The Tribune, Chandigarh, India

	Goldman Fraud Analysts see little impact on domestic market New Delhi, April 18 The domestic market is unlikely to be heavily impacted by the American market watchdog's latest tirade against the Wall Street giant Goldman Sachs, say analysts. "The Goldman Sachs issue is not going to affect the domestic markets in big way, as investors are upbeat ahead of corporate earnings. A correction, however, on concerns of the Goldman Sachs law suit, cannot be ruled out," Geojit BNP Paribas Financial Services research head Alex Mathews told PTI. Last Friday, the US market regulator, Securities and Exchange Commission, charged the investment banking major Goldman Sachs with fraud and causing over $1 billion loss to investors by misrepresenting facts about a financial product tied to sub-prime mortgages, which caused the fall of the Wall Street titans and the global financial meltdown that began in September 2008. The Goldman Sachs news rattled the Wall Street as well as the European stock markets on Friday. The Goldman Sachs counter plunged 12 per cent on the New York Stock Exchange on Friday following the SEC charges. Marketmen have mixed views on the magnitude of the impact on the domestic markets due to the charges on Goldman Sachs. "The market is likely to start the week on a weak note. It will then look at global cues for direction and is expected to move sideways from there on," CNI Research CMD Kishor P Ostwal said. "Globally, the financial markets are associated with each other and any bad news in the US would certainly have a chain reaction across the world, including the domestic stock markets. The Goldman Sachs suit is a big event and a reaction is awaited from the domestic markets," SMC Capital's equity head Jagannadham Thunuguntla said. Stocks having investment from Goldman Sachs are likely to see selling pressure in the coming sessions, analysts said. "Goldman Sachs has a lot of exposure in the domestic market and the defrauding charge on the financial major would have some impact on its portfolio," Thunuguntla added. Analysts, however, ruled out that this development would have a negative impact on the foreign institutional investors activity in the domestic market. "The FIIs are bullish on emerging markets like India and they will keep investing in such markets. Capital inflows from overseas fund houses will continue in coming period," said an analyst at a brokerage house. According to American SEC, charges against Goldman Sachs have been made for "defrauding investors by misstating and omitting key facts about a financial product tied to sub-prime mortgages as the US housing market was beginning to falter". Sub-prime mortgages, where chances of defaults are high, were one of primary causes for the global financial crisis. Over the weekend, the Dow Jones declined 126 points or 1.13 per cent to close at 11,018.66 and S&P 500 ended down by 1.61 per cent to 1,192.13, while Nasdaq dropped 1.37 per cent. European markets too reacted sharply, with Britain's FTSE 100 falling 1.39 per cent and France's CAC 40 declining nearly 2 per cent. — PTI
	Monetary Policy RBI likely to raise key rates Mumbai, April 18 The Reserve Bank is likely to squeeze money supply and make borrowings costlier further in its monetary policy on Tuesday to tame inflation which has come close to 10 per cent, say bankers. The apex bank, however, may not aggressively tighten the monetary policy and is likely to resort to only a moderate 0.25 per cent hike in short-term borrowing rates and mandatory bank deposits with RBI, bankers said. According to them, moderate tightening should suffice because inflation is expected to ease after the rabi (winter) crop, including wheat, sugar, potatoes and pulses, reaches the market, around mid-May. Much hawkish stance on monetary tightening may hamper the economic recovery, they said. "My sense is that a quarter per cent of increase in both CRR, repo and reverse repo rates is the right thing for RBI to give confidence and comfort to the market and to avoid any knee-jerk reactions," Yes Bank CEO Rana Kapoor told PTI. Repo and reverse repo are the key short-term rates, while CRR is the money that every bank has to mandatorily keep with the central bank. Also, industry sources said that banks are not likely to raise lending rates, at least immediately, even if RBI hikes rates by a quarter per cent as liquidity is sufficient in the near term. "The RBI is likely to hike the rates by anywhere between 0.25-0.50 per cent as the inflation situation warrants monetary action," Oriental Bank of Commerce's CMD T Y Prabhu said. State Bank's Chief Financial Officer S S Ranjan was of the view that hike in RBI action is certain given the current inflation conditions and signs of the economic recovery. "I expect that CRR will be hiked by 0.25 per cent as the focus of the central bank now is to bring down inflation." — PTI
	Goldman defends mortgage deals New York, April 18 In the eye of a storm on charges of fraud, investment banking major Goldman Sachs has always fended off criticism that it reaped huge profits by betting against residential mortgage products. Many Wall Street corporations, including Goldman Sachs, have been criticised for selling many products related to sub-prime mortgage market and such instruments were even blamed for the financial crisis that rattled the world. "We did not generate enormous net revenues or profits by betting against residential mortgage-related products, as some have speculated...," Goldman Sachs had said in the annual report published earlier this month. The US markets regulator Securities and Exchange Commission on Friday filed a lawsuit charging that Goldman duped and caused losses of over $1 billion to investors by misrepresenting facts about a financial product tied to sub-prime mortgages. According to the annual letter written by Goldman Sachs chairman and chief executive Lloyd C Blankfein and its president and chief operating operator Gary D Cohn, its relatively early risk reduction resulted in "losing less money" in residential mortgage-related products. The SEC has complained that Goldman defrauded investors by misstating and omitting key facts about a financial product tied to sub-prime mortgages as the US housing market was beginning to falter. — PTI
	Tax Advice No rebate on gift to grandson by SC Vasudeva Q. I want to give Rs 50,000 to my grandson as gift in the shape of a fixed deposit for eight years or “LIC’s Wealth Plus” policy for eight years. Please guide me if I can claim rebate in my income tax return for the financial year 2009-10 in the abovesaid system of gift and what more papers I have to prepare for the same. — Hari Singh A. A gift made to grandson is not deductible from the total income of an assessee. Such a gift would, however, not be taxable in the hands of your grandson. It would be advisable to make a gift by cheque to your grandson and the investment of the gifted amount is made by him through his bank account. A letter making a gift by the donor and a letter from the donee accepting the gift would be a sufficient proof for the gift so made. IT refund Q. As per my IT statement for the Assessment Year 2009-10, a refund of Rs 4,500 is due to me. Since the IT Dept. is not eager to settle my case, can I take credit for this amount of refund in my IT statement for the Assessment Year 2010-11? — Jyoti A. It would not be advisable to take a credit for refund which has not been approved so far by the Income Tax Department. The return for Assessment Year 2009-10 should have been filed by you by 31st July, 2009, and therefore there is sufficient time as yet for the processing of the said return. You will have to make the payment of tax, if any, due to the assessment year 2010-11 without taking the credit for a sum of Rs 4,500 which is due according to your calculations as refund from the tax department. Residential status Q. I retired from Central Govt. Department and went to the USA and attained US citizenship. Whether I have to convert my pension drawing post office savings account into some other account which was opened before going to the USA. I have been in India for more than 182 days. I am holder of PIO card for 15 years and now want to live in India. Whether I can apply for Indian citizenship too? Please guide. — RK Dhiman A. Since you have come back to India for permanent settlement, it may not be necessary to convert your pension drawing post office savings account at this stage. The period of 182 days has to be considered for ascertaining the residential status of an assessee and in case you have been in India for more than 182 days in the financial year April 2009 to March 2010, the residential status would be that of resident but not ordinary resident for a period of two years. You would thus be liable to pay tax on any income earned in India as well as such income which is received from business or profession controlled from India. The fact that you have come back to India and are intending to settle permanently in this country should enable you to seek Indian citizenship. It would be advisable to consult a lawyer on this issue as it may also involve giving up the US citizenship. Tax on gratuity Q. It was published in The Tribune dated 15.02.2010 in this column that no tax is payable on government employee’s gratuity as reply to a query of Rajdeep Singh. I retired from Food Corporation of India (a Central Govt. undertaking) on 30.04.2009 as manager (general). Due to revision in pay scales w.e.f. 01.01.2007, my gratuity amount comes to around Rs 7,50,000, but I have been informed by the accounts branch/DCRG Cell, Food Corporation of India, District Office, Ferozepur that gratuity amount above Rs 3,50,000 is taxable. Pay scales are governed under I.D.A. pattern. Therefore, you are requested to kindly confirm/clarify with relevant law/clause of Central Govt. undertakings (PSUs) whether gratuity amount above Rs 3,50,000 is taxable or not. — RK Nagpal, Shyam Sunder Sharma A. The exemption in respect of taxability of an amount received towards death-cum-retirement gratuity is available under Section 10(10)(i) to the employees of the Central Government under the Revised Pension Rules of Central Government or as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence services. The amount of gratuity received by employees of a government undertaking is not covered within the aforesaid exemption provided under Section 10(10(i) of the Act. Any gratuity received in excess of Rs 3,50,000 by an employee of a government undertaking would not be covered by the aforesaid exemption. The same would be taxable in accordance with the provisions of Section 10(10(iii) of the Act.