from the balance sheets of banks to other players in the financial system, RBI said in the report.
— PTI |
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Maturity amount of insurance policy tax-free
by S.C. Vasudeva Q. I am an NRI based in the USA. I am having some rental income in India for which a return is being filed regularly. I have been making payment towards an insurance policy and claiming deduction under Section 80C of the Act. Is the amount receivable on maturity of policy taxable or tax-free? — B. K. Jalota, New York A. An amount received towards the maturity of insurance policies is tax free both for residents and the non-residents. However, any sum received under an insurance policy issued on or after 1st day of April 2003 in respect of which premium payable for any of the years during the term of policy exceeds 20% of the actual capital sum assured would not be exempt from tax unless such an amount has been received on the death of a person. Medical reimbursement
Q. Could you please let me know what amount is exempt from tax in respect of the reimbursement of medical expenses to an employee? — Anil Kumar, Muktsar A. The value of reimbursement of medical expenses to an employee/provision of medical facilities by an employer to an employee is exempt from tax under the first proviso to Section 17(2) of the Act. Under the said proviso, exemption from tax will be available in respect of: (a) medical facilities provided to an employee or any member of his family in any hospital maintained by the employer; (b) reimbursement, by the employer, of expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family - (i) in any hospital maintained by the Government or any local authority or an approved hospital under Central Health Scheme or a similar scheme of any State Government, (ii) in respect of the prescribed diseases or ailments, in any hospital approved by the Chief Commissioner; subject to the condition that the employee attaches with his return of income a certificate from the said hospital specifying the disease or ailment for which medical treatment was required as well as receipt of the amount paid to the hospital; (c) group medical insurance taken by the employer for his employees or reimbursement of medical insurance premium paid by the employee on his health or on the health of any member of his family under scheme approved by the Central Government (or, in relation to assessment year 2007-08 and subsequent years, also under any scheme of the Insurance Regulatory and Development Authority; (d) reimbursement by employer of actual expenditure incurred by an employee for medical treatment from any doctor in respect of the employee, or any member of the family of such employee, not exceeding in the aggregate Rs 15,000 in the previous year; (e) actual expenditure incurred by the employer on medical treatment of the employee or any member of the family of such employee, outside India. The expenditure incurred by the employer on travel and stay abroad of the patient and one attendant is also exempt from tax subject to the condition that - (i) the expenditure on medical treatment and stay abroad will be exempt only to the extent permitted by the Reserve bank of India, and (ii) the expenditure on travel is exempt only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed Rs 2,00,000; (f) reimbursement of expenditure by the employer in respect of any expenditure actually incurred by the employee for any of the purposes mentioned in (e) above subject to the conditions specified therein. Self assessment tax
Q. Could you be kind enough to let me know what is the difference between self assessment tax and advance tax? — K. Singh, Solan A. The self assessment tax is payable on the total income declared in the Income-tax return. The amount of tax paid under self assessment is required to be paid before the date of filing the return so that the particulars thereof can be reflected in the Income-tax return. The self assessment tax should also include the interest payable under Section 234B and 234C of the Act on account of short payment of advance tax. In case of late filing of return, self assessment tax would also include the interest for the late filing of return payable under Section 234A of the Act. The advance tax is payable on the principle of 'pay as you earn'. The same is payable in three installments during the financial year in which the income is earned. The advance tax is payable on the estimated current income and the income tax thereon is required to be calculated at the rates in force in the financial year. The current income is the total income of the assessee which would be chargeable to tax for the assessment year immediately following the financial year during which the advance tax is required to be paid. The relevant dates of installments in such financial year on which advance tax is payable by an individual are 15th September on which date not less than 30% of the advance tax is payable, 15th December on which date the tax payable should not be less than 60% of such advance tax as reduced by any amount if any paid in earlier installments, 15th March on which date the whole amount of advance tax as reduced by the earlier installments is required to be paid. The Act also provides that in case an amount is paid by way of advance tax on or before 31st day of March, the same shall also be treated as advance tax paid during the financial year ending on that date for all intent and purposes. While computing the advance tax the tax deducted at source is required to be reduced and the net amount is payable by the assessee as advance tax on the aforesaid dates. |
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BSNL to share network with private telcos
New Delhi, September 14 In a Management Committee meeting recently, the PSU approved a proposal in this regard. "The MoU in this regard may be signed with the seeking operators initially for six months only on non-exclusive and experimental basis," a BSNL internal circular of the Management Committee meeting said. BSNL will sign the first roaming agreement with new telecom operator Swan Telecom, the circular said. The committee has decided to levy roaming charge of 52 paise a minute per outgoing call. "The Management Committee, after detailed discussion, has decided that roaming charge of 52 paise per outgoing call may be offered for the intra-circle roaming service seeking operators," it said, adding that BSNL would review the charge after initial six months and it could be revised up or downward based on prevailing conditions and volume of business. The committee said only the idle capacity of the network will be used to earn extra revenue. The incremental additional cost of of the upgradation of equipment to provide roaming will be borne by the seeker operators. With this, subscribers of private operators will finally be able to roam on BSNLs nationwide network. While all private telcos have roaming agreements with each other, BSNL, till date, has not opened up its networks for roaming deals. At present, only subscribers of state-owned MTNL (whose services are restricted to Delhi and Mumbai) are allowed to roam on the BSNL's network. BSNL is expecting a revenue of about Rs 1,000 crore annually by signing commercial roaming deals with private operators.
— PTI |
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Hindujas may make cars
Mumbai, September 14 "We are not averse (to making cars) and are open to investments in that sector, said Hinduja Group chairman Srichand P Hinduja. "There is a slowdown in the market — who knows, we could look at acquisitions in this segment," he said without elaborating. The Hindujas' flagship company, Ashok Leyland, which manufactures about 85,000 commercial vehicles annually at its various plants pan-India, had announced its expansion plans, including manufacturing one lakh LCVs at its greenfield facility being set up near Chennai at an investment of Rs 2,600 crore. It would also invest Rs 1,500 crore to raise output at Ennore and Hosur in Tamil
Nadu. — PTI |
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BT may exit Tech Mahindra
New Delhi, September 14 BT may be mulling to exit totally from the venture, sources close to the development said but no confirmation could be obtained either from the British entity or the Indian corporate house. Asked if British telecom had approached with its offer to sell its total or part stake, a TCS spokesperson said "We do not comment on market speculation". Sources said the approach could have been driven out of synergistic angle as TCS has a thriving telecom practice and most importantly BT is a valued customer of TCS. Although the valuation of the company has not yet been done by any professional investment banker, the market cap of the company is close to $2.5 billion as per the current share price of
firm. — PTI |
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Forex reserves fall by $6.5 billion
Mumbai, September 14 This was primarily due to a fall in the foreign currency assets (FCA) which slid to $279.626 billion compared to $286.117 billion in the previous week. FCAs expressed in the US dollar terms include the effect of appreciation or depreciation of non-US currencies such as the euro, sterling and yen held in reserves, RBI said in its weekly report yesterday. Gold reserves and special drawing rights during the week remained static at $8.692 billion and $4 million respectively.
— PTI |
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