The Tribune, Chandigarh, India

	IPO Bids SEBI makes small, big investors on par New Delhi, May 2 Retail and institutional investors will be treated alike in terms of bidding for shares in public offers from tomorrow, a move also likely to bring down the exorbitant levels of over subscriptions in the primary market. A new directive from the market regulator SEBI is coming to effect from tomorrow as per which institutional investors will have to pay upfront 100 per cent money in primary issues, just like the retail investors. Analysts have given mixed responses to how the new norm would impact the IPO subscriptions, at a time when the primary market is seeing a lot of activity. "While this move may bring down subscription from IPOs, it should not affect recovery of the primary markets. Also, it is a means of encouraging greater accountability and reducing speculation, so it is desirable in the long run," financial research firm Celent senior analyst Anshuman Jaswal said. "On a theoretical basis, it could impact subscription. But in reality, institutional players do not over trade, they apply only where they want to invest. So unless we have a clutch of issues clubbed together in the same timeframe, in reality it is unlikely to impact IPO subscription," HDFC Securities head (private broking and wealth management) Vinod Sharma said. Earlier, QIBs were required to put only 10 per cent as margin money in public issues, while retail investors were putting the entire 100 per cent along with the applications. "This move will provide incentive to the institutional investors to fine-tune their primary market participation and invest their funds more judiciously," Jaswal said. Echoing the view, CNI Research CMD Kishor P Ostwal said, "This will plug chances of manipulative excess or over subscription in a particular issue." At present, three public issues are open for investors - Jaypee Infratech, Tara Health Foods and state-run power producer Satluj Jal Vidyut Nigam Ltd. Another move of the regulator coming into effect tomorrow is that the listing time for companies after the completion of the initial public offer has been halved to 12 days. Marketmen said the move would help rotate investors' money faster for possible deployment in other issues. SEBI has also decided that reservation for employees in public/rights issues would be available to employees of subsidiaries and material associates of issuer whose financial statements are consolidated with the issuer's. "This could be really helpful in case of IPO of PSU stocks especially, which are of late facing difficulty in getting 100 per cent subscriptions," Ostwal said. — PTI
	Banking via mobile likely to be reality soon Shiv Kumar Tribune News Service Mumbai, May 2 Banks across India may roll out financial transaction services via mobile phones nationally as part of a plan by the Reserve Bank of India to deepen financial inclusion across the country. Under this programme, banks, mobile phone service providers and third party payment gateways will come together to enable transfer of funds between individuals apart from facilitating payments to retailers, utility providers, etc. A pilot project to this effect is on in Pune and is likely to be rolled out nationally in the coming months. Under this project initiated by Yes Bank and Nokia, customers would have to simply walk into a Nokia retailer and register their mobile phone numbers to load money into their accounts. These accounts called the Mobile Money Service (MMS) accounts may also be opened with Yes Bank where money is deposited. RBI officials said they would decide on giving the green signal for rolling out the service nationally after evaluating the success of the pilot project. "This initiative will provide consumers with greater 'Anytime Anywhere' convenience and will be a significant milestone on the path of financial inclusion as stated by the Reserve Bank of India," Yes Bank CEO Rana Kapoor said. While releasing its monetary policy statement last month, the RBI had noted that there were more people owning mobile phones as against bank account holders. “Given the penetration levels of mobile telephony in India, this could become an important medium for achieving financial inclusion in the country,” RBI had noted. The apex bank had also noted that banks needed to partner more with mobile service providers to deepen financial inclusion in the country. The mobile phone-linked accounts will allow some basic functions like cash deposit, cash withdrawal, balance inquiry and transfer of money.
	64 US banks collapse in 4 months New York, May 2 The count of American bank failures are climbing by the day, with a staggering 64 entities closing down in 2010. Out of the total collapses, as many as 23 banks were shut down by the authorities in April, the highest for any month this year. Moreover, seven banks went belly up last Friday, resulting in a whopping expense of more than $7.3 billion to the Federal Deposit Insurance Corporation (FDIC). The federal agency insures deposits at over 8,000 US banks. Indicating that the country's banking sector continues to be weak, the total number of failures this year translates to about 15 entities on an average shutting down every month. The latest entities to bite the dust are Westernbank Puerto Rico, Eurobank, Frontier Bank, BC National Banks, Champion Bank, R-G Premier Bank of Puerto Rico and CF Bancorp, according to the FDIC. — PTI
	Hero Honda barred from dealing with contractor’s staff Sunit Dhawan Tribune News Service Gurgaon, May 2 The court of Gurgaon Additional District and Sessions Judge YS Rathore has restrained Hero Honda Motors from dealing with the employees provided to it by Brain Logistics Pvt Ltd (which had been providing warehousing management service to Hero Honda) through any other contractor. The court passed the said orders after considering a petition filed by Brain Logistics yesterday. The petitioners maintained that they had been providing warehousing management service to Hero Honda Motors’ SPD plant in Gurgaon since October 2001, and had nearly 500 employees on their payroll. “However, in April, 2010, all employees provided by Brain Logistics to the said Hero Honda plant were usurped by the company management through a new purported contractor,” the petition asserted. It further alleged that the company was trying to transfer the workmen provided to it by Brain Logistics to another contractor. "The sole purpose behind the move is to break the continuity of service and then absorb these trained workmen at a low cost," it said, adding that the Hero Honda management was depriving these workers of their legal rights of seeking permanency in job and other perks "illegally and forcibly". The petitioner also sought an order directing the respondent company to deposit an amount of Rs 1,50,11,455 which was due and payable towards the outstanding dues, including the dues of the workmen from the period April 2009 to February 2010. The counsel for Hero Honda Motors sought an adjournment for filing of reply. The judge granted adjournment to May 10, but restrained the respondents from dealing with the employees provided to them by the petitioner till they were on the rolls of the petitioner. Deepak Jain, who heads the SPD of the Hero Honda plant, said he was not aware of any such matter.
	Market Update Global cues to drive market by Lalit Batra Global cues and next batch of Q4 results may continue to guide the domestic market. The results announced so far have been fairly encouraging. Among key results this week include HDFC, Cipla, Idea Cellular, Jindal Steel & Power, Lupin, PNB, Dr Reddy’s Laboratories and JSW Steel. Last week, markets edged lower in volatile trade as unease over euro zone sovereign debt levels weighed on world equities. However, expectations of a normal monsoon this year and optimism about Q4 corporate earnings capped the decline on the domestic bourses. The European debt crisis spread after S&P slashed its credit ratings on Greece and Portugal. The rating firm also lowered its credit rating on Spain amid concerns about the country’s growth prospects following the collapse of a construction bubble. The downgrades escalated fears of a contagion that could raise borrowing costs for European countries and derail an economic recovery. Investors may tread with caution as historically month of May has been a difficult month for the stock markets and global cues, as they stand today, do not provide much comfort either. Moreover, with a slew of IPOs waiting in the wings may suck out liquidity from the markets which may put the markets in a bit of bother. However, investors with a longterm view may invest in some of the quality IPOs that are likely to hit the markets. SJVN issue Sutluj Jal Vidyut Nigam Ltd (SJVN) is coming up with a public offering of 41.5 crore equity shares of Rs 10 each through offer for sale. The selling shareholder will be raising Rs 954.9 crore at the lower price band of Rs 23 and Rs 1,079 crore at the higher price band of Rs 26. The offering would constitute 10 per cent of the paid-up capital of the company. Retail investors will get the shares at a discount of 5 per cent on the cut-off price arrived at after the book-building process. SJVN is a hydroelectric power generation company originally established as a joint venture between the Government of India and the government of Himachal Pradesh to develop and operate Nathpa Jhakri Hydro Power Station (NJHPS). Located on Sutlej (river) in Himachal Pradesh, NJPHS is currently the largest operational hydroelectric power generation facility (on the basis of installed capacity) in India with an aggregate generation capacity of 1,500 MW. The company plans to add 4,000MW capacity over the next six to seven years. The company has a robust dividend payout ratio in excess of over 30 per cent in the past few years. When compared to other listed peer NHPC, SJVN is being offered out attractive valuations when compared on the price to earnings matrix, but is richly valued at the upper end when compared on the price to book matrix. Hence it would be prudent for the retail investor to apply at the lower end of price band which will ensure that he “gets some money on the table”.
	Tax Advice Interest on post office monthly income scheme taxable by SC Vasudeva Q. I had retired in January, 2008 and I had deposited Rs 9 lakh in Post Office Monthly Income Scheme. I am getting interest of Rs 72,000/- per annum. Whether this interest will be calculated in the total income for the assessment year 2010-11? Whether gratuity up to Rs 5 lakh is exempted from tax. — Subash Batra A. The interest earned in Post Office Monthly Scheme is taxable and would be includible in the total income of an assessee. The amount of gratuity received by an employee is exempt to the extent of Rs 3.50 lakh only. Gift to relative Q. I want to give Rs 50,000 each as gift to the following members of my family. 1. Married son, 2. Unmarried grandson and granddaughter, 3. Daughter-in-law, 4. Married daughter or her unmarried children, 5. Son-in-law, 6. Married brother or sister. Payment will be made by cheque out of my personal income on account of pension. Can I do so without any tax liability either on me or the recipient. How many times a gift can be given in a year and whether there is any monetary limit up to which gift can be given? — D.K. Aggarwal A. The gift made to the persons referred to in your query would not attract any tax liability in the hands of the recipients under the provisions of Section 56 of the Act as the relatives mentioned in your query are covered within the exception provided in the aforesaid section. IT return Q. I am a NRI (POI) and doing job in India for the past about 3 years. I shifted my and my wife's saving in India through bank and opened NRE account. I have submitted my income tax return of my Indian income without touching NRE account deposits. My account is likely to be converted to NRO account after maturity. I have been going to the USA on tour during this job period for short spell of times since my parent company is MNC (US-based). My question is should I continue my IT return as it is without touching and mixing Indian income in to NRO account? In case bank deducts TDS what should I do? My wife is a housewife here. How about her interest income out of NRO account? Can she issue Form H if bank deducts TDS. Her NRO income out of interest may be marginal to tax slab applicable to the ladies. So in case she does not issue Form H it becomes difficult to get refund from the department? We both are PAN holders. Please advise how we should file income tax return. In case we want to go back to the USA, can we take NRO amount to the USA? — Sharat Gupta A. (i) You will have to continue to file your tax return, including the interest earned in NRO account. (ii) The amount of TDS deducted at source shall be adjustable against the tax payable by you or in case the same is in excess of tax payable by you, the same would be refunded. (iii) In case the interest earned on your wife's NRO account arises due to deposits out of her savings, the same would be taxable in her hands. In case the deposits represent your money, the interest arising thereon would be taxable in your hands. (iv) The facility of filing Form H is allowable to a person who is the age of 65 years or more at any time during the previous year. In case she does not have any other income and the interest income arising in her bank account is less than the taxable limit she may be able to file Form 15G for the purposes of non-deduction of tax at source. The income-tax returns are to be filed electronically these days. In case you shift to the USA permanently, it should be possible for you to remit $ 1 million per financial year to the USA out of your NRO account. Fellowship taxable Q. Please guide me on the following tax queries: 1. My son is a student and is doing Ph.d as full time in IIT. He is getting Institute Assistanceship/Fellowship for this study. I want to know whether this fellowship is taxable or it is exempted. 2. The amount deposited under Senior Citizen Saving Scheme 2004 (SCSS-2004) in the Post Office is qualified for rebate under Section 80C of the I.T. Act. Is this rebate also admissible if the amount is deposited in Nationalised banks under SCSS 2004. 3. The rebate on purchase of NSCs in the joint names is admissible under Section 80C of the I.T. Act to the first name account holder or rebate is allowed on single name NSCs only. — Baldev Krishan Garg A. a) The fellowship received by your son is taxable. b) The deduction under Section 80C is allowable for a deposit made under Senior Citizen Saving Scheme 2004 whether the same is made in a Post Office or a nationalised bank. c) The deduction in respect of purchase of National Saving Certificates in joint name would be available to the first holder of the National Saving Certificates. PPF account Q. My son opened a PPF Account in SBI, Patiala, in March 95 when he was in service in India. He continued this A/c after he shifted to the USA in 1999. He later acquired the US citizenship. This account is getting matured in March 2010 on completion of 15 years. I think as per present rules he cannot get this account extended beyond March 2010. Please clarify:- 1. If he can return the account without further contribution. 2. Whether amount at his credit as on 31.03.2010 will continue earning interest beyond 31.03.2010 and for how long? 3. Whether he can repatriate the maturity amount to the USA after conversion to US Dollars? — Naresh Chander Gupta A. The Public Provident Fund Scheme provides that in case a resident who subsequently becomes a non-resident Indian during the currency of the maturity period may continue to subscribe to the fund till its maturity on a non-repatriation basis. The amount of fund lying in your son's account therefore is to be kept up to the date of maturity period only and it would, therefore, be advisable to withdraw this amount after the maturity period. In view of the deposit being on non-repatriation basis, it may not be possible to remit such an amount to the USA. Tax liability Q. I give below my income figures. Kindly check the tax liability or refund due after taking into account TDS by PO and bank. Please advise whether deduction of Rs15,000 toward medical reimbursement will be allowed or not though it will not effect the tax liability. I am a senior citizen of 65 years eligible for IT exemption upto Rs 2,40,000 and a retired bank employee. — Sudarshan Kumar Jain A. Your income would be below taxable limit even if the medical reimbursement is added to your total income. I am sure you are aware of the fact that for claiming deduction under Section 80U of the Act a certificate from prescribed authority is required to be enclosed along with the return. You would be entitled to claim a refund of the tax deducted at source amounting to Rs 3,708 as you will have to file your tax return in view of the provisions of section 139 of the Act. Income Deduction Pension 1,46,170.62 80C LIC 18,463 and HDFC Insurance Interest PO MIS 43,200.00 80U 50,000 Interest SCSS 36,000.00 (Hearing impaired 72 decible) Medical reimbursement 37,937.00 TDS by Bank Unknown App interest on STD 30,000.00 TDS PO 3,708 ___________ 2,93,307.62 __________