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No policy paralysis, says FM
India to see key reforms in next 6 months: Basu
Petrol pump dealers defer strike
Jewellers woo buyers with discounts, schemes
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Mukesh keeps promise; RIL is debt-free
Tax Advice
Savings Bank Account
Markets expected to remain volatile
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The Finance Minister was replying to apprehensions expressed by Corporate America over the perceived policy paralysis in the government and Chief Economic Adviser Kaushik Basu's comments that there may not be any big ticket reforms till elections in 2014. Rejecting criticism about lack of decisions, Mukherjee contended that the government has taken a number of policy decisions in recent months. "We have a new manufacturing policy, very recently. It's in operation. We have announced earlier that we will institute infrastructure debt fund. We have created infrastructure debt fund," the minister, who is here to attend the annual Spring meeting of the IMF and the World Bank, said. "We announced that we shall make easy access to commercial borrowing. Series of measures for easy access to commercial borrowing have been done” Mukherjee said. On major reform legislations, Mukherjee said he was trying to get three legislations - Pension Fund Regulatory Act, Insurance Act and Banking Amendment Act - passed. — PTI
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India to see key reforms in next 6 months: Basu
However, he feels the "biggest reform" GST (Goods and Services Tax) may be tougher because it is good and not everybody wants it to happen under the present regime. Basu, whose remarks on Wednesday that no big ticket reform is possible till 2014 elections raised a political flutter back home, said there is a serious risk of another European crisis in 2014 and appropriate measures need to be taken to avert another global economic crisis. On FDI in multi-brand retail, he said, "you can't be 100 per cent sure, but I feel that it's very likely that it will happen. This can be a big boost to Indian farmers and small producers. It will also have an uplifting on investor confidence. — PTI
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Petrol pump dealers defer strike
New Delhi, Apríl 22 The Federation of All India Petroleum Traders (FAIPT), which claims to represent about 40,000 petrol pump operators in the country, had called for a day-long strike on Monday and a nationwide indefinite strike from month-end to demand higher commission on sale of petrol and diesel. Federation general secretary Ajay Bansal said Reddy agreed to consider the demands after two-rounds of discussions with Reddy on April 19 and 20. "Various issues/demands concerning petrol pump dealers were discussed at length," he said. —
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Jewellers woo buyers with discounts, schemes
Mumbai, April 22 "Most jewellers are offering schemes like free silver coins with gold jewellery above a certain value in addition to discounts in making charges in order to gain volumes," says Dheeraj Jain, a gold jeweller at Mumbai's Zaveri Bazaar, one of the biggest gold markets in the country. Corporate houses which have entered the retail business in a big way are getting even more aggressive. The Gitanjali group has come out with a scheme called the ‘Swarna Mudrika’ under which customers get free silver coins on purchase of gold coins. Reliance Jewels is wooing customers with the option of booking jewellery in advance so that they do not have to pay the higher price on the day of Akshaya Tritiya when gold prices usually go up. "We expect a lot of pent-up demand for gold jewellery to come out in the open on the occasion of Akshaya Tritiya," adds Jain. The trade was badly hit by a three weeks' strike by jewellers across the country. A number of jewellers have come out with schemes on platinum jewellery which is seeing increased demand, according to those in the trade. Even the National Stock Exchange (NSE) has got into the act by extending the trading session for gold Exchange Traded Funds (ETFs) on April 24.
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Mukesh keeps promise; RIL is debt-free
New Delhi, April 22 At the end of last financial year ended March 31, 2012, Reliance Industries Ltd (RIL) had a total cash balance of Rs 70,252 crore, as against an outstanding debt of Rs 68,259 crore, making the country's most valued firm debt-free on a net cash basis. RIL's outstanding debt rose marginally by about 1 per cent during last fiscal, but the surge in its cash position was much larger at about 66 per cent during this period. As on March 31, 2011, RIL had outstanding debt of Rs 67,397 crore, as against a cash balance of Rs 42,393 crore. Mukesh Ambani, CMD , had told RIL's shareholders at their Annual General Meeting on June 3, 2011 that the company would become debt-free during 2011-12. Meeting the target, RIL's full-year financial results for the fiscal ended March 31, 2012, showed that the company has become "debt free on a net basis as compared to the gearing level of 13.5 per cent as on March 31, 2011." At the end of last financial year ended March 31, 2012, RIL had a total cash balance of Rs 70,252 crore, as against an outstanding debt of Rs 68,259 crore, making the country's most-valued firm debt-free on a net cash basis. — PTI
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Medical reimbursement exempted from tax
By S.C. Vasudeva Q. I am a senior citizen aged 69 years. I retired from the Railways in the year 2002. My income is as follows: Pension for the financial year 2011-12: Rs 4,00,440, Interest on FDR SBI Bank: Rs 5,196, Allahabad Bank: Rs 22,785, Interest on NSCs: Rs 4,315. I got knees of my wife operated in the year 2008 from a private hospital at Jalandhar and spent Rs 2,51,686 on her treatment. I applied for the reimbursement of medical expenses from the Railways, but the Railways has refused to reimburse. I then went to CAT, Chandigarh, where the judge gave a favourable judgment and I received Rs 1,70,000 as per the rules of Railways. I have to file income tax return for the assessment year 2012-13 after payment of income tax. So far, tax deducted at source by SBI Bank is Rs 5,196 and advance tax paid is Rs 3,000. I want to know if the reimbursement amount of Rs 1,70,000 is a taxable or not. — AS Jassal A. According to the provisions of the Act, any sum paid by the employer in respect of any expenditure incurred by the employee on his medical treatment or treatment of any member of his family in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees would not be treated as a taxable perquisite. You have not indicated whether the surgery was undertaken in a hospital approved by the Government. In case the amount of Rs 1,70,000 reimbursed to you by Railways represents the amount paid for treatment of your wife in an approved hospital as referred to hereinabove, the same would not be taxable as perquisite in your hands. Q. My son worked in a reputed company for some time, but he was not paid his salary due to some internal issues of the company. Later on he was relieved of his duties and he got a new job in another company. As he was checking his TDS status on the net, he found his ex-employer having deposited an amount of Rs 17,500 as TDS and paying salary of Rs 1,41,000 & 34,000 against his Permanent Account Number. It is worth mentioning here that not even a single rupee has been received by him. He has been continuously demanding his salary for the period he worked. We understand that it is a clear case of fraud with my son and also with the income tax authorities. Please guide how this issue can be resolved. — Jatinder Singh A. According to the provisions of the Income-tax 1961 (The Act), tax is required to be deducted from salary at the time of payment of salary. It seems the company has made a provision in its books of account regarding salary payable to your son and deposited the amount of tax on the amount of salary payable to him. Your son can take a deduction for the amount of tax deducted at source provided he reflects the salary income of Rs 1,41,000 & 34,000 in his return of income. He should keep on making efforts for recovering the amount of salary due to him from his ex-employer. In case his ex-employer does not pay the salary, he may have to take a legal action for the recovery of the salary due to him. Q. I am working as a programme coordinator with an educational non-profit NGO for two states and getting honorarium of Rs 5-6 lakh besides my pension of Rs 2 lakh being received from my employer. I have to incur expenses towards coordination activities in the form of tour, travel, correspondence, printing (computer), medals, trophies cash prizes to students, teachers, schools in district- level awareness functions etc. Please advise me the extent of deductions allowed on such honorarium besides usual deductions as permissible under the Income-tax Act. I am a senior citizen and physically handicapped (60%). — BN Sharma A. Section 57 of the Act provides that the income chargeable under the head “Income from other sources” shall be computed after allowing deduction in respect of expenditure (not being in the nature of capital expenditure) laid down or expended wholly and exclusively for the purpose of earning such income. You can, therefore, claim deduction in respect of an expenditure which fulfils the above conditions. Please note any claim for expenditure should be duly supported by an evidence for incurring such expenditure. Q. I am 73 years old and getting pension. I have been filing income tax return regularly. My queries are as under: a) I want to open an PPF account with my son at No.2 in a bank. What will be the lock-in period? b) If I deposit Rs 1,00,000 every financial year out of my savings, can I get rebate of Rs 1,00,000 u/s 80C. c) If I die before the completion of lock-in period, can my son at No.2 draw the whole amount from PPF before the expiry of lock-in period? — SK Bharadwaj A. a) A PPF account can be opened in the name of an individual. The scheme with regard to PPF does not provide for the opening of an account in joint names. There is a lock-in period of five years after which you can withdraw 50% of the amount that stood to your ceredit at the end of the fourth year, immediately preceding the year of withdrawal or at the end of preceding year, whichever of the two is lower. b) You will be able to get a deduction of Rs 1,00,000 under Section 80C of the Act in case an amount of Rs 1,00,000 is deposited in PPF account during the financial year in respect of which deduction is claimed. c) It will be advisable to make a nomination in favour of your son who will be able to receive the amount standing to your credit in the event of your death.
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Savings Bank Account
Undoubtedly these measures have benefited host of Indian households, as around 85% of the savings accounts are maintained by households only. These are likely to benefit more of rural populace as the investment avenues available to rural households are limited as compared to urban populace. The share of rural populace in the savings bank accounts is around 36% of the overall savings bank accounts. Interest on a daily basis Technology has changed not only the way we live, but also the way we bank. So I would like you to recollect those "good old" days when computers were not so prevalent and it was difficult for the banks to calculate interest on the savings bank account on day-to-day basis. That is why banks used to pay interest on the minimum balance lying in your bank account between 10th and end of the month. In such cases when you parked huge sums in your savings bank account and if the money was used even for a single day during the month, then you would lose the interest for the whole month. Since savings bank accounts are maintained primarily to run your household expenses, the balance lying in the bank account effectively goes to minimum on the last day of the month for majority of the account holders. This way almost all account holders were deprived of their legitimate due. The reason for following this method of providing interest on savings bank account was the practical difficulty in manually calculating the interest on a daily basis for thousands of bank accounts for each branch of the bank. Owing to computerisation process undertaken by the banks on a massive scale, the decision of calculating interest on a daily basis came into force with effect from April 1, 2010. Now that entire banking system is well-equipped to make it happen, computing the interest on these thousands of accounts with the help of a click of a button has become quite feasible. This effectively ensured that you get interest of each penny you keep in the bank. Deregulation of interest Another landmark decision which led to the significant change in your savings bank account came with the RBI's announcement of deregulation of interest on savings bank deposit account during monetary policy announcement on October 25, 2011. So what this deregulation meant? The banks, which were mandated to pay an interest of 4% on your savings account balances calculated on daily balance after the directions of RBI as discussed above, were free to pay any rate of interest on the savings bank accounts. This resulted in competition among the banks and especially among the new private banks for saving deposits. As a fallout of deregulation of interest rates, many banks have increased their rate of interest. Prominent among them is Yes Bank which is offering a rate of interest of 7% on its savings bank account. The other is Kotak Bank which is offering an interest rate of 6% on the balances above Rs 1 lakh. So if your bank has increased the rate of interest to 6% effectively, you will get 50% more interest on the same amount of deposits. This way we see that it has benefited more of those people who used the savings bank account for earning interest rather than parking the money for meeting the household expenses. No TDS on interest Only a few people are aware that interest on a savings bank deposit account is not subject to any tax deduction at source irrespective of the amount of interest you earn. The ability to receive the income without deduction of tax at source plays a prominent role when one makes his/her investment decision. This provision is very helpful for the persons who are non-taxpayers as their income is not taxable. Rebate on interest The attractiveness of savings bank account got more magnified with the budget proposal of allowing deduction up to Rs 10,000 to individual and HUF from their taxable income. So now the interest up to Rs 10,000 becomes tax-free. Effectively, savings bank deposit interest does not exceed this amount for an average individual during the year. So in case average balance maintained by you with your bank has been around Rs 1.67 Lakh or lower during the whole year, the entire interest earned by you on such saving bank account will be exempt. Effectively, it will yield you 8.57% interest if calculated on pre-tax basis for the person in the highest tax slab of 30%. Change in the method of calculating interest accompanied by these two measures - deregulation of interest rates and deduction up to Rs 10,000 - makes it a better investment preposition for the people who are looking for both - liquidity and convenience. The writer is CFO, Apnapaisa.com. The views expressed are his own. |
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Markets expected to remain volatile
Last week saw Infosys and Friday, the 13th April, spooking the markets. This week it was Infosys futures and then Nifty futures which caught people by surprise. In the morning on the NSE, Infosys futures were sold till Rs 1,950 against the ruling price of Rs 2,400. This happened around 10.40 am. In the afternoon around 2.19 pm, the Nifty futures sold off and touched a low of 5,000 against the then prevailing value of 5,330. In the case of Infosys, the stock recovered instantly while in the case of Nifty, the damage done saw recovery but the markets ended weak and had lost the momentum. The week saw gains initially on expectation by the RBI Governor and then on him actually announcing a repo rate cut of 50 basis points which was highly unexpected. The markets cooled off and gave up some gains on account of the weakness one saw on Friday. The week closed with gains all round and the BSE Sensex gained 279.33 points or 1.63% to close at 17,373.84 points. The NSE Nifty gained 83.40 points or 1.60% to close at 5,290.85 points. The broader indices like the BSE500, BSE200 and BSE100 gained 1.31%, 1.35% and 1.38% respectively while the BSE Midcap gained 1.26% and the BSE Smallcap gained 1.49%. Among the other indices were the BSE Auto which gained 5.88%, BSE Metal 3.33% and BSE FMCG up 2.98%. On the losing side was BSE Oil which was down 0.47%. In individual stocks, Tata Motors gained 9.55%, Heromotocop was up 6.32% while Maruti Suzuki gained 5.14%, Coal India up 7.34% and Tata Steel up 4.59%. BHEL lost 4.72% while IVRCL, which is witnessing a takeover battle, lost 15.13% after it said it would not increase its stake further. The week was action packed with RBI announcing an unexpected repo rate cut of 50 basis points. Friday was action packed with these two freak trades or wrongly punched trades or orders where the intention of the order was to create panic. The issue needs to be investigated because such freak trades cannot happen with such alarming frequency. The Indian rupee lost over 1% and closed weaker at Rs 52.08. FIIs were net buyers of Rs 368 crore while domestic institutions bought stock worth Rs 391 crore. Reliance announced results where the core income and profits are under severe pressure or strain while income from cash on the books has increased significantly and is now over 50% of the total profits. This share has closed weak and lost Rs 20 or 2.66% to close at Rs 731 for the week. The week ahead has plenty of action and without doubt will be volatile. Thursday, the April 26, will see the expiry of the April series of futures and the previous month's expiry was at 5,178.85 which is a good 112 points lower than the current level. Result season has begun and some signs of strain and cost pressure are visible in the results declared so far. It is likely that the stress would increase as more and more companies declare results. There is a negative bias for beginning of the week ahead and this bias is likely to turn positive mid-week or towards the end of the week. The BSE Sensex has support at 17,230, then at 17,079, then at 16,941, then at 16,828 and finally at 16,559 points. It has resistance at 17,518, then at 17,599, then at 17,687, then at 17,807 and finally at 17,995 points. The NSE Nifty has support at 5,245, then at 5,202, then at 5,154, then at 5,076 and finally at 5,043 points. It has resistance at 5,336, then at 5,361, then at 5,426, then at 5,499 and finally at 5,519 points. The writer is founder of KRIS, an investment advisory firm. The views expressed are his own. Key pointers l
Benchmark indices edged higher buoyed after the RBI repo rate cut by a sharper-than-expected 50 basis points to give a boost to flagging economic growth l
The market gained in four out of five trading sessions in the week gone by. Auto stocks were in the limelight. The BSE Sensex gained 279.33 points or 1.63% to settle 17,373.84 for the week ended April 20. From 30-share Sensex pack, 24 stocks rose and six stocks declined. Reliance Industries (RIL) shed 2.64% on expectations of weak Q4 results. The 50-stock S&P CNX Nifty gained 83.40 points or 1.6% to settle at 5,290.85 l
In the coming week, stock markets are expected to remain volatile as traders roll over positions from the near-month April 2012 series to May 2012 series. The April 2012 derivatives contracts expire on Thursday (April 26) l
Focus will continue on corporate earning guidance to gauge the earnings outlook. TCS, Sesa Goa, Wipro, Sterlite Industries India, ICICI Bank, Axis Bank, Jindal Steel & Power Siemens and Maruti Suzuki will announce their quarterly earning in the coming week. |
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Washington, April 22
Washington, April 22
Of late your savings bank account has become little more attractive to park your temporary surplus funds, owing to the cumulative effect of the steps taken by the government and RBI. Let us discuss what are these steps that have made savings bank account a worthwhile avenue to park your funds.
