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Investment norms for MFs, insurance firms eased
India, Japan, S Korea join to avert eurozone crisis damage in Asia
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Fitch downgrades Italy, Spain, Belgium ratings
Investor Guidance
Aviation Notes
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Investment norms for MFs, insurance firms eased
New Delhi, January 28 "It has been decided to exempt insurance companies and MFs which are broadbased investment vehicles representing the interests of the public at large from the provisions of SEBI (ICDR) Regulations relating to sale and lock-in of their pre-preferential shareholding in the issuer company," SEBI chairman U.K. Sinha said after a board meeting here. "As a matter of liberalization, we’ve taken this measure: if there is a broadbased investor base, for example the mutual funds and insurance companies which do not represent the interest of one particular investor, they have group of investors backing them and they take their decisions on professional consideration... why should they be debarred from this facility? "Even they have bought or sold in the last six months they’ll be permitted (to participate in another preferential allotment). So, they have been given this special exemption," Sinha added. According to SEBI regulations (Issue of Capital and Disclosure Requirements (ICDR), an insurance company or a mutual fund cannot participate in preferential allotment transactions before the six-month cooling off period. Also, allottees are required to lock in their entire holdings for six months under the present norms. The board has decided to enhance the minimum investment amount of clients under the portfolio management schemes (PMS) to Rs 25 lakh from Rs 5 lakh at present. This would apply to new customers. "PMS regulations are light touch regulation and SEBI was worried that retail investors are being drawn into it whereas their interest are not as tightly protected or guarded as it is in mutual fund regulation," Sinha said. The changes would be brought about by amending the SEBI (Portfolio Managers) Regulations, 1993. Further, SEBI has said asset management companies (AMCs) would be responsible for accuracy and truthfulness of the advertisements. "Asset management companies (which float mutual funds) shall be responsible for the accuracy, truthfulness, fairness of the advertisement", said a statement issued after the SEBI board meeting. — Agencies
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India, Japan, S Korea join to avert eurozone crisis damage in Asia
Davos, Switzerland, January 28 The united efforts of the three major Asian economies were shared with the delegates at the World Economic Forum meeting by Japanese Prime Minister Yoshihiko Noda. Noda's announcement was followed by IMF chief Christine Lagarde warning euro crisis could spill over to other regions. "Japan is already working with South Korea and India to reduce the risk of the crisis spreading to Asia," Noda told the World Economic Forum through a video link from Tokyo, on Friday evening. Pointing out that Europe's crisis could be a major risk for the global economy, he said, "Japan stands ready to support the Eurozone as much as possible." In another session on Saturday, International Monetary Fund managing director Lagarde said: "No one is immune in the current situation... It’s a crisis that could have collateral effect, spillover effect around the world. Everybody has an interest to solve this situation". Singapore Prime Minister Lee Hsien-Loong also had a word of caution, stating the escalation of European debt crisis would cause serious problems for the entire world. Lee, however said there was lot of momentum in the Chinese and Indian economies. Kishore Mahbubani, dean at the Lee Kuan Yew School of Public Policy, National University of Singapore,underscored importance of India and China. "Even though there is rising inequality in the world, the long term trend towards less and less poverty is continuing... China and India will contribute in enormous numbers in reducing poverty," he said. — PTI
Euro crisis biggest threat to world economy: Japan
Japanese Prime Minister Yoshihiko Noda urged the eurozone to get to grips quickly with its debt crisis on Saturday, branding it the biggest threat to the global economy "It’s indeed the major source of risks for the global economy," Noda, speaking via videolink from Tokyo, told the Davos forum in Switzerland. "Within the eurozone there should be major steps to alleviate the concerns of the international community and the markets."
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DoT for one-time fee for extra spectrum
New Delhi, January 28 In a move which would hurt leading telecom operators like Bharti Aitrtel, Vodafone and Idea, all of whom have been opposing the telecom sector regulator’s suggestion, the Telecom Commission, the highest decision making body of DoT has given its go-ahead for charging a one-time fee for extra spectrum beyond the contracted limit of 6.2 MHz held by these telecom companies. What is further going come as a major outflow would that these operators could be charged the one-time fee for the spectrum beyond 6.2 MHz from the date of spectrum allocation. These operators are already up in arms against the government move to penalise them for entering into 3G roaming pacts and have dragged the DoT to the telecom sector tribunal TDSAT. Reports also suggested the government may also charge for spectrum between 4.4 MHz and 6.2 MHz on the basis of auction prices after notification is made. The telecom operators have been opposing TRAI’s suggestion that there was no such clause in the telecom licences given to them under which this type of levy can be imposed. Further they point out that the allotment of spectrum to them was as per the policy of the day. Earlier last year TRAI proposed the one-time fee for which the amount was computed by experts. TRAI recommended that each MHz of additional spectrum, after the 6.2 MHz limit, held by operators should cost a one-time Rs 4,571.87 crore on a pan-India basis. While reports suggested that there was unanimity in the Telecom Commission over the levy of one-time fee and the pricing of extra spectrum, but the final decision on the issue has been left to the government. TRAI had also suggested the one-time fee would vary from circle to circle and the operators would have to pay only for those circles where they hold extra spectrum. The telecom operators, on the other hand, had supported an auction route to determine one-time fee for spectrum beyond 6.2 MHz.
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Fitch downgrades Italy, Spain, Belgium ratings
New York, January 28 "Consequently, these sovereigns do not, in Fitch's view, accrue the full benefits of the euro's reserve currency status," it said. Fitch cut Italy's rating to A-minus from A-plus; Spain to A from AA-minus; Belgium to AA from AA-plus; Slovenia to A from AA-minus and Cyprus to BBB-minus from BBB, leaving the small island nation just one notch above junk status. Ireland's rating of BBB-plus was affirmed. All of the ratings were given negative outlooks. Fitch said it had weighed up a worsening economic outlook in much of the euro zone against the European Central Bank's December move to flood the banking sector with cheap three-year money and austerity efforts by governments to curb their debts. "Overall, today's rating actions balance the marked deterioration in the economic outlook with both the substantive policy initiatives at the national level to address macro-financial and fiscal imbalances, and the initial success of the ECB's three-year Long-Term Refinancing Operation in easing near-term sovereign and bank funding pressures," Fitch said. — Reuters
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Investor Guidance
Q: Under Section 80E of the Income Tax Act an assessee is entitled for tax deduction for payment of interest on loan from any financial institution. The loan should have been taken for purposes of pursuing higher education of self, spouse or child. I took out a bank education loan during fiscal 2008-and am paying interest on it out of my taxable salary every year. However, my employer has refused to grant me the deduction of interest paid by me to the bank under section 80E for FY 2011-12 on the grounds that my son, for whom I took out the loan, is studying abroad, and that the loan is in his name and I'm only the co-borrower. Is my employer right in denying me the tax benefit on both these counts?
— Sourabh Gupta A: The objections raised by your employer are not valid on account of the following reasons: (a) you are paying the interest on the loan (b) you are a co-borrower and therefore it can't be said you didn't take out the loan (I assume you're a co-borrower on account of your age; and (c) taking out a bank education loan for studies abroad is not prohibited under Section 80E of the IT Act. Q: I'm donating Rs 1,000 every month to a charitable organization, which issues me a receipt that says: "Permanent exemption from income tax under Section 80G of the Income Tax Act, 1961 sanctioned as per amended clause vi subsection v of 2009". Can I claim tax deduction for the entire annual donation of Rs 12,000? — Jiwan Singh A: A receipt for donation to a charitable body should normally mention the letter number and the date by virtue of which the exemption under Section 80G of the IT Act, 1961 has been granted. This is all the more essential in view of the IT department's Circular No 7/2010 dated Oct 27, 2010 according to which charitable trusts that were granted exemption prior to the amendment have to apply and get such permanent exemption again. The receipt issued to you therefore doesn't comply with the requirement for grant of deduction under Section 80G . Q: My query relates to tax deducted at source under Section 194C of the IT Act on railway freight. The definition specifically says "work includes transportation of goods and passengers by any mode other than by rail". Does Indian Railways here mean the railways department only, or does it also apply to private entities that transport rail freight? — Pankaj Kumar A: The provisions of Section 194C of the Income Tax Act are applicable to the payments made for carriage of goods and passengers by any mode of transport other than by railways. In case the freight payments are made directly or through someone to Indian Railways, the provisions of the aforesaid section should not be made applicable for payment of such freight charges. |
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Aviation Notes
Unstable airfares and unprecedented taxation of passengers at international airports in India are two major causes of concern. They have been disturbing the rhythm of flying because two organizations — the International Air Transport Association (IATA) and the Directorate-General of Civil Aviation (DGCA) — appear to have lost control over their operators like Delhi International Airport Pvt Ltd (DIAL). What is most shocking is that, instead of improving discipline and bringing in greater transparency, the two bodies look helplessness.
There was a time in Delhi until the 1980s when the arrival IATA inspector sent ripples of alarm among airline bosses. Now no one cares when he lands and when he takes off because IATA has apparently become more of a "social outfit" than an international law-enforcing body. The DGCA's position has become more deplorable than that of IATA. It is a body that is more in need of a thorough overhaul than other operators in the aviation industry. The underlying all-important fact is that private operators like G.M. Rao (he seems to has a finger in every pie including the Indian Premier League) are turning wealthier and hard-pressed passengers are becoming poorer. According to the latest reports, the DIAL, subtly supported by the Airport Economic Regulatory Authority (AERA), is planning to levy a users' development fee for all passengers — departing, arriving and transiting — from April 1. This will be an additional burden on passengers who are already shelling out enormous amounts of hard-earned money through taxes and fees. According to airline officials, India is the only country that taxes air travelers and fees are much more than the basic fare and the government remains just a mere spectator. The proposed new fee is very hefty and will affect even those passengers who buy their tickets abroad. What is shocking that passengers in transit will also be subjected to fees ranging from Rs 800 to Rs 360. According to airline bigwigs and regular flyers, DIAL and AERA are adding to the chaos in the already confused aviation industry. DIAL has reportedly justified the UDF charges. Airline officials, however, have a different view while passengers claim they are being harassed and burdened with unnecessary taxes and fees. Owing to lax control by the authorities, a section of the pampered pilot community turned wild recently. An Air India Express pilot reportedly committed a "double fault" inside of a few seconds, endangering the lives of passengers. He first violated the most important rule of taking off without obtaining the mandatory clearance from air traffic control and then, after being challenged by the ATC, he slammed the brakes at high speed when the aircraft was taking off at a speed of 260kmph at Singapore's Changi international airport. An inquiry into the "gross indiscipline" among Air India Express pilots has been instituted. |
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Wary of the European debt crisis causing collateral damage all around the world, India, Japan and South Korea are working together.
