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Sweeten deal, Tayal tells ICICI Bank
Aviation Notes
Investor Guidance |
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Sweeten deal, Tayal tells ICICI Bank
Mumbai, May 22 "They (ICICI Bank) have got a lottery. I believe that it is a (good) deal for them.... We are definitely looking for a better valuation... it should be a minimum 1:3," Tayal told PTI over the phone here. Earlier this week, the boards of both banks gave in-principle approval for the merger and jointly appointed accounting firm Haribhakti & Co to arrive at the valuation. ICICI Bank offered 25 shares for every 118 shares of BoR (or a swap ratio of 1:4.72) held by the Tayal family. Under the share-swap ratio, the Tayal group will receive 1.88 crore ICICI Bank shares for their 8.88 crore BoR shares. According to a senior BoR official, the bank's board is likely to argue for a better valuation at tomorrow's meeting and also discuss issues pertaining to safeguarding the interests of its 30 lakh customers and nearly 4,000 employees. "Improving the valuation from what has been offered by the bank will definitely come up at the board meeting tomorrow. Also, the board is keen that the interests of its customers and staff are protected," an official said. Tayal has a stated holding of just above 28 per cent in the bank, but according to Sebi, his actual holding is around 55 per cent. Recently, the market regulator had banned around 100 entities, including Tayal group firms, from accessing the stock market, accusing the promoters of fraudulently hiking their holding in the bank. The Reserve Bank had also penalised the bank with a Rs 25 lakh fine for alleged violation of various norms, including misrepresentation of documents, KYC norms and handling of a particular corporate account. The regulator also appointed Deloitte Haskins and Sells to conduct a special audit of the bank. — PTI |
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Aviation Notes Minister of State for Civil Aviation Praful Patel categorically stated on April 13 that “Worst is over for Air-India. This is far from true as overhead expenses are mounting at an alarming speed instead of being arrested. The appointment of an Austrian Gustav Baldauf at higher salary than the salary of chairman and managing director Arvind Jadav has raised a storm in the airlines. The new incumbent not only lacks in experience to handle intricate AI situations, but all other rules have been violated in appointing him. According to the board’s terms and conditions, the COO should have been below 50 years of age and possessing experience and expertise on all matters pertaining to civil aviation. In the selection of Austrian, the selection panel raised a big hue and cry as he is 54. Airline bigwigs have accepted in providing concessions to Baldauf but, in their defence, they say that the upper age criterion is ‘preferred group’ and not mandatory one. “In making selection from global area, certain compromises and concession have got to be offered to get a right person”, according to AI officialdom. What is of for concern is that the AI officialdom says one thing while board members say another. AI says that the board was duly informed of providing some concessions to Baldauf, board members allege that they were never consulted. The question that arises is how a selection panel of industrialists, headed by aviation secretary M.Nambiar, can overrule rules, regulations and norms finalised by the board of directors? There is also confusion whether the Austrian was short-listed or his name was subsequently added. I again says different from what some board members allege. The advertisement clearly stated that only those officials, who had experience of participation in the turn-around activities, would be given preference. Baldauf did not possess this essential qualification as he had crossed from Jet Airways to the National Aviation Company of India Limited (NACIL). What has rendered the situation worse is that Baldauf is the first expatriate, who has been appointed ‘boss’ of the Indian PSU. His terms of reference are to strengthen the airline’s operations and his detailed paper will be examined by the CMD Jadav, whose salary and perks are equivalent to 10 per cent of the Austrian. The question that every staffer has been asking is: “Do we not have a competent official in India to initiate turn-around of the airline which was once a pride of joy of the country. |
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Investor Guidance Q : I have some questions regarding gold Exchange Traded Funds (ETF): If we sell the ETF, say after 10 years, will it be subject to long-term capital gains tax? Is there any fund that will exchange the units for physical gold like say if we wanted to convert this for our childrens’ wedding and use the gold in the physical form during the wedding? In this way will the capital gains tax be avoided also? I understand that there is no wealth tax on this as long as we hold it as an ETF but if we convert it to gold then wealth tax comes into play - please advise if this is right. — Mehra A: Yes, the sale of ETF after one year will lead to long-term capital gains tax. The current rate is 10 per cent. Though wealth tax is not applicable on mutual fund units, including ETF, if the units are converted into gold wealth tax will become applicable since as per current rules, wealth tax is applicable on physical gold holdings. However, five-ten years later, the tax rules may well be a lot different than what they are now. Also, currently these ETFs do not offer the facility to convert the units into gold, but this is on the anvil and is certainly going to be offered in the future. In any case, since the NAV will track the price of gold, even if exchange is not offered, you can sell the units and buy the gold at the then prevailing price. Exchange of units into gold will also not help to avoid tax since tax is payable on what is called “transfer” in tax parlance and a transfer includes any exchange of one asset against another asset. HRA concession
Q : I am a college lecturer and living in a rented accommodation at the place of work and claiming HRA concession on house rent for many years. Now I have taken a house loan for purchase of a house in a city where my husband resides. Can I claim the benefit of deduction of interest on house loan and also HRA benefit on the rented accommodation simultaneously? Both the accommodations are in different cities.
— P. Walia A: The only restriction on HRA is - an employee living in his own house or where he does not pay any rent is not eligible for this exemption. Since you pass both the tests, you are in a position to claim the benefit of HRA. The benefit of claiming deduction up to Rs 1,50,000 of interest paid on housing loan can be claimed on self-occupied house. You are in a position to do so. Please note that the house must be complete with clearance for occupation from the authorities. The two claims are independent of each other and, therefore, can be claimed simultaneously. PPF account of son
Q : I had opened a PPF account in the name of my son in 2003-04 and have been depositing the yearly amount in it since then, the last deposit being made in FY 2008-09. My son migrated to Australia in July, 2004, on student visa and attained permanent residency in March, 2007, and now has become an Australian citizen in December, 2009. I would like to know whether I can still continue his PPF account or not. If not, can this account be closed prematurely and if yes, please let me know the procedure for doing so.
— Kamla Devi Sharda A: Yes, you can continue your son’s PPF account till its maturity in spite of the fact that he is an Australian citizen now. Once a PPF account is opened when one is a resident Indian, the same can be continued till its maturity without any restrictions. However, upon maturity, it cannot be renewed, it has necessarily to be closed. The maturity proceeds may be credited to the investor’s NRO account. Tax rates for NRIs
Q : Are there any discounts for NRIs in the Indian tax system? Also what kind of proof is required for NRIs. If I was out for 18 months and if I come and stay in India and work for an Indian company can I claim tax benefits.
— Vibhavari A: The tax rates for NRI and residents are the same. The concession for NRIs is that their forex income is not taxable in India. However, if you happen to be a resident, your global income is taxable in India. Surely, you will get the benefit of Double Taxation Avoidance Agreement between India and your host country, if such an agreement exists. Your residential status is determined on the basis of the following Provision of the ITA : A resident is one who during a financial year satisfies any one of the following 2 basic conditions: He is in India for at least 182 days in the FY or 365 days out of the preceding 4 FYs and 60 days in the FY. The stay in India need not be continuous. Most persons going abroad for an employment for the first time will have the status of resident since they will be covered by the ‘B’ clause above. Therefore, if an Indian citizen leaves India in any year for the purpose of employment, the 60 days in the clause ‘B’ above is to be replaced by 182 days. Provident Fund
Q: I worked with an organisation in India till 2007 post which I moved to Bahrain. Now, the provisions of provident fund are not applicable in Bahrain. I have an accumulated PF balance in India with my previous employers and both of them have recognised provident fund. I served for more than 7 years with two employers in India. The first employer with whom I served for 6 years has been crediting interest to the PF account(recognized provident fund) since I have not drawn/transferred the PF balance. They are deducting TDS on the same. Is the interest on PF balance post leaving employment chargeable to tax? If so under what section of IT Act? Further, under what provisions of IT Act is the employer deducting TDS? Further what shall be the rate of TDS for a NRI? Further, being an NRI is there any option of avoiding the tax? I do not have the option to transfer it to an employer in Gulf since PF system is not there. The only option is to withdraw the amount which I want to use for retirement. I am only 32 at present.
— Rajesh A: Interest on Registered Provident Fund (RPF) of an employee is tax-free. Does it still remain tax-free after the employee retires and does not claim his PF for say 2 to 3 years? If one goes strictly according to the drafted provisions, it appears that this interest is tax free since the amount becomes payable only when the ex-employee asks for it. However, we are told that many ITOs take the stand that the balance in Co-PF gets the colour and character of Co-FDs, when the employee retires. This stand is challengeable. The authors may be contacted at wonderlandconsultants@yahoo.com |
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