B U S I N E S S

US economy adds 195k jobs, unemployment rate 7.6%
Washington, July 6
The US employers added a robust 1,95,000 jobs in June and many more in April and May than previously thought. The job growth suggests a stronger economy and means the Federal Reserve could slow its bond purchases as early as September. The unemployment rate remained 7.6 per cent because more people started looking for jobs - a healthy sign - and some didn't find them. The government doesn't count people as unemployed unless they're looking for work.

Unilever ups stake in HUL for Rs 19,180 cr, but misses target
Mumbai, July 6
Unilever has failed to meet its buyback target in Hindustan Unilever (HUL), raising its stake in the Indian arm to 67.3 per cent for Rs 19,180 crore - short of the intended 75 per cent - at the end of the open offer period which closed on Thursday. The Anglo-Dutch FMCG giant could mop up only 14.8 per cent of the targeted 22.58 per cent stake hike in the domestic subsidiary. At the offer price of Rs 600 per share, this works out to be worth Rs 19,180 crore, at an average price of Rs 601.40 a share, the London-based consumer goods major said in a statement issued from London.

India seeks US investment in power sector
Washington, July 6
India's Minister of State for Power Jyotiraditya Scindia sees great potential for US investments and co-operation in the Indian power sector. Potential areas of such co-operation include transmission technologies, development of large scale hydro power, supercritical technology development for efficient energy production, smart grids and energy efficiency improvement programmes, he said.

investor guidance
No tax on monetary gift to parents
Q: I have a small apartment on the outskirts of Mumbai which I have let out for a rent of Rs 11,000 pm. I have no other income in India. Would I have to pay any tax on this income in India? Would the tax be payable if I were to gift the rental income to my retired parents who live in India? Would they have to pay tax on this gifted amount?

US economy adds 195k jobs, unemployment rate 7.6%

Washington, July 6
The US employers added a robust 1,95,000 jobs in June and many more in April and May than previously thought. The job growth suggests a stronger economy and means the Federal Reserve could slow its bond purchases as early as September.

The unemployment rate remained 7.6 per cent because more people started looking for jobs - a healthy sign - and some didn't find them. The government doesn't count people as unemployed unless they're looking for work.

The Labour Department's report on Friday showed that the US job market is showing surprising resilience in the face of tax increases, federal spending cuts and economic weakness overseas. Employers have added an average 2,02,000 jobs for the past six months, up from 1,80,000 in the previous six months.

June's job gain was fuelled by consumer spending and the housing recovery. Consumer confidence has reached a 5-year high and is helping drive up sales of homes and cars. Hiring was especially strong in June among retailers, hotels, restaurants, construction companies and financial services firms.

"The numbers that we're seeing are more sustainable than we thought," said Paul Edelstein, an economist at IHS Global Insight, a forecasting firm. "We're seeing better job numbers, the stock market is increasing and home prices are rising."

Pay also rose sharply last month and is outpacing inflation. Average hourly pay rose 10 cents in June to $24.01. Over the past 12 months, it's risen 2.2 per cent. Over the same period, consumer prices have increased 1.4 per cent.

Stocks rose sharply in mid-afternoon trading. The Dow Jones industrial average was up about 133 points. And the yield on the 10-year Treasury note jumped from 2.56 per cent to 2.72 per cent, its highest level since August 2011. That's a sign that investors think the economy is improving.

The willingness of consumers to keep spending has benefited Carlisle Wide Plank Floors, which makes hardwood flooring used in stores, restaurants and hotels. CEO Michael Stanek said orders jumped 30 per cent in the first quarter compared with a year earlier.

Friday's report showed the economy added 70,000 more jobs in April and May than the government had previously estimated - 50,000 in April and 20,000 in May. Further job growth could lower unemployment and help the economy rebound after a weak start this year. — AP

Unilever ups stake in HUL for Rs 19,180 cr, but misses target

Mumbai, July 6
Unilever has failed to meet its buyback target in Hindustan Unilever (HUL), raising its stake in the Indian arm to 67.3 per cent for Rs 19,180 crore - short of the intended 75 per cent - at the end of the open offer period which closed on Thursday.

The Anglo-Dutch FMCG giant could mop up only 14.8 per cent of the targeted 22.58 per cent stake hike in the domestic subsidiary. At the offer price of Rs 600 per share, this works out to be worth Rs 19,180 crore, at an average price of Rs 601.40 a share, the London-based consumer goods major said in a statement issued from London.

HUL shareholders tendered only 3.2 crore shares, as against the target of 48.7 crore, worth $3.17 billion, or Rs 19,180 crore, during the offer that began on June 21, it said.

At 14.8 per cent, the success rate of the buyback programme was around 66 per cent. The original plan was to buy back 48.7 crore shares from HUL shareholders. The offer value was 37 times HUL's earnings before interest, taxes, depreciation and amortisation (Ebitda) at 
Rs 600 apiece.

According to analysts, investors held back from tendering shares as that would have entailed them paying a hefty 21 per cent in capital gains tax adjusted with a Government-provided index for inflation against a paltry 0.01 per cent security transaction tax if they sell in open market.

HUL shares rose 1.4 per cent to Rs 609.15 on Friday on the BSE after rallying to Rs 631.95, up 5.1 per cent, in morning session. — PTI

India seeks US investment in power sector

Washington, July 6
India's Minister of State for Power Jyotiraditya Scindia sees great potential for US investments and co-operation in the Indian power sector. Potential areas of such co-operation include transmission technologies, development of large scale hydro power, supercritical technology development for efficient energy production, smart grids and energy efficiency improvement programmes, he said.

Scindia, who was here on a short visit at the invitation of the Brookings Institution, said a $25 billion financial restructuring plan was aimed at improving the viability of the state power utilities.

He said thanks to various energy efficiency measures there had been a savings equivalent of 11,000 MW of avoided capacity in the past 5 years. This achievement was set to be surpassed with the target of 12GW for the next 5 years, he said. — PTI

investor guidance
No tax on monetary gift to parents
A.N. Shanbhag

Q: I have a small apartment on the outskirts of Mumbai which I have let out for a rent of Rs 11,000 pm. I have no other income in India. Would I have to pay any tax on this income in India? Would the tax be payable if I were to gift the rental income to my retired parents who live in India? Would they have to pay tax on this gifted amount?

— Firoz

A: 1. The tax rates for NRIs are not different from those applicable to Residents. Income up to INR 2,00,000 is not taxable. Since your income from rent would amount to Rs 1,32,000 only, there would be no tax payable on rent in India. Any monetary or non-monetary gifts made to parents are not taxable. There is no limit on the amount that can be gifted as well as the number of times it can be gifted.

Q: As per my knowledge, EPF (Employee Provident Fund) contribution by employer which is less than 12% is not to be included in the employee’s earnings for calculation of income tax. My query is with respect to NPS (New Pension System). I want to know whether the 10% contribution of employer’s share will be taxable as the employee’s income?

— Shantanu

A: Under Section 80CCD, contributions by the employee as well as the employer up to 10% of the salary of the employee (basic+DA) is deductible from his gross total income (which includes the employer’s contribution) within the overall limit of Rs 1 lakh in respect of contributions to schemes covered by Section 80C, 80CCC and 80CCD.

Q: My date of birth is 15.3.53 and I will be 60 in March 2013. From which year I will be able to avail of senior citizen status for income tax purposes. Will it be 2012-13 or 2013-14? The confusion is due to difference in calendar year and financial year and my birth date falls in March.

— Mitra

A: Section 80DDB defines a senior citizen as an individual who is 60 years of age or more at any time during the previous year. Consequently, one can claim the higher basic exemption limit applicable to a senior citizen in the same year even if the birthday was March 31. Even if your birth date falls in March, you will be a senior citizen for the entire FY 12-13 (Assessment Year 13-14).

Q: Are dividends received under arbitrage schemes of mutual funds tax free in the hands of investors?

— Harish

A: Arbitrage funds are normally equity-oriented. However, they are risk free since they take a reverse position to their equity exposure in the derivatives market. However, this depends upon the presence of arbitrage opportunities in the market. Since these funds cannot hold open equity positions, in the absence of arbitrage opportunities, the funds are invested in debt and money market instruments. Therefore, it is possible that in a given period, due to lack of suitable opportunities, the equity exposure of the fund is below 65% thereby making it a non equity-oriented fund. So the answer to your question would be while all dividends received are tax-free in the hands of the investors, if these are received from a non-equity fund, a dividend distribution tax is deductible at source whereas there is no dividend distribution tax payable by equity-oriented fund.