The Tribune, Chandigarh, India

	High oil prices to keep markets volatile New Delhi, April 10 The stock markets are likely to see volatile trend and may undergo consolidation this week in the absence of positive factors, coupled with a steaming crude oil, which rose to over two-year high last week, say experts. The Bombay Stock Exchange benchmark index Sensex failed to garner investors' interest and saw lacklustre trading sessions in the week gone by, with the key index gaining 31.06 points, or 0.15 per cent, to settle at 19,451.45 in the previous trading session. According to experts, the stock market is likely to be volatile as the IIP number for March will be declared on Monday. They also feared that high global commodity prices will add to pressure on profit margins of corporates as high oil prices will fan inflation, leading to higher interest rates. "Market is likely to be volatile as the industrial production figure for March will be declared on Monday. Market is expected to consolidate ahead of the results," Bonanza Portfolio Ltd Senior Research Analyst (Equity) Shanu Goel said. Analysts also voiced that there are not many positive events that could take the market further up from here in the near term. "On the flip side, there are a few headwinds, especially those emanating from the overseas markets, which could dampen the sentiment, IIFL Head of Research (India Private Clients) Amar Ambani said. On the local front, attention will shift to earnings. FII inflows and inflation are the other two variables one should keep a close eye on," he said. However, Ambani said the overall bias will stay upbeat due to the renewed pick-up in foreign fund inflows in the Indian equity market. Corporate earnings have been factored in but any surprises will have some stock-specific impact, he added. This week will have two major events which the Dalal Street will closely monitor i.e. the industrial production figure for March month and the result season which will be kicked off from April 15 with IT bellwether Infosys Technologies publishing its number on the same day. "At higher levels profit-booking may not be ruled out on concern of higher crude oil price. Infosys Q4 result will be an important factor to determine the market trend," Motilal Oswal Securities Associate VP Senior Analyst Technical Equities Parag Doctor said. — PTI
	India 2nd best FDI destination, says Nomura Mumbai, April 10 Nomura India has said despite the recent massive slump in FDI inflows, India remains the hottest investment destination in the world after China and inflows will return to the pre-crisis peak levels by early 2012. Foreign direct investment (FDI) inflows plunged 25 per cent in April-January period to $17 billion year-on-year. The figure was more alarming in January when it nosedived 48 per cent to $1.04 billion. Attributing the recent decline to primarily global factors, Nomura India vice-president and economist Sonal Varma said following the 2008 crisis, other emerging markets too saw sharp drop in FDI inflows but picked up steam after two years unlike India. "Of the $12-billion decline in FDI inflows between 2008 and 2010, around 60 per cent was due to weak inflows into service spaces like computer software and hardware, financial services, banking, and construction," Varma said. "The sharp drop in inflows into banking and other financial services is unsurprising as the crisis led firms to restructure operations. As a result, share of infrastructure in total FDI inflows rose to 24.7 per cent in 2010 from 16.3 per cent in 2007 and that of manufacturing rose to 32.1 per cent from 19.6 per cent, despite a fall in the absolute numbers in FY11," she said in her report. While globally, overcapacity, credit crunch, fragile growth and increased risk aversion led multinational corporations to curtail investment, locally, the environment-sensitive policies pursued appear to have affected the investor sentiments, she said. "Delay in framing a land acquisition law has also hurt. In addition, the country's cost-competitiveness may have taken a hit due to deteriorating quality of infrastructure, elevated inflation, a skilled labour shortage, rising wage costs and corruption," Varma pointed out. Other factors like tax issues (income tax notice on Vodafone), delay in $9.6-billion Carin-Vedanta deal, many corruption cases are also said to be keeping off investors. — PTI
	No online payment for forex trade: RBI Mumbai, April 10 Amid introduction of illegal online forex trade by certain companies, the Reserve Bank has asked credit card issuing companies to not permit payments for such transactions. The regulations under the Foreign Exchange Management Act (FEMA), 1999, do not permit resident Indians to trade in foreign exchange in domestic or overseas markets. The RBI's instruction comes in the wake of introduction of overseas foreign exchange trading on a number of Internet and electronic trading portals, luring the residents with offers of guaranteed high returns based on such forex trading. Several people have lost heavily in forex trade through Internet portals in the recent past. "The advertisements by these Internet or online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees," the RBI said. Many companies even engage agents who personally contact gullible people to undertake forex trading and investment schemes and entice them with promises of disproportionate or exorbitant returns, the RBI said. Such companies ask public to make the margin payments for such online forex trading transactions through credit cards or deposits in various accounts maintained with banks in India, the RBI said. "...the card issuing companies who may also be advised to remain alert against permitting payments for such unauthorised transactions," the central bank said. The apex bank said it has also observed that accounts are being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin and investment money. — PTI
	Tax Advice Returns can be filed using power of attorney by SC Vasudeva Q: My son serving in MNC in India is now on project work to Germany for about 10 months (likely to extend further if required), through his company. He has his salary account in India. (i). Can he transfer his salary amount paid to him in Germany to his salary account in India online? (ii). What is the procedure of paying Income tax in respect of his salary as per Form 16 and interest income earned on salary amount if transferred to his salary account in India? — Ashok Chohan A : (a) There should not be any problem for your son for the on-line transfer of funds from Germany. (b) The company with which your son is employed must be deducting tax at source in respect of salary whether paid to him in India or in Germany. Your son must be having Permanent Account Number (PAN) as he seems to be resident in India and has gone to Germany on a project work for ten months only. He can file his return on-line from Germany or you can file his return in India and sign on his behalf by taking a Power of Attorney from him. It may be possible for him to claim deduction for income-tax, if any paid in Germany against the tax payable in India on his total income. Defence pension Q: Our only unmarried son has died and his death has been attributable to military services by the Government of India, Ministry of Defence Special family pension of Rs 3, 000 a month has been granted and is credited to the account of the father. (a) Is this special family pension exempt from income tax? (b) If not exempt, should it should be credited in my name as the mother is the legal heir under Hindu Succession Act, 1956 ( a certificate from the Collector in my name has been issued as the legal heir of my son). (c) Can the family pension be divided between both father and mother for tax with separate deduction of Rs 15,000 or 33% for each one of us? — Ms Ambika A: (a) In accordance with the provisions of section 10(19) of the Act, family pension received by the widow or children or legal heirs as the case may be, of a member of Armed Forces of the Union, where the death of such person has occurred in the course of operational duties in such circumstances and subject to such conditions as prescribed would be exempt from tax. The circumstances of the death as prescribed in Rule 2BBA Income-tax Rules 1962 are as under: - (i). Acts of violence or kidnapping or attacks by terrorists or anti-social elements; (ii). Action against extremists or anti-social elements; (iii).Enemy action in international war; (iv).Action during deployment with a peace keeping mission abroad; (v).Border skirmishes; (vi). Laying or clearance of mines including enemy mines as also mine sweeping operations; (vii).Explosions of mines while laying operationally oriented mine-fields or lifting or negotiation mine-fields laid by the enemy or own forces in operational areas near international borders or the line of control; (viii).In the aid of civil power in dealing with natural calamities and rescue operations; (ix). In the aid of civil power in quelling agitation or riots or revolts by demonstrators The Head of the Department where the deceased last served or the service headquarter, as the case may be has to certify that the death of the concerned member has occurred in the course of operation duties in the circumstances mentioned above. (b) You are correct in stating that you are the legal heir under Hindu Succession Act, 1956 and therefore, you should be entitled to receive the family pension since your husband is not a legal heir in Class 1 of the Schedule to the aforesaid Act. The question of apportionment of the family pension between two of you therefore should not arise. You should therefore be entitled to receive such pension Medical reimbursement Q: Frequently, you have advised that the perquisite of medical charges reimbursement by an employer to the employee even if the amount exceeds Rs 15,000/- is not chargeable to income tax if the conditions mentioned in section 17(ii) of the income tax Act are fulfilled (The Tribune 18.3.2007). Till now I had been under the impression that even pensioners were also covered by these provisions. Now a friend has advised that this provision is applicable only in the case of employees because the word ‘pensioner’ has not been specifically mentioned therein. In my opinion, these provisions should also cover the pensioners, because they are ex-employees and the term ‘salary’ in the Act also includes ‘pension’. — Gurnam Singh A.The issue raised by you is debatable and will have to be tested in the court of law. The reason for this doubt arises because wherever the Act wanted an exemption or facility to be provided to a former employee, the same has been expressly stated in the relevant section of the Act. You may in this connection refer to section 10(5) (b) of the Act which provides for the exemption of travel concession to an employee from his employer or a former employer. Retirement benefits Q: On my retirement from a Bank on 31.10.2010, I have received/to receive following benefits: Leave encashment of 240 days— Rs 4.30 Lakh Own contribution of P.F. and interest thereon — Rs 10.32 Lakh Gratuity — Rs 10.00 Lakh Commutation of Pension: — Rs 7.00 Lakh Please let me know which of the above benefits are taxable under income tax act and up to what extent? — Mohinder Singh (a) You would be entitled to claim an exemption in respect of cash equivalent of the leave salary for the period of earned leave where such earned leave does not exceed ten months. The amount for such ten months is required to be calculated on the basis of the average salary drawn by you during the period of ten months immediately preceding the retirement. The exemption is limited to a maximum of Rs 3 lakh. In case, you fulfill the aforesaid conditions, the balance amount of Rs 1.30 lakh would be taxable. (a)Your contribution to PF and interest thereon would not be taxable provided the amount has been received from a notified/recognized PF. (b) The amount of gratuity of Rs. 10 lakh would be exempt from tax as you have retired after May 24, 2010. (c)The amount of commuted pension would be exempt provided the same is not in excess of 1/3rd of the pension which you were normally entitled to receive.