Mumbai, april 27
The government said 27 companies, including the local units of HSBC, Standard Chartered and Vodafone, underpaid taxes in the last fiscal year after they sold shares to their overseas arms too cheaply.

Finance Minister P. Chidambaram named the companies in a written reply on Friday to a lawmaker's question about which companies were in conflict with the tax department over transfer pricing issues.

Transfer pricing, or the value at which companies trade products, services, shares or assets between units across borders, is a regular part of doing business for a multinational company and influences tax liabilities.

The issue has been high on the political agenda in India and the country has stepped-up enforcement of tax collections and actions against global companies as it aims to make up for a revenue shortfall and head off a credit rating downgrade.

The tax department also made "transfer pricing adjustments" involving the local unit of Royal Dutch Shell, Chidambaram said. Shell's India arm filed a petition in the Bombay High Court on Wednesday challenging the claims by tax authorities that a share sale to its overseas parent in 2009 was undervalued by about Rs 152 billion.

British-based mobile phone giant Vodafone said in February it had received a fresh transfer pricing order in India over the issue of shares by a unit, adding to its tax woes in the country. It has said it would challenge the order.

Spokesmen for Vodafone, HSBC and Standard Chartered declined to comment.

India's top mobile operator Bharti Airtel and some units of the diversified Essar conglomerate, including Essar Power and Essar Investments, were also named by the minister in his statement.

India has targeted several multinational companies in recent years for tax audits on transfer-pricing, but over the past 12 months has widened the scope of the investigations, tax officials have said. — Reuters

New Delhi, April 27
Capital markets regulator Securities & Exchange Board of India may get greater powers to check money-pooling frauds by various entities across the country, as the government is considering a major overhaul of regulations governing such schemes.

The proposed critical amendments to the securities laws, would also involve the capital markets regulator getting direct powers for attachment of properties, search and seizure of assets and powers to seek information from any entity in relation to its probes against erring persons and entities.

The amendments could be made to a host of regulations, including the SEBI Act, the Securities Contracts (Regulation) Act and the Depositories Act, a senior official said. As a result, SEBI could be given powers for overall regulation and oversight of all kinds of money-pooling activities and the definition of collective investment schemes (CIS) would be expanded to include all kinds of activities involving collection of Rs 100 crore or more public money, the official added.

While CIS operations already come under SEBI's jurisdiction, many companies try to challenge the regulator's actions taking advantage of loopholes in the existing norms and on the grounds of multiplicity of regulators.

The official said SEBI has been given assurance by the government that the regulations would be amended soon. While proposals to these effects are being pursued by SEBI for almost four years now, a strong need to push with these changes has been felt in the recent months.

SEBI was earlier of the view that a separate regulator should be considered for all kinds of public money-pooling activities by nonlisted entities under a separate act. Alternatively, SEBI has been seeking amendment to the SEBI Act to widen the scope of CIS definition to include all money collection schemes.

According to the proposed changes, any pooling of funds under an investment scheme involving a collective amount of Rs 100 crore and above should be considered CIS activity, while SEBI would be empowered to specify the parameters for determining as to what constitutes pooling of funds from the public for the purpose of treating them as CIS operations. — PTI

Deal sternly with companies indulging in manipulative practises: SUPREME COURT to SEBI

The Supreme Court has asked SEBI to deal sternly with companies indulging in manipulative and deceptive practices to send a clear message that market abuse will not be tolerated in the country. “SEBI, the market regulator, has to deal sternly with companies and their directors indulging in manipulative and deceptive devices, insider trading, etc, or else they will be failing in their duty to promote orderly and healthy growth of the securities market,” the court said. The judgement assumes importance as it has come at a time when “chit-fund” companies and the Sahara group are making headlines for illegally collecting money from people by promising attractive returns. — PTI

In the income tax declaration form, how is one supposed to get the maximum rebate for a home loan? I have taken a loan of Rs 18 lakh for a 20-year tenure at 10.25% interest. What will I write as principal for claiming rebate in the form?
— M. Arora

It is presumed you have already taken possession of the house. Your EMI consists of two parts — interest and capital repayment. Interest is deductible up to a maximum limit of Rs 150,000 u/s 24 and, moreover, the capital repayment is deductible up to a maximum limit of Rs 1 lakh after aggregating it with other avenues under Sec. 80C. The FY2014 budget has proposed introduction of a new Sec. 80EE to grant an additional deduction of up to Rs 1 lakh to any individual provided: (i) The assessee does not own any residential house on the date of sanction of the loan; (ii) the loan should be taken from only a bank or housing finance firm; (iii) loan should have been sanctioned in FY2014; (iv) loan should not exceed Rs 25 lakh; (v) the value of the property should not exceed Rs 40 lakh; (vi) loan shall be for only acquiring a residential house. Sec. 24 permits borrowing for acquiring, constructing, repairing, renewing or reconstructing a property, even a commercial one; (vii) this is a one-time deduction available for FY13-14. However, where the interest payable for the year is less than Rs 1 lakh, the balance shall be allowed in the next fiscal; (viii) where any deduction is allowed under this section, it shall not be allowed in respect of such interest under any other ITA provisions for the same or any other year. If the loan was sanctioned in FY13, you are not eligible for this new concession.

I took out a bank loan for home repairs and claimed tax deduction under Sec. 80C of the Income Tax Act for the principal repayment. However, I have now been informed by my employer that I can't avail of this deduction for the current fiscal.
— Kevin

There has been no amendment in the tax laws on this issue. Sec. 80C always provided for deduction against payment by an individual or a “Hindu undivided family” for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied) the income from which is chargeable under ‘Income from House Property’ in respect of repayment of loans taken from some specified sources.

BRIEFLY

LONDON
HSBC cuts gold, silver price forecasts for 2013, 2014:HSBC lowered its gold forecast for this year and next on Friday, saying the recent tumble in prices for the yellow metal has dealt a severe blow to investor confidence, which may take many months to restore. The bank cut its 2013 gold price forecast to US $1,542 per ounce from $1,700 and the 2014 price outlook to $1,600 per ounce from $1,720. The bank, however, expects gold prices to stabilize after the recent rout as retail demand for gold lends support with rising jewelry and gold coin purchases from Asia. HSBC also cut its 2013 silver price forecast to $26 per ounce from $33 and the 2014 price outlook to $27 from $31 earlier. — Reuters

Mumbai
Stocks likely to consolidate ahead of RBI policy:The RBI's annual monetary policy review on Friday will be crucial for shares next week alongside key earnings of Hind Unilever, IDFC and Bharti Airtel. A Reuters poll shows 37 of 42 economists expect the central bank to cut the repo rate by 25 basis points on May 3. The RBI’s guidance on future policy stance will be key for direction in the near-term post the outcome. The Nifty is expected to move in a range of 5750-5950 ahead of the policy, dealers said. — Reuters