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SEBI: Share transfer among promoters is equity sale
Subsidy leakage worrisome, says FM
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EPFO may fix minimum pension at Rs 1,000 per month
Indian exposure to US debt down by $6.3 bn
SBI to cut interest rates on education loan
Now, you can invest up to Rs 1 lakh in PPF a/c
RIL gets over 70 bids for natural gas
Markets likely to be volatile
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SEBI: Share transfer among promoters is equity sale
New Delhi, February 19 The regulations bar any entity from being alloted shares on preferential basis, if it has sold the shares of the same company in the past six months. The SEBI has made its stance clear in an informal guidance sought by pharma company Strides Arcolab Ltd. Strides Arcolab was seeking to issue convertible warrants to its promoter group. However, the promoter group entities of the company had executed certain 'inter-se transfer of shares', although the same did not lead to any change in the its total promoter holding. The company had sought SEBI’s guidance on whether the inter-se transfer would be considered as ‘sale’, as per the SEBI’s Issue of Capital and Disclosure Requirements (ICDR) regulations, which make the promoters ineligible to subscribe to preferential allotment within six months. SEBI in its reply has told the company that all the promoters and promoter group entities become ineligible for allotment of shares on preferential basis, if any person belonging to promoters or the promoter group has sold shares during the past six months. SEBI further said the relevant regulations do not "differentiate between inter-se transfers made to entities within promoter group and sales made to others." "Hence, the term ‘any person who has sold any equity shares of the issuer’ shall also include any person who has made inter-se transfers within the promoter group. "Thus, as per the extant regulations, if there is any inter-se transfer among the promoter group entities in the preceding six months, then all the persons/entities forming part of 'promoter(s) and promoter group' shall become ineligible for allotment of specified securities on preferential basis," SEBI noted.
— PTI |
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Subsidy leakage worrisome, says FM
Gurgaon, February 19 Speaking at an event organised by Oriental Bank of Commerce here today, Mukherjee said various financial inclusion programmes for extending banking facility to rural population and the Aadhaar project (of providing an unique ID to all citizens) would help in tackling the problem of leakage in the government subsidy for the poor section. "Banks can play a major role through inclusive programmes like Swabhimaan, and by extending banking facility to a large number of rural population," he said. "If these subsidies are provided through the banking network, institutional financial networks, the leakage will be reduced substantially," he added. The government had earlier said its subsidy bill was likely to increase by over Rs 1 lakh crore, over and above the original estimate of Rs 1.34 lakh crore, mainly on account of higher outlay towards fertiliser, food and oil. — PTI
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EPFO may fix minimum pension at Rs 1,000 per month
New Delhi, February 19 The number of EPFO pensioners getting a monthly pension of Rs 1,000 is 7 lakh. The data reveals there are cases where pensioners are getting a monthly pension as low as Rs 12 and Rs 38. As per estimates, the proposal to hike the minimum pension to Rs 1,000 per month will require an additional contribution of 0.63 per cent of subscribers' basic pay and dearness allowance to the pension account. The hike in contribution will be over-and-above the 8.33 per cent contributed by employers toward the pension account of employees, as well as the 1.16 per cent provided by the government under the scheme. — PTI
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Indian exposure to US debt down by $6.3 bn
New Delhi, February 19 As per the latest foreign holding data for the US Treasury Bonds, the debt securities issued by the US government, India ranked as the 18th largest foreign holder of these bonds at the end of 2011, down from 15th a year earlier. While China remains the largest foreign holder of the US treasury bonds, it has lowered its exposure during 2011. A number of other countries such as Taiwan, Hong Kong, Russia, Luxembourg and Singapore also pared their holdings. However, Japan, the UK, Switzerland, Canada, Germany, Thailand, Ireland, Belgium and South Korea saw their holdings of the US treasury bonds increase during the year. At the end of December 2011, India held US treasury bonds worth $34.2 billion, as against China’s $1.1 trillion. — PTI
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SBI to cut interest rates on education loan
Mumbai, February 19 Meanwhile, according to sources in the know of the development, the bank has decided to reduce interest rates on education loans by 25-100 bps across various maturities, after its Alco (asset, liability committee) met over the weekend. Accordingly, for a loan of Rs 4 lakh, interest rate will be down by 25 bps to 11.75 per cent; for loans in the Rs 4-7.5 lakh range, the rate is down 100 bps to 12.50 per cent, while for loans above Rs 7.5 lakh, the rate is lower by 25 bps to 12.25 per cent. SBI is also offering a concession of 50 bps on interest rates for loans given to female students. — PTI
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Tax Advice By S.C. Vasudeva Q. Recently it was reported in the Press that the government has raised the limit of deposit in PPF from Rs 70,000 to Rs 1,00,000. Kindly advise if this limit has been raised for the purpose of benefit u/s 80C from 1.12.2011 or the only benefit would be to earn “tax-free” interest on the additional Rs 30,000.Also, whether the enhanced limit is effective from 1.12.2011 or from 1.4.2012. — Gurnam Singh A. The limit of deposit in PPF account has been raised to Rs 1,00,000 wef 6th September, 2011. However, the limit under Section 80C of the Act for the purpose of claiming deduction has not been raised. The said limit remains at Rs 1,00,000. The enhanced limit for deposit in PPF account is applicable for the financial year 2011-12. Rebate u/s 89
Q. I am a pensioner of the Punjab Government. On April 2, 2008, my pension was stopped and I received pension up to May 2008. For the financial years 2008-09, 2009-10 and 2010-11, my income from interest from MIS and fixed deposit was Rs 68,053, Rs 36,000 and Rs 68,059, respectively. For the financial years 2008-09 and 2010-11, income tax returns were filed by me and in these returns IT refund was shown as Rs 3,316 and Rs 2,122 respectively. As per the court order in November, 2011, I have received pension of Rs 5,94,119. From Rs 5,94,119, year-wise amount of pension is Rs 89,466 for the year 2008-09, Rs 1,44,356 for the year 2009-10, Rs 1,90,360 for the year 2010-11 and Rs 1,51,650 for 2011-12 (up to October, 2011). Please guide me how income tax can be saved on this amount which was withheld by the government and was paid as per the court order. Now, no income tax has been deducted by the bank from Rs 5,94,119 at the time of payment. In November 2011, Rs 1,00,000 has been deposited in a tax-saving scheme. Please guide me if there is any rule according to which returns can be filed now for the years for which I have received the pension now. If returns can be filed, then how much amount I would have to pay as income tax for each financial year. — Gurdial Singh A.
(a) It is not possible to revise the return for the financial year 2008-09 as the same could have been revised by 31st March, 2011. However, you can revise the return for the financial year 2009-10 by 31st March, 2012. The return of the financial year 2010-11 can be revised up to 31st March, 2013. (b) It would be advisable to include the above income of Rs 5,94,119 in the return for the financial year ending 31st March 2012 and seek the benefit under Section 89 of the Income Tax Act, 1961 (The Act). IT return
Q. I am a government pensioner and file income tax returns regularly. My yearly total income is pension plus interest on deposits in bank(s) and post office. However, my total income does not exceed Rs 5 lakh. As per government notification, persons having total income of less than Rs 5 lakh are not required to file their income tax returns any more. In light of this notification, kindly advise:- a) Whether the pensioners are also covered under this notification and not required to file income tax return? If yes, then do they need to inform about their income from interest to the authorities of bank disbursing pension to them? b) For how long we need to retain the record pertaining to our yearly income. c) Do we need to inform the income tax officer concerned that income tax return has not been filed as we are covered under respective notification. — Balbir Singh Batra A.
(a) The notification applies to assessees earning income from salaries. The pension is taxable under the head “income from salary”. In all fairness, the notification should be applicable to pensioners. I may add that this notification was applicable for the financial year 2010-11 only. (b) The notification was applicable to the assessees whose interest income from savings bank account did not exceed Rs 10,000. It did not apply to those assessees who had income from deposits other than savings bank account. (c) It would be advisable to keep tax records for a period of seven years prior to the year in respect of which the return is being filed. (d) There is no such requirement in law. DTC regime
Q. Under Direct Taxes Code (DTC), exemption limit under Section 80C is Rs 1.5 lakh (one lakh in PPF account + Rs 50,000 in LIC). But PPF subscription for HUF is closed. One can take LIC for Rs 50,000 per annum. Where should the HUF invest the remaining Rs 1 lakh to get full rebate of Rs 1.50 lakh. Please advise. — Ramesh Marwaha A.
The provisions of the Direct Taxes Code as they stand today restrict the allowable deduction in respect of insurance to the extent of Rs 50,000 only. The deduction allowable to approved funds is applicable to an individual assessee only. The present facility of the allowable deduction is to the extent of Rs 1,00,000. Therefore, the allowable deduction to an HUF stands curtailed to Rs 50,000 only in the Direct Taxes Code. |
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RIL gets over 70 bids for natural gas
New Delhi, February 19 At the close of offer on February 17, RIL received over 70 bids totalling a demand of more than 90 million standard cubic meters per day, several times more than the peak output of 3.5 mmscmd that the company plans to produce from Sohagpur block in Madhya Pradesh by 2014-end, industry sources said. — PTI
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Tax-saving instruments
One should start early in the year and not wait for the last quarter to start investing in tax-saving instruments. The earlier you start, the sooner will your investments mature. Thus, it is of utmost importance to understand that tax planning is not just about saving tax, but it should also complement your long-term financial goals, says Anil Chopra It is high time for ‘11th hour tax planners’ to get into action. With less than two months to go in the current financial year, taxpayers need to quickly finalise their tax-saving avenues and take decisive actions. Thus, while it is the basic duty of every citizen to pay tax, it is also the basic right of every citizen to minimise the tax outgo by way of judicious tax planning and also simultaneously ensuring long-term wealth creation. The various tax-saving provisions are gifts from the government to public and each one of us should benefit from them. However, the biggest mistake people make is they procrastinate their tax planning. One should start early in the year and not wait for the last quarter to start investing in tax-saving instruments. The earlier you start, the sooner will your investments mature. Moreover, if you postpone your tax savings till the last minute, you may find it hard to arrange the funds at that moment. Eligible investments u/s 80C
Provident Fund: This includes Public Provident Fund (PPF), a recognised Employees Provident Fund (EPF) and Government Provident Fund (GPF). All of these are retirement solutions aimed at creating a handsome retirement corpus for an individual over the long term by encouraging regular savings. Investments in provident funds enjoy a EEE structure i.e. the investments are tax deductible/exempt, the income from the investment is tax exempt and the maturity proceeds are also exempted from tax. These investments are among the safest investments in terms of credit enjoying the sovereign guarantee and normally carry the highest rate of return too among securities issued or sponsored by the Government of India. While investments in EPF and GPF are deductible up to Rs 1 lakh, investments in PPF were till now, restricted to a maximum of Rs 70,000 in a year by an individual. But recently, the limit has been increased to Rs 1 lakh by the government, bringing it at par with EPF and GPF. Mutual Fund ELSS:
ELSS is a diversified equity scheme investing in a portfolio of quality stocks chosen without any market capitalisation or sector bias. Investment in ELSS is locked in for a period of three years from the date of investment. Since ELSS schemes invest in equity markets, over longer investment horizons, they have delivered the highest long-term returns among investments eligible u/s 80C. These are suitable for investors having a long term horizon of more than 5 years and have a considerably higher risk appetite than debt investors. As mentioned above, an optimal way to invest in ELSS is by way of monthly SIPs. However, since there are a large number of ELSS schemes available in the market and not all are equally good, one must be very selective in choosing the right scheme for investment as a wrong choice can seriously jeopardise the long term returns on the portfolio. Taxpayers should take the advice of their financial planner or a trusted investment adviser while selecting the right ELSS schemes. Life insurance/pension plans:
This includes pure term plans, traditional life insurance policies such as whole life plans, pension plans, endowment plans and also Unit-Linked Insurance Plans or ULIPs. Premiums paid on either of these plans enjoy tax benefit up to Rs 1 lakh u/s 80C. However, one must ensure that the premium paid in any year does not exceed 20% of the sum assured under the policy. Holders of this instrument too enjoy a EEE benefit as there is no tax liability on any capital receipt from life insurance policies. NSCs/bank deposits:
These instruments do not enjoy EEE benefit unlike investments in provident funds, ELSS schemes and life insurance or pension plans. Income or interest received during the term is taxable and so are any gains on maturity. These instruments hence score low in terms of post-tax returns as well as tax benefit potential over the term of the product, even though investments made in these are eligible for deduction up to Rs 1 lakh in the year the investment is made. Tuition fee for children:
This includes tuition fee paid (fee paid for private tuition is not eligible) for children (up to a maximum of two children) and does not include other expenses incurred such as cost of books, donations, transport etc. Since education expenses are nonetheless an investment in the child’s future, tuition fee paid has been made deductible u/s 80C subject to the overall limit of Rs 1 lakh. The exact saving in tax u/s 80C will depend upon the tax slab applicable to a particular individual. Rebate u/s 80CCF
With effect from financial year 2010-11, a new section has been introduced to enable taxpayers save additional tax over and above that permitted under Section 80C. Deduction of up to Rs 20,000 is allowed for investment in specified long-term infrastructure bonds. These bonds are issued by notified institutions like PFC, NHAI, IRFC, HUDCO, etc. The primary purpose of introducing this provision is to promote long-term investments in the infrastructure sector. Also, by investing in these bonds, one is able to save income tax up to Rs 6,180 (assuming you are in the 30% tax slab), besides earning stable and secure returns on one's investment over the long term. Rebate u/s 80D:
Healthcare costs have become prohibitively high nowadays; health insurance helps an individual in meeting these healthcare costs without a significant impact on one’s savings and at a very reasonable annual premium. The Government of India has also chosen to incentivise people who go for health insurance by allowing a deduction from tax for premiums paid u/s 80D. An individual can claim deduction up to Rs 40,000 towards premium paid for health insurance policy for self and family members. By paying this amount as premium, one can not only save income tax up to Rs 12,360 (tax plus education cess assuming the person falls in the 30% tax bracket), but also hedge his/her financial risk arising out of any illness to any of the insured family members. It is suggested that you seek help of an independent financial adviser who can suggest you a right mix of instruments. As a thumb rule, one-third of the Rs 1,00,000 deduction allowed under Section 80C should go towards PPF. Another one-third should be invested in ELSS and the balance one-third can be utilised for taking a life cover by way of life insurance policies. Thus, it is of utmost importance to understand that tax planning is not just about saving tax, but it should also complement your long-term financial goals. The writer is Group CEO,
Bajaj Capital. The views expressed are his own. |
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Markets likely to be volatile
Liquidity, liquidity and more liquidity has driven the markets upwards for the seventh consecutive week. The levels which have now been reached were last seen in July 2011 and the mood is now not only optimistic but people have simply forgotten that there were fundamental concerns when the markets had reached a low of just over 15K on the Sensex and 4,500+ on the Nifty. Well that seems to be from another era and another world. It’s time to be cautious as all good things also come to an end at some time.
FIIs invested a staggering Rs 4,516 crore in the week while domestic institutions continued their selling and pulled out Rs 650 crore in the week. The rupee gained marginally and closed at Rs 49.27. Result season is over and there are definite signs of pressure on the margins of companies and also the fact that there is pressure on the sales growth as well. The continued gains in the market have ensured that the pessimistic mood at the end of the year is completely gone and replaced with renewed optimism. The week ahead begins with a trading holiday on Monday. The week also sees the expiry of February futures on Thursday and this series has seen Nifty rise from 5,158 to current level of 5,564, a gain of 7.87% so far. This kind of gain is not normal and is a spectacular month so far. One is expecting consolidation to happen for the past two weeks but there seems to be no such thing happening simply because the liquidity is never ending. The rally which one saw on Thursday clearly squeezed out all shorts in the market and one should be careful in sharp movements which are likely to continue as we go forward. The global scenario sees Greece at centrestage with the package being still debated. The Iran embargo and sanctions have ensured that crude prices have again begun to rise and would put a strain on the oil companies and the fiscal deficit. The week ahead is a short one with one holiday and futures expiry making it extremely choppy and volatile. The BSE Sensex has support at 18,208, then at 18,019, then at 17,829, then at 17,630 and finally at 17,355 points. The NSE Nifty has support at 5,537, then at 5,475, then at 5,408, then at 5,334, and finally at 5,255 points. The week ahead would be interesting and extremely choppy where one should trade cautiously. The writer is founder of KRIS, an investment advisory firm. The views expressed are his own.
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Personal finance
The BSE Sensex gained 540.66 points or 3.05% to close at 18,289.35 points. The NSE Nifty gained 182.70 points or 3.39% to close at 5,564.30 points. The broader markets saw the BSE 100, BSE 200 and BSE 500 gain 3.63%, 3.64% and 3.69%, respectively. The BSE Midcap and BSE Smallcap gained 4.77% and 3.27%, respectively. Among sectoral indices, BSE Realty gained a staggering 10.18%, while BSE Bankex gained 6.25% and BSE Auto gained 6.24%. In individual stocks, BHEL gained 16.67%, Axis Bank up 14.68%, PFC up 13.78% and State Bank up 11.23%. A surprise loser was Reliance Industries down 2.85% and this also brought the BSE Oil & Gas down 1.44%.