New Delhi, June 15
The government today approved disinvestment of 10 per cent each in Coal India Ltd and Hindustan Copper Ltd, as it pushes its agenda to raise Rs 40,000 crore this fiscal through stake sales in PSUs. The move, which is likely to generate about Rs 16,000 crore, was approved by the Cabinet Committee on Economic Affairs (CCEA). In Coal India Ltd (CIL), the government will offload 10 per cent of its equity through an initial public offering. Hindustan Copper Ltd (HCL) will issue fresh shares equivalent to 10 per cent of pre-issue paid-up capital along with government selling 10 per cent of its stake in the firm through a follow on public offer.

As a result of the government’s decision, shares of Hindustan Copper zoomed over 14 per cent in the morning trade soon after the announcement of disinvestment.

Despite volatility in the broader market, the stock opened firm on the Bombay Stock Exchange and jumped 14.27 per cent to touch a high of Rs 537.70.

Home Minister P Chidambaram told reporters here that share sale, which gives 5 per cent discount to the employees of both the PSUs, is likely to happen within six months. "Disinvestment of CIL would be through book-building process in the domestic market. One per cent of the equity will be offered to the employees of CIL and its eight subsidiaries," Chidambaram said after the CCEA meeting.

The government holds 100 per cent equity in the coal major, which has a total paid-up capital of Rs 6,316.36 crore. Post the disinvestment of 63.16 crore shares, its holding will be reduced to 90 per cent. Through the IPO, one per cent of the equity will be offered to nearly four lakh employees of CIL and its eight subsidiaries at discount of 5 per cent. "The CCEA has also decided to allow 5 per cent price concession to retail investors in order to encourage greater public ownership of the public sector company," Chidambaram added.

CIL is the world's largest coal producer with an output of 431.5 million tonnes (MT) last fiscal. It accounts for over 85 per cent of India's total coal production of 531.5 MT. Commenting on disinvestment of HCL, Chidambaram said there will be a fresh issue of equity to extent of 10 per cent of the pre-issued paid up capital. "In conjunction with the issue of the equity, government will also disinvest its 10 per cent pre-issued paid-up capital of the company." The government has targeted to raise Rs 40,000 crore from disinvestment this fiscal. So far, divestment in Satluj Jal Vidyut Nigam fetched Rs 1,000 crore to the government.

The disinvestment in HCL, 0.41 per cent stake of which is already with the public, will see the government holding coming down to 81.45 per cent from 99.59 per cent at present. HCL's follow-on offer will see the firm issuing fresh shares aggregating up to 9.25 crore shares of face value of Rs 5 each, with government selling a similar quantum of shares. 

New Delhi, June 15
The government today said provident funds would not be taxed on withdrawal and dropped a proposal to levy Minimum Alternate Tax (MAT) from corporates based on their assets from the revised draft Direct Taxes Code.

The Code, released for public discussion, does not give any details on the Income Tax structure such as the slabs or rates, which were provided in the first draft released in August 2009.

Based on the outcome of discussion on the revised draft code, the government will bring in a new Income Tax legislation to replace the archaic Act of 1961.

Revenue Secretary Sunil Mitra said the taxation rates in the first draft, which suggested 10 per cent tax on income from Rs 1.60-10 lakh and 20 per cent on income between Rs 10-25 lakh and 30 per cent beyond that, were illustrative.

He said the tax rates would be made known only in the proposed Act, a bill for which will be introduced in Parliament in the coming monsoon session.

"As of now, it is proposed to provide the EEE (Exempt-Exempt-Exempt) method of taxation for Government Provident Fund (GPF), Public Provident Fund (PPF) and Recognised Provident Funds (RPF) ...", the revised DTC released by the Finance Ministry said.

The revised draft also puts pensions administered by the interim regulator PFRDA, including pension of government employees who were recruited since January 2004, under EEE treatment.

The first DTC draft had proposed to tax all savings schemes including provident funds at the time of withdrawal bringing them under the EET (Exempt-Exempt-Tax) mode.

The proposal drew flak from several quarters, especially the trade unions and salary earners.

The fresh draft, on which the government has invited comments from stakeholders till June 30, also dropped the proposal to impose MAT on gross assets, a move which too was fiercely opposed by the industry.

"We welcome both the changes (on MAT and long-term savings)", a spokesman for industry chamber Ficci said. — PTI

New Delhi, June 15
The possibility of an interest rate hike gathered momentum with the Reserve Bank today stating that it is keeping its options open to take monetary actions to rein in the runaway inflation, even before the quarterly review next month.

"High inflation is a concern. Inflation is always a concern and will remain a concern (for RBI). At some stage monetary policy has to address the issue," RBI Deputy Governor KC Chakrabarty told reporters on the sidelines of a function in the Capital today.

If the Governor comes to the conclusion that if there is a need now, it will be done, he said, adding, "the monetary action can happen any time".

When asked whether the monetary action can be taken before the next policy review scheduled for July 27, he said, "absolutely".

Meanwhile, Finance Minister Pranab Mukherjee also said the Reserve Bank would consider monetary policy measures to tame inflation, which has crossed double digit.

"Even in the last policy announcement, 25 basis points were increased...So, as and when the Reserve Bank feels appropriate steps are required to be taken to control the inflation, it will do so," Mukherjee said.

Bankers also echoed similar views saying interest rates are under pressure, as inflation is high and liquidity remains tight due to payment towards 3G and broadband wireless access spectrum and advance tax outgo.

"Liquidity is very tight now as it is the last day for the payment of advance tax. Liquidity in the last two days has been absorbed because of broadband spectrum payment and advance tax," Punjab National Bank chairman KR Kamath said. — PTI

New Delhi, June 15
Mediclaim policyholders, who are not satisfied with the service of their existing service providers, will be able to switch to another insurer soon without any change in the premium outgo.

However, this facility will be available to those policyholders who are insured for a sum of Rs 1 lakh and above, to begin with. It has been decided to widen the cover, according to the recommendation submitted by the General Insurance Council, an association of non-life insurers.

Issues have been sorted out and it has been suggested that portability would be allowed for sum insured over Rs 1 lakh, General Insurance Council secretary-general SL Mohan told PTI.

Insurers will be able to sell such health covers once the regulator has approved it, he added. The policyholders will be able to switch their health cover providers with the same benefits retained once they have bought this cover.

At present, a policyholder is given health cover for a year and the same has to be renewed every year. If there is no claim, the policyholder is entitled to a bonus in the form of increased sum and for every claim-free year, this bonus gets accumulated.

However, under the proposed new policy, after the expiry of the term, if one intends to switch over to a new company, the accumulated bonus is not carried forward and one has to start all over again.

For senior citizens it becomes all the more difficult because companies are reluctant to sell new Mediclaim policies to the elderly.

Two insurers do not generally have identical mediclaim policy and so both the industry and the regulator are working out a minimum benefit that would be carried forward in case of change of the insurer. — PTI

Mumbai, June 15
Mirroring the uptick in the economy, corporate India’s advance tax payments have jumped sharply in the April-June quarter of this fiscal.

Giving details of the advance tax collection, an Income Tax official said Life Insurance Corporation paid an advance tax of Rs 533 crore compared to Rs 469 crore in the year-ago period, representing a 13.6 per cent rise. Today was the last day for making advance tax payments.

General Insurance Corporation saw a steep hike of 170.5 per cent in its advance tax payments at Rs 46 crore from Rs 17 crore in the year-ago period, while the steepest was that of HDFC Asset Management Company that paid Rs 60 crore compared to Rs 10 crore in the comparable period. HDFC AMC's higher tax payment also reflects the growth in capital markets.

Housing lender HDFC Ltd paid an advance tax of Rs 215 crore as against Rs 175 crore in April-June period last fiscal, while Yes Bank paid Rs 50 crore compared to Rs 27 crore. Aditya Birla group company Hindalco paid Rs 55 crore compared to Rs 45 crore last year, reflecting a rise of 22.2 per cent, while Crompton Greaves gave Rs 38 crore as against Rs 28 crore a year ago, a 35 per cent increase.

However, there was no change in tax payments of FMCG major Hindustan Unilever that stood at Rs 75 crore, according to the tax department official. — PTI

BRIEFLY

RCom at month high
Mumbai: Reliance Communications (RCom) on Tuesday hit a month high by surging over 5 per cent, after it decided to demerge its telecom tower unit Reliance Infratel to create a separate entity, making its investors wealthier by Rs 2,900 crore. Shares of RCom extended Monday’s gains by surging another 5 per cent to a high of Rs 188.30 on the BSE. The scrip finally settled the day at Rs 186.65, up 4.27 per cent from the previous close. — PTI

Tata Tele offer in J&K
Jammu: Tata Teleservices on Tuesday announced the launch of Haier C301R mobile phone handset priced at Rs 849 clubbed with free talk time of Rs 200 for all local and STD calls for its pre-paid subscribers in the Jammu and Kashmir circle. The subscribers will be charged at the rate of 60 paise per minute for all calls.— TNS

Water purifier at Rs 1,000
New Delhi: FMCG major HUL has launched a more affordable variant of water purifier brand Pureit Compact at Rs 1,000 across the country. The new product comes at a one-time cost of Rs 1,000 and is available at all leading retail outlets, HUL said.— PTI