B U S I N E S S

SEBI sets 1-yr target for probes, warns manipulators of action
Mumbai, October 21
Capital markets regulator Securities & Exchange Board of India has set a one-year target to complete investigations, saying that the long-drawn probe processes are a thing of past and manipulators cannot escape the long arm of the law.

Some big names skip 2G auction due to high base price
New Delhi, October 21
As expected the forthcoming 2G spectrum auction has received a lukewarm response from the telecom operators of the country who have cited the high base price as the reason for staying away.

Kingfisher lenders say recovery last option
Mumbai, October 21
Lenders to Kingfisher Airlines, whose combined exposure of nearly Rs 7,500 crore is at risk, have said they will go in for recovery measures only as the last resort and expressed hope that its promoters will be able to find an investor and resume operations.

Investor Guidance
Gift from spouse’s sibling tax-free
Q: I have given some money to my brother as a loan on 12% annual interest. Now, I want to gift Rs 4 to Rs 5 lakh to his wife. Will the interest received when she invests this gifted amount be treated as her income or will it be clubbed with my income for tax purposes? Will this be objected to by the tax department?

biz talk
Havells to beef up overseas ops; R&D remains priority
Leading electrical and home appliances’ manufacturer Havells India, with total revenues of Rs 6,500 crore, is registering itself amongst the top five lighting companies in the world. The firm has acquired world-renowned lighting company, Sylvania. Havells’ global network constitutes of 7,000 professionals across 91 branches and representative offices in over 50 countries.
                                   Qimat Rai Gupta, Havells India chairman & MD

 

personal finance Working women not only earners, tax savers too! Chains do not hold a marriage together. It is threads, hundreds of tiny threads, which sew people together through the years."- Simone Signoret The changing face of savings & investments in India A survey by Market Xcel has found that investors in small towns in India are more open to modern avenues of savings and investments. To take just one case, Amit Nandwani, a shopkeeper in Agra, invests around Rs 6,000 every month in Systematic Investment Plans (SIPs). However, his friends, all of whom are self-employed, choose to rely on traditional avenues of savings and investments such as post office small savings schemes, National Savings Certificates and insurance polices.

SEBI sets 1-yr target for probes, warns manipulators of action

Some big names skip 2G auction due to high base price
Tribune News Service

New Delhi, October 21
As expected the forthcoming 2G spectrum auction has received a lukewarm response from the telecom operators of the country who have cited the high base price as the reason for staying away.

Companies like Reliance Communications (RCom), SSTL, Aircel and Reliance Industries all chose not to put in any applications on the last day of filing applications on Saturday with telecom industry bodies saying operators saw no "business case" in buying airwaves at such a high price.

"We’ve always maintained that there’ll be muted demand for the auction process as the reserve price set by the government is too high," Rajan Mathews, director general of GSM operators’ body COAI, said.

"There is no business case for companies to participate in auction with such a high reserve price," the other cellular operators’ body, AUSPI, said.

Kingfisher lenders say recovery last option

Investor Guidance
Gift from spouse’s sibling tax-free
By A.N. Shanbhag

Q: I have given some money to my brother as a loan on 12% annual interest. Now, I want to gift Rs 4 to Rs 5 lakh to his wife. Will the interest received when she invests this gifted amount be treated as her income or will it be clubbed with my income for tax purposes? Will this be objected to by the tax department?

— Madhavan

A: According to Section 56 of the Income Tax Act, 1961 the gift received by a person from his or her spouse’s sister or brother will be tax-free. Secondly, the interest earned by such spouse would not be subject to clubbing. In other words, the interest will be taxable in your sister-in-law’s name only and not in your hands. As long as the gift is made legitimately and routed through normal banking channels and it is out of natural love and affection and not as a means of evading tax, the income tax department will not have any objection.

Q: I am a nonresident Indian living in Canada. I have inherited a house in Mumbai from my parents. I am in a process of selling it. I intend to purchase 54EC Rural Electrification Corp Bonds at Rs 50 lakh for saving capital gains tax. I need a (non-Portfolio Investment Scheme) NRO demat account to have these bonds deposited. I contacted many banks or brokerage for this, but they offer only PIS or trading accounts. My bank will not provide above facility to NRIs in Canada. Where can I open a (non-PIS) NRO demat account?

— Vijay Gandhi

A: The Rural Electrification Corp bonds can be purchased in physical form also without depositing money in a demat account. The investor can instead hold the physical bond certificate. Since you have six months to invest from the date of sale, we would suggest investing in the bonds through the physical mode. The Reserve Bank of India does not prohibit nonresident Indians from having a non-Portfolio Investment Scheme demat account. If any bank or institution doesn’t offer this facility, then they should accept the credit of bonds in the PIS demat itself.

biz talk
Havells to beef up overseas ops; R&D remains priority

personal finance
Working women not only earners, tax savers too!
Considering the present high cost of living and raising kids, more and more women are entering the workforce to augment the family finances. There are certain tax benefits whereby a family's income can be increased if the wife is also working
Balwant Jain

Chains do not hold a marriage together. It is threads, hundreds of tiny threads, which sew people together through the years."- Simone Signoret

In these changing times when the role of money has become increasingly significant and women in the house, being educated, are sharing the family's financial burden with élan, one such important thread is - money!

As we know marriage is a vehicle with two wheels and both wheels should move in sync for smooth running of the family. This is increasingly becoming clear in respect of monetary respect as the man and woman of the house are bearing equal weight of monetary responsibilities. Considering the present high cost of living, housing and bringing up and educating the children, more and more women are entering the workforce to augment the resources of the family. Though the Income Tax Act, 1961 earlier used to grant a higher exemption limit for female taxpayers, this is no longer available now. However, there are certain tax benefits by way of which a family can have enhanced benefits if the wife is also working.

Let us discuss some of the important provisions here.

Education expenses

According to the provisions of Section 80C of the Income Tax Act a person can claim deduction in respect of education expenses incurred in any university, college, school or educational institution situated in India for full-time education of his child up to an amount of Rs 100,000 a year along with other eligible items like PPF, ULIPs, Provident Fund, etc. However this deduction is available in respect of two children only. Thus in case if there are more than two children, the working wife can claim the education expenses for up to more two more children as the restriction of two children is per assessee and not per family. Even in cases where family does not have more than two children but education expenses per year exceed Rs 100,000 per year, then these expenses can be bifurcated between husband and wife so as to maintain the limit of Rs 1 lakh.

Medical Insurance

According to Section 80D of the Act an assessee can claim deduction up to Rs 15,000 for any amount paid toward medical insurance premium for self and family. However taking into account the actual cost of taking health insurance, the limit of Rs 15,000 is not sufficient enough to cover the whole family. Moreover this limit of Rs 15,000 includes a deduction of Rs 5,000 available for preventive health checkups, the effective limit available for health insurance is only Rs 10,000 for those availing of the benefit of the checkups. So a health insurance premium paid in excess of these limits cannot be claimed under Section 80D in most of the cases where husband is the sole taxpayer. However in case the wife is also working, the policy can be purchased and premium be paid in such a way so as to ensure that both husband and wife are able to claim the fullest benefits of Section 80D and ensure that the family has adequate health insurance cover.

For home loan repayment

According to Section 80C, an assessee can claim deduction on account of many items which are almost mandatory in nature like life insurance premium, Provident Fund and repayment of housing loans. Since property prices have gone up substantially, the principal repayment itself in most of the cases is above Rs 100,000. So effectively most of the home loan borrowers are not able to claim the full benefit of home loan repayment under Section 80C. In such cases if the husband is only one working, the benefit in respect of such overflowing items is lost. However in case wife is also working, the amount of repayment can be claimed by both of them if they are joint owners of the property and co-borrower of the property.

Benefits in respect of house property

According to the present scheme of taxation of income from house, a person is allowed to have one property for self occupation and thus need not pay any tax on that. However in case one owns and uses more than one property, the owner has to offer for tax notional rent for taxation another property though he has not received any rent. In case wife is also earning the other property can be had in her name and thus between husband and wife two properties can be treated as self-occupied without having to offer any amount of notional rent for taxation.

Likewise, under the wealth tax laws one residential house is exempt from payment of wealth tax. So in case an assessee owns and occupies more than one residential house property, he has to pay wealth tax on the value of other houses except the one self-occupied house property as per the valuation formulae of the Wealth Tax Act.

So from the above discussion it become clear that though presently there are no separate tax benefits available for working women, however a working women can still take benefit of existing provisions of tax laws to minimize overall tax liability of the family as a unit.

The author is chief financial officer at Apnapaisa.com, an online marketplace for loans and investments. The views expressed in this article are his own

The changing face of savings & investments in India
Ashwani Arora

A survey by Market Xcel has found that investors in small towns in India are more open to modern avenues of savings and investments. To take just one case, Amit Nandwani, a shopkeeper in Agra, invests around Rs 6,000 every month in Systematic Investment Plans (SIPs). However, his friends, all of whom are self-employed, choose to rely on traditional avenues of savings and investments such as post office small savings schemes, National Savings Certificates and insurance polices.

Rise of unconventional modes

According to the Association of Mutual Funds in India (AMFI), between September 2011 and March 2012 the proportion of assets contributed by tier-I, II and III cities and smaller towns in assets under management (AUM) of the Indian mutual funds industry increased 3.63 per cent to 28.88 per cent. In absolute terms, these regions contributed Rs 7,500 crore more to the industry's AUM. On the Bombay Stock Exchange the share of investors from cities such as Rajkot, Ahmedabad, Bangalore, Indore, Jaipur, Patna and Ludhiana has grown more than threefold, although on a smaller base.

Till recently, investors in emerging cities such as Agra, Vizag, Gauhati and Rajkot were focused on conventional modes of investing.

The Market Xcel Data Matrix survey found that unconventional modes are picking up fast. Although traditional life insurance and bank fixed deposits remain popular, 64% of the 3,000 respondents in 24 towns across India said they intend to invest in stocks and shares, 37% would like to invest in infrastructure bonds.

The mutual fund bug has also caught on to these towns and cities. About 40% of the equity-based mutual fund applications are from the non-metros. Interestingly, top five brokers in the country have over one-half of their clients outside the six metros, and Purulia, West Bengal and Hamirpur, Himachal Pradesh have more demat accounts than does Gurgaon, Haryana. The main reason for this shift from fixed income avenues and small saving instruments took place because the fallen returns look too low to take care of retirement needs. 55% of survey participants in north India said they intend to invest in stocks and debentures with 45% saying would like to invest in infrastructure bonds.

Tenure of investments

Though, Indians have strong desire to try out different investment options, the current level of investment is little. North Indians invest more in long-term options. Overall investors in such cities like to make small investments of less than Rs 50,000 in a year (66% of the survey participants). 37% spent more than Rs 100,000. In the north 46% of people invested less than Rs 50,000 in long-term options during the past one year.

Reasons for saving

"Family" is the key to making investment decisions among these investors. The amount invested is generally the surplus out of meeting family expenses and commitments. The study reflects there are multiple reasons that lead to savings decisions; be it arranging for inflation in future, to maintain standard of living post retirement, tax saving, protection for the self and family by buying insurance products, good rate of returns and safety of money or stability of returns.

Role of spouse in decision making

In north India 93% of the audience uses its own knowledge for decision making on financial investments. The spouse's opinion has a vital role in decision making. The same trend was observed across India.

Even amid the worsening economic scenario during 2011-2012, Indian investors from smaller cities showed confidence in investing. Small town investors understand the significance of making investments as much as large town dwellers. The definition of savings and investments seems identical and led by factors that revolve around secure future, way to fight inflation, insurance and maintaining a particular level of lifestyle. Clearly there is a huge scope for financial companies and advisors in these emerging towns.

The author is research head at Market Xcel Data Matrix. The views expressed in this article are his own

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