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FIIs buy Indian equities worth $11 bn this year
Biz Talk
Tax Advice
PSBs may seek time to comply with bulk deposit norms
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Aviation Notes
Spectrum auction guidelines: TDSAT rejects RCom plea
personal finance
Plan well before you step out for shopping
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FIIs buy Indian equities worth $11 bn this year
New Delhi, August 19 Market experts said foreign investors have factored in deficient monsoon, slowing economic growth and high interest rate regime, and are pinning hopes on the government's fresh initiatives on reforms. "With the government indicating a softer stance on the controversial General Anti-Avoidance Rules (GAAR) and retrospective taxation issues, many FIIs which had stayed away with the Indian equities for some time are once again coming back to India," a stock broker said. Destimoney Securities MD and CEO Sudip Bandhopadhyay said, "The huge FII inflows were not driven by the country's fundamentals, it’s mainly because of the global factors such as ECB and the US Federal Reserve. In India, there are some concerns like weak monsoon, slowing economic growth among others." During August 1-17, FIIs were gross buyers of shares worth Rs 26,363 crore, while they sold equities amounting to Rs 20,670 crore, translating into a net investment of Rs 5,692 crore ($1.02 billion), as per SEBI data. In addition, FIIs have infused Rs 708 crore in the debt market this month, taking the year-to-date investment to Rs 24,961 crore. FIIs poured in Rs 10,273 crore in the stock market last month after a pull out of Rs 1,957 crore in the April-June quarter. The BSE 30-stock index, Sensex, has gained over 14% so far in 2012 and this month alone it has risen 2.63%. It closed at 17,691.08 on Friday. The number of registered sub-accounts has risen to 6,366 as on August 17 from 6,278 at the end of last year, while the number of registered FIIs has fallen to 1,756 from 1,767 during the same period.— PTI |
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BSNL has adopted multi-pronged approach for growth
R K Upadhyay, who took over as the chairman and managing director of the ailing state-run telecom company BSNL in April last year, is hopeful of turning around the company. In an interview with Girja Shankar Kaura, he talks about his strategy to overcome the losses, increase revenue and venture into other areas to regain the lost ground. Q: You had taken the charge of the firm at a time when it has been on its decline. You probably have the toughest job on your hands. What is your strategy to put the firm back on the track? A: A multi-pronged strategy comprising performance management or improvement at all levels of various departments of the company may help the firm. This has facilitated procurement to field formations of essential items of store / material which was held up for quite some time. Many ongoing projects aimed at improvement and expansions of services to customers were expedited with focused attention and regular monitoring. Strict financial discipline in all activities has been enforced. Q: What about managing a large workforce and dealing with the wage bill which constitutes almost 60 per cent of the revenue out go? A: Redeployment of staff is being done from fixed line services to new roles such as marketing, sales, distribution, customer services etc. These roles are crucial in a competitive environment. Also, employees are being engaged in other important activities such as data centres, in the field of improving service quality etc. Further, with a view to rationalise the wage bill, BSNL has prepared a voluntary retirement scheme (VRS) for its employees and submitted the same to the government for its approval. Q: Are there any plans to implement the Sam Pitroda Committee report? A: The committee was set up by PM and it will submit its report to the the government. Internal panel of DOT under the chairmanship of member(S) further examined the committee's recommendations and provided government’s decisions to BSNL. The firm will implement the government’s decisions based on the committee’s report. Q: And if you do implement, then what kind of reaction are you expecting from the work force? A: Such decisions primarily pertains to improving operational efficiencies, getting more business and improving overall profitability. Most of the decisions except VRS are generally acceptable to the employees. The VRS proposal is still under government's consideration. Q: BSNL has not been able to add new lines since the past two-three years. What is your plan for capacity addition in the current fiscal? A: BSNL has added 12.68 million lines in 2009-10,13.52 million in 2010-11 and 3.3 million lines in 2011-12. Further, a tender of 15 million GSM lines has already been finalised to expand GSM capacity in 2012-13. Purchase orders against the said tender have been placed by various circles fo BSNL on the L1 bidder and the project rollout is under way. Q: Don’t you think that the BSNL has started late in capacity building process as other operators of the country have marched ahead with capacity enhancement? A: For the last three years, BSNL has attempted for procurement of GSM lines and floated the tender. The tenders were cancelled at various stages of tendering based on recommendations of various authorities. Q: In the absence of any capacity increase, what paln the company has made to increase its revenue? A: We have finalised a tender of 15 million GSM lines to expand GSM capacity in 2012-13. Purchase orders against the same have been placed by the BSNL’s circles on the L1 bidder. Q: Do you think that the lack of initatives taken by your predecessors is responsible for the mess which the BSNL is facing today? A: No comments. Q: What is store for the future ? How will BSNL be placed at the end of your tenure? A: BSNL has lot of intrinsic strength. It is very strong in its infrastructure and network reach. Coupled with this it has talented trained technical manpower. It’s a strategic resource of the government. With improved and efficient functioning, I see a great future for BSNL. It is already market leader in the broadband sector and soon it will scale up the ladder in other segments of the business as well.
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Over 10% employer’s contribution taxable
By S.C. Vasudeva Q. I am an assistant professor in a government aided college and have an Employees Provident Fund account. What is the income tax deduction on EPF? At present I am getting rebate only on my 10% share of the contribution, but what about the employer’s 10% share - is it also tax deductible? — Jaswant K. Jassal A. The query raised by you does not indicate that the provident fund to which contribution being made is a recognised one. Presuming that the same is a recognised PF, you are entitled to claim deduction under Section 80C of the Income Tax Act 1961 in respect of your contribution. You are not liable to pay any tax on employer’s contribution if you are in continuance service for five years or more. It may be added that contribution by an employer in excess of 12% of the salary of the employee is taxable in the hands of the employee. In your case, the contribution of the employer is 10% of the salary and therefore such contribution is not taxable. Q. Is there any procedure to get a PAN card cancelled, my younger brother got a PAN card under his friend’s name but by inserting his photograph and submitting fake documents, he received the card but later destroyed it. Can you guide as to what remedy is available in such a situation. The card is live on the income tax website. — Ashoo A. Your brother should write a letter to his Assessing Officer for the surrender of his Permanent Account Number. He should state clearly in the letter that PAN card has been destroyed inadvertently and the same is being surrendered. An acknowledgement with regard to the receipt of this letter should be obtained from him for the records. Q. My tax refunds for the AYs 2010-11 and 2011-12 were held up with CPC allegedly on account of address failure. I have made written as well as online complaints but to no effect. Suggest some ways to solve the issue. — KS Bakshi A. I hope you have inserted correct address in the records. It is a possibility that no reply to your response sheet is received on account of the incorrect address. You may also approach your tax officer for the grant of refund after the correction of your address. Q. My son is a software engineer in Chennai and got his income tax refund for 2004-2005. In the meantime, he went abroad and could not deposit the same in the account. The refund voucher became void. After that he submitted the same to the department for validation but till date we have not received any cheque from the department. We have sent them so many reminders but of no avail. We have the acknowledgement copy with us. Suggest, to whom we should approach in the matter? — Rakesh Ahluwalia A. You should approach the Ombudsman of the tax department. Presently, Prakash Chandra is the Ombudsman for the northern part of the country. You can approach him at Central Revenue Building, I P Estate, New Delhi-110002.
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PSBs may seek time to comply with bulk deposit norms
Mumbai, August 19 The Finance Ministry has directed banks to reduce their bulk deposits in order to improve profitability and sound asset-liability management, by end of this fiscal. PSBs like Punjab and Sind Bank, Corporation Bank and Indian Overseas Bank among others have bulk deposits of more than 15 % as of now. "Banks with higher bulk deposit can not reduce it to 15% during this period when deposit mobilisation is slow in the system," the source added. According to RBI data, while credit growth had grown 17.2% as of July 27, deposit growth was 13.8%. The deposit growth was lower than the RBI's projection of 16 % for the current financial year. To mobilise deposits, many PSBs, including Bank of Baroda and Central Bank of India, have increased deposit rates on long-term tenors. — PTI |
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Time to develop international connectivity in UP
By K.R. Wadhwaney No sooner the political scenario changed in Uttar Pradesh, the ambitious plan for an international airport at Greater Noida died a premature death. Now, the state’s chief minister, Akhilesh Yadav, has floated a proposal for the maintenance and upgradation of Lucknow and Varanasi airports. According to the plans submitted to the Minister of State for Civil Aviation Ajit Singh, the two airports would be soon given the status of international airports but CM Yadav wants that the frequency of international flights should be increased for the convenience of passengers. The new terminal has already been inaugurated but it will be getting a makeover with ultra-modern gadgets and equipment. The Varanasi airport, which lacks basic facilities, will be improved so that all Varanasi-bound flights can operate without any hindrance. The statistics show that in UP, which has 16.1 per cent population of the country, only two per cent of total flights operate and only 2.5 per cent people fly. The situation is poor and needs to be improved, according to aviation authorities. The health of the general aviation, particularly of helicopter sector, is as feeble, if not worse, as that of civil aviation. According to reports, there are many helipads in the country, but only nine of them are licensed by the directorate-general civil aviation (DGCA). Surprisingly, none of these helipad is operated by the government. The study shows that there is no coordination among four agencies-government, DGCA, private construction companies and associates of public-private-partners. As a result, helicopter sector continues to stay at bottom, although there a tremendous scope for expansion and improvement. If the helicopter sector wears a better look, the health of civil aviation will look brighter than it has been. Similarly, efforts made to improve basic infrastructure at metropolitan and major cities have resulted some positive changes but operators and officials still lack innovative ideas. Only if airline officials become service-minded, many of passengers’ woes will be sorted out.
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Spectrum auction guidelines: TDSAT rejects RCom plea
New Delhi, August 19 "The impugned guidelines ... In our opinion, being not final, cannot be held to be conclusive and binding on the parties hereto. We, therefore, are of the opinion that this petition is not maintainable at this stage ...," the TDSAT bench headed by its Chairman Justice S B Sinha said while dismissing RCom's petition. Anil Ambani-led Reliance group firm RCom in its petition has submitted that as per the DoT's circular of July 3, the government would allot two blocks of 1.25 Mhz to existing GSM operators in the proposed auction, while the CDMA players can bid for one only block. "This approach of the government is discriminatory and leads to non-level playing field among the similarly placed UAS licensees," RCom said in its petition, in which the firm had also made sectoral regulator TRAI a party. However, the Telecom tribunal TDSAT has asked the government to expeditiously dispose of two representations made by RCom on the guidelines. Moreover, the bench gave liberty to RCom to approach it in future if any cause of action arises in it. The two member tribunal was of opinion that guidelines issued by the government for the proposed spectrum auction were not final and the government may "modify terms and conditions at any point of time and before the commencement of auction process". Moreover, TDSAT observed that the Reliance group firm had already made representations before the government after issuance of the guidelines and its outcome is still pending. According to RCom, with only one block of 1.25 Mhz in 800 Mhz band the CDMA operators "will not be able to get even the license mandated 5Mhz of spectrum in various circles". — PTI |
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PPF — an evergreen retirement planning tool
Planning for retirement is important; one should start as soon as one begins working. But how? The Public Provident Fund, popularly known as PPF, has been one of the favourite instruments of investment since it was launched in 1968. It has been traditionally used as a means to accumulate money for meeting specific goals or for post-retirement life. Balwant Jain
Who can open a PPF account? Any resident Indian individual can open a PPF account. The account can also be opened in the name of a minor. Though with recent changes, a PPF account can no longer be opened in the name of an Hindu undivided family (HUF) but for income tax purposes an HUF can still contribute money to the account of any of its members and claim the tax benefit under Section 80C. For whom does it work? Those who are employed have to compulsorily contribute toward the employee provident fund (EPF) scheme, thus are able to create a reasonable corpus by the time they retire. However for self-employed, there is no such compulsory saving avenue to ensure accumulation of corpus at the time of retirement. PPF offers an excellent avenue for the people who are self-employed and do not have the avenues like employee provident fund scheme. Since the rate of interest on PPF account is now linked with 10 years' yield on government securities, one is insulated from the risk of tying oneself with fixed rate of interest. Now, the system of announcement of interest on yearly basis is helpful to investors as the investor is able to get the current rate of interest on all his accumulated deposits. In fixed interest rate era, you may decide not to contribute for a particular year but your accumulated balance will still get the lower rate of interest. Even for people who are employed, PPF provides an additional avenue for retirement corpus with in-built flexibility as you are not required to invest a fixed sum of money month after month unlike in employee provident fund where the amount of contribution is fixed. In the case of PPF, what you are required to contribute minimum is Rs 500 every year subject to maximum of Rs 100,000 every year. Thus in the period of good liquidity, one can contribute higher sums and vice versa. For whom it does not work? Since the rate of interest on a PPF account is fixed, and is risk free, it may not suit the persons who want higher returns and are willing to take higher risks also. For such persons either taking exposure in equity through NPS or investment in mutual funds through systematic investment plan offers better alternative as the returns on equity in very long-term have outperformed the returns provided by fixed interest rate instruments. What if DTC comes into effect? The proposed direct tax code (DTC) under clause 69 provides for deduction of Rs 1 lakh in only limited avenues like employee provident fund, gratuity scheme, superannuation fund, national pension system and public provident fund scheme. If we observe closely, the items which will qualify under clause 69 are long-term in nature and practically cover avenues which are suitable for retirement planning. This deduction will only be available to individuals only as against benefit of present Section 80 C which is available to HUF also presently. As far as EPF, gratuity fund or superannuation funds are concerned, these are not available for self-employed people and thus leaving this assessee with NPS and PPF only. Here also PPF scores over NPS because of two reasons - firstly, PPF is more flexible as compared to NPS, as in case of NPS you cannot normally withdraw the money before completion of 60 years of age and then you have to mandatorily withdraw at least amount equal to 40% of the corpus to buy an annuity. In case of PPF, one can partly withdraw the money even before completion of its tenure which is generally of 15 years. Moreover, the age of 60 years is not at all relevant in case of PPF. So, one can keep the money in PPF account as long as you want. There is no upper age limit whereby you have to withdraw your balance in PPF account. Even after completion of initial period of 15 years, you can renew the account in block of five years at a time for any number of times. The second reason for PPF scoring over NPS as retirement instrument is that in case of 40% of accumulated balance in NPS, you have to purchase an annuity and the pension received from such annuity is taxable in the year in which it is received thus making it less tax efficient in your retirement era. Whereas the full corpus accumulated in the PPF account is tax-free on its maturity thus giving you flexibility to invest the corpus in investment avenues which may give you better returns than those you can expect from an annuity. How wonderful PPF as an instrument can be for retirement planning can be appreciated with the following example. Let's take a person who joins his first job at the age of 25 and contributes Rs 1 lakh at the end of every year. Since life expectancy has significantly gone up, I presume he would be retiring on completing 65 years. With the interest rate presumed to be 8.8% for the entire tenure of his PPF account, can you guess how much money he will get from his account when he retires? Hold your breath - it's Rs 32.03 crore! This is the magic of three factors combined - investing early, tax-free returns and the power of compounding. Open your PPF account today if you haven't opened it yet! The author is chief financial officer of Apnapaisa.com, an online insurance price & features comparison engine for loans and investments. The views expressed are his own.
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Plan well before you step out for shopping
Monsoon sales are all over the city. So what should a shopaholic person like me do? How to avoid such temptations which can make my bank accounts lighter and my credit card bills heavier. So why all of sudden this enlightenment that “Money” is not meant to be splurged on impulse shopping?
How to avoid impulse buying? Before stepping out for your shopping sojourn - make a list which you should follow to a large extent. By planning well and sticking to the shopping list (of course with 10-20% variations are allowed) you’ll visit only those stores from where you have to make a purchase. This will dramatically bring your expense down. We have noticed that even the most disciplined savers find themselves buying unnecessary items when they are out for shopping. If you do need to shop, take along a friend who will help you control yours spending. This will help you avoid impulse buys and focus on what you really need. Well all this activity is to control impulse buying. But what precautions we should take while shopping? Sensible precautions for
shopping Here, my advice would be that you must carry sufficient cash rather than credit cards of high credit limit. This will keep your shopping within your budget and prevent you from spending more than you want. Don’t even think that if I will need more cash, I will withdraw from the ATM in the mall. On the contrary think that I have to manage my shopping in this amount only. Shopping- A retail therapy Understandably, the shopping is very much a reflection of our personality and not only social and financial implications but also of psychological ones. It is a stress-buster, ego-booster and personality enhancer. So much so that it is therapeutic too that is why a term retail therapy is dedicated to it. If you do it judiciously, it will have magical effect but if you don’t it can have very drastic effect on your finances. Set goals before splurging Write down your goals on a sheet of paper and always keep those in mind before going for shopping. When you’re out shopping, if you have the urge to buy, remember those set goals and ask yourself whether that purchase will help you meet your goals or not. It’s always best to have a blueprint of where your money is going, instead you can invest this money for your better future. Can we do it with our limited resources I mean taking money out of our monthly budget?, asked one of my friends. I quipped, “Why not? You can invest in term deposits or popularly known as fixed deposits, recurring deposits, SIP- debt mutual funds to meet your short term goals whereas for long-term goals, you can invest in PPF, SIP - equity mutual funds and gold funds. Once these dedicated investments are in place, you can splurge on your long cherished watches, shoes, bags, dresses and what not as you have earmarked your money to take care of your future. They were convinced that they will have more money in hand and more peace of mind when they come for their next shopping sojourn. They moved on with the promise to come up with their goals and investment amount they want to dedicate to the goals. Happy smart shopping! The writer is Chief Editor, Apnapaisa, an online insurance price & features comparison engine for loans and investments. The views expressed are her own. |
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Foreign Institutional Investors (FIIs) have infused a net amount of $1.02 billion (about Rs 5,692 crore) in August so far, taking the total for this year to $11.4 billion (Rs 57,958 crore) in Indian equities, according to the Securities and Exchange Board of India (SEBI).
In the good old days, the rate of interest paid on Public Provident Fund was unbelievable, i.e., 12% and that too tax-free. In this article I will try to answer all relevant questions on PPF as a retirement planning avenue.
The point is not that you don’t indulge in shopping but how to shop in such a way so that you don’t land in a financial mess in future. Here, I would like to share information about a session which I took for my shopaholic friends in my neighbourhood mall recently. I started explaining them that impulse buying is an unplanned decision to buy a product, made just before a purchase. If we go by the research findings which suggest that emotions and feelings play a decisive role in making an impulse purchase and marketers and retailers exploit these impulses. Not only this, has your normal decision gone out of window for window shopping ever?