Service  Tax & Income Tax Consultants Bangalore, Accounting Services, Audit Firm in India.

Service Tax & Income Tax Consultants Bangalore, Accounting Services, Audit Firm in India.

Service Tax & Income Tax Consultants Bangalore, Accounting Services, Audit Firm in India.

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SEBI working on revised listing agreement norms : 18-04-2014


To promote good business practices, capital market watchdog SEBI is working on revised listing agreement norms that would include enhanced corporate governance provisions.

The board of Securities and Exchange Board of India (SEBI), in February this year, had approved new corporate governance norms that require companies to justify CEO salaries, put in place whistle—blower policies and have orderly succession plans.

Sebi’s Whole Time Member Prashant Saran today said the regulator is working on revised listing agreement for companies.

Noting that it is a detailed process, he said it was difficult to give a time line.

According to him, SEBI keeps on evolving guidelines and policy measures to put in place norms for better corporate governance.

He was participating at a conference organised by PHD Chamber of Commerce and Industry.

Under the new corporate governance norms, to be effective from October 1, listed companies require greater oversight of and by independent directors, greater checks on all related party transactions involving promoters and directors and limits on directorships and remuneration of board members.

Among others, the new norms, finalised after detailed consultations over draft regulations released in January 2013, seek to exclude ‘nominee directors’ from the definition of independent directors.

Other proposals include compulsory whistle blower mechanism, expanded role of audit committee, prohibition of stock options to independent directors and enhanced disclosure of remuneration policies.

Source : The Hindu

Finmin widens monitoring of NPAs at public sector banks to top 50 accounts : 18-04-2014


Stepping up pressure on public sector banks (PSBs) to bring down bad loans, the finance ministry has widened its monitoring of non-performing assets (NPA) from ‘top 30’ NPA accounts to ‘top 50’ for all state-owned lenders. The ministry has also asked lenders to submit an action-taken report on recovery for the ‘top 50′ NPA accounts as on December-end 2013.

In a communication to PSB chiefs, the new secretary of department of financial services (DFS), GS Sandhu, also sought a list of wilful defaulters and findings of prima facie diversion of funds by such borrowers.

The scope of supervision has been extended to the top 50 NPA accounts to get a better picture of the bad loan problem, official sources said. At June-end 2013, gross NPAs with the top 30 accounts of 26 PSBs were worth R63,671 crore, which is around 35% of their total gross NPAs of R1,82,829 crore.

Incidentally, the CBI is also scrutinising the top 30 cases of NPAs for the entire banking system as part of its efforts to find out any instances of criminality, including fund diversion. In the last quarterly meeting to review the performance of PSBs and financial institutions, finance minister P Chidambaram had expressed concerns over high NPAs in two segments — large corporates and small industries.

 The seriousness of the NPA problem was also captured by ratings agency Fitch. In a report released on Thursday, Fitch Ratings expressed concerns over stressed assets in India compared to other Asian emerging markets. Fitch said it “expects Indian banks’ asset quality to weaken further, with stressed assets (NPAs and restructured loans) to rise from 10% (at mid-2013) to around 15% during FY15 (by March 2015).”

“State banks are most affected and may need R3.8 lakh crore of new equity by 2019 to achieve full compliance with Basel rules, although delayed implementation has reduced near-term capital pressure,” it added.

In addition to bad loan recovery efforts on top 50 NPAs and the list of wilful defaulters, the DFS secretary also sought details of monitoring of projects by state-owned lenders in corporate credit after loan disbursement. He also wanted to know if the PSBs were maintaining a database of assets to which lending has been done and, if so, the details of it. This will form part of the ministry’s performance review of PSBs, following its concerns over rising NPAs and deteriorating asset quality, sources told FE.

The ministry had in October last year asked PSBs to set up a separate vertical headed by an officer of the rank of general manager for recovering money from bad loans.

Gross NPAs of PSBs had surged to 5.17% of their advances in December-end 2013 from 3.84% at March-end 2013 (and 4.18% in end-December 2012) while their restructured assets increased to 7.44% from 7.18% during the period. A harder look at the NPA data reveals that at December-end 2013, maximum NPAs were in the small and medium enterprises loan segment with 7.21% of advances while agriculture loan NPAs were at 5.99%. NPAs in the corporate loan segment were 5.28%. In retail loans, NPAs were 2.74% and, in real estate, they were 1.83%.

Data for last fiscal’s December quarter show that PSBs were able to bring down NPAs by just R60,426 crore, of which recoveries were only R18,933 crore while upgrades were to the tune of R21,988 crore. Write-offs stood at R19,505 crore.

Source : PTI

Rupee down 3 paise against dollar : 16-04-2014


The rupee declined by three paise to 60.26 against the US currency in morning trade on persistent dollar demand from banks and importers on the back of higher dollar in the overseas market.

 The rupee resumed lower at 60.30 per dollar as against the last closing level of 60.23 at the Interbank Foreign Exchange market. It eased further to 60.31 before quoting at 60.26 per dollar at 1030 hours (IST).

 The domestic unit hovered in a range of 60.25-60.31 per dollar during the morning trade.

 Renewed dollar demand from banks and importers in view of higher dollar in the international market mainly affected the rupee against the dollar, a forex dealer said.

Source : PTI

Rupee weakens to 60.29 on disappointing IIP data : 15-04-2014


The rupee opened weak by 12 paise at 60.29 per dollar against the previous close of 60.17 per dollar due to disappointing IIP numbers and a flat opening in the domestic equity market.

According to dealers, the dollar’s gains against other currencies overseas and increased demand for the American unit from importers also weighed on the rupee.

The rupee had lost 10 paise to close at 60.17 against the US currency on Friday.

Industrial production data, which was released after market hours on Friday, had once again slipped into the negative territory and contracted 1.9 per cent in February due to poor performance of manufacturing sector, especially capital goods.

Forex and money markets remained closed yesterday for “Ambedkdar Jayanti”.

Source : Business Line

States will not be treated as ‘subordinates’: Modi : 14-04-2014


If the National Democratic Alliance comes to power, it will ensure that the Prime Minister and Chief Ministers of all States will work as a team to take the country forward, according to BJP prime ministerial candidate Narendra Modi.

“All States will be equal partners. We will have a Team India concept,” he said, addressing an election rally in Chennai.

The Congress-led Government had failed to take States along with it. “States were treated as subordinates. Being a Chief Minister (Gujarat) of a State for four terms, I am aware of the problems the States are going through,” he said.

“The Centre will go shoulder-to-shoulder with States as a team for India’s future growth,” he said.

The NDA will keep in mind different problems of each State. Based on their needs, different development models will be adopted for the States. For instance, in Tamil Nadu, maritime trade can be developed, he said.

Modi said the 2014 election is unique. It is not a negative election but an election of hope, he said. Taking a dig on the two Dravidian parties — Dravida Munnetra Kazagama and All-India Anna Dravida Munnetra Kazhagam — Modi said both parties have wasted their time in trying to finish the other.

“They don’t care for the people. However, for the first time, there is a third power in the form of NDA alliance (seven party) that will change the fate of the State,” he said. Both parties have taken people for granted, he said.

For the first time, the NDA has formed a pre-poll alliance of 25 parties, he said.

‘Courtesy call’

Though speculations were rife that Narendra Modi would seek Rajnikanth’s support for the Lok Sabha polls, after a brief meeting here, both termed it as just a “courtesy call”.

Narendra Modi, who arrived at the Chennai airport at around 6 p.m. drove straight to Rajinikanth’s Poes Garden residence. The meeting lasted for a little over twenty minutes.

“We are good friends and well-wishers. When I was in the hospital, Modi used call me frequently to inquire about my health. I invited him for a cup of tea with me when he comes to Chennai, and that’s what he is here for,” Rajinikanth told his fans and media persons gathered in front of his house.

He said Modi is a capable administrator and a leader, and “I wish him all the best”.

Later, Modi said, “Rajinikanth is a good friend and I came to wish him on the eve of Tamil New Year.”

Source : Business Line

Indian rupee down 27 paise against US dollar : 11-04-2014


The Indian rupee fell by 27 paise to 60.34 against the US dollar in early trade today at the Interbank Foreign Exchange market on demand for the American currency from importers amidst its higher value overseas.

Forex dealers said besides dollar’s gains against the euro overseas, increased demand from importers for the US currency and a lower opening in the domestic equity market also put pressure on the Indian rupee.

Yesterday, the rupee strengthened by 7 paise to close at 60.07 against the US currency, which quoted lower in overseas markets.

Meanwhile, the BSE Sensex fell by 149.30 points, or 0.66 per cent, to 22,566.03 in early trade today.

Source : The Economic Times

Indo-US tax talks stuck on acceptable profit margins : 10-04-2014


A Joint effort by India and the US to amicably decide on their respective shares of taxes from IT and ITeS companies operating in both countries is threatening to unravel, owing to a big, seemingly unresolvable gap between the transfer pricing (TP) margins individually determined by them. While New Delhi is unwilling to accept the margins made by India-registered IT companies from services rendered to related parties in the US in certain past cases to be anything less than 18%, the US tax authorities want India to agree to a much lower rate of 12-13%.

The discord surfaced in the exploratory Indo-US tax talks under what is called a mutual agreement procedure (MAP) — a provision in the double taxation avoidance treaty between the two countries — held in Washington in February. The inability of both sides to make headway in the first round of MAP talks increased the uncertainty over the tax liability of over 200 companies wanting to avoid their profits to be taxed twice. In case an MAP-based settlement doesn’t materialse, these companies would have little option but to approach courts to resolve the disputes.

For the US taxman, the payments made by a US company to its Indian subsidiary is a business expense that needs to be deducted from the profits of the former. A higher TP rate could mean a higher deduction and a resultant lower tax revenue for the US and hence the inclination to disallow higher deductions. India, on the other hand, reckons the profits of these firms to be higher as can be seen from the 20-30% rate prescribed by it for firms in different businesses to escape transfer pricing scrutiny under safe harbour rules.

TP rates are meant to denote the arm’s length price (what would have been between unrelated parties).

A revenue department official told FE that India has suggested the 18% rate in the MAP talks after an analysis of the margins, adding it was difficult to accept lower rates. Although there are several ways for the revenue department to determine the transfer pricing rates, in case of IT and ITeS companies, the cost-plus method is usually allowed.

With stark differences in the February talks, Indian revenue authorities, sources said, are now trying to find a middle path for making headway in the next round of talks.

Since the 12-13% rate is internationally accepted, India is finding it difficult to hold to the higher margins, analysts said. In fact, under the safe harbour rules (SHR), the 20-30% margins have forced the majority of the companies to be out of it and therefore, only 30 applications were filed for the same in FY14, the first year of SHR.

The Rangachary panel – SHR rates were fixed based on its recommendations – found that while IT companies were quoting profit margins of 15%, TP officials thought they should be as high as 24%. The panel finally settled for a 20% SHR but this is too high to gain traction. Similarly, in the ITeS sector, while companies with a turnover of under Rs 500 crore were quoting margins of 15%, the transfer pricing officers wanted an average of 26% and the panel, again, recommended 20%.

In case of contract R&D in the IT sector, the Rangachary panel took a middle path by fixing 30% as profit margin – to balance the base rate of 20% and profit margins of some of the companies as high as 50-60%.

The Indo-US MAP negotiations had got stuck with the US side pressing for the removal of SK Mishra, joint secretary in charge of the international tax division, and talks resumed only after he was replaced by Akhilesh Ranjan on July 10 last year, when finance minister P Chidambaram was visiting the US to woo investors.

As per the strategy firmed up by the Indian side, of the 100-plus US firms including Microsoft which have filed for a solution under MAP for past cases, around 70 have now filed for unilateral advance pricing agreements (APAs), which detail how various expenditures and income are to be treated by the tax authorities for a (future) period of five years.

But these are unilateral APAs, which are not recognised by the US. The idea is to turn them into bilateral APAs so that they get a deduction in the US for the tax paid in India.

For this to happen, both the sides will have to first agree on the TP rate. “The Indian side will have to find a solution. Probably, the way forward could be to tackle the existing cases at a higher rate and new cases at the rate closer to what the US wants,” said the official quoted earlier.

 Source : PTI

Rupee down 11 paise against dollar in early trade : 10-04-2014


The rupee declined by 11 paise to 60.25 against the US dollar in early trade today due to appreciation of the American unit against other currencies overseas.

Besides, fresh demand for the US dollar from importers also put pressure on the rupee.

The local unit had lost 3 paise lower at 60.14 against the dollar yesterday due to late demand for the US currency from importers.

Dealers attributed the fall in the rupee today to dollar’s gains against other currencies overseas but a higher opening in the domestic equity market capped the fall.

Meanwhile, the benchmark BSE Sensex rose by 66.86 points, or 0.29 per cent, to 22,769.20 in early trade today.

Source : The Economic Times

Rupee strengthens to 59.85 in early trade : 09-04-2014


The rupee pared its initial gains and was trading weak at 60.04 against the dollar at 10.54 a.m. local time at the Interbank Foreign Exchange market due to mild dollar demand from banks and importers.

The domestic unit jumped by 29 paise to 59.82 against the dollar in the opening trade amid IMF’s forecast of improved growth prospects for India.

Supported by slightly stronger global growth, improving export competitiveness and implementation of recently approved investment projects, India’s growth is expected to recover from 4.4 per cent in 2013 to 5.4 per cent in 2014, the IMF had said yesterday.

The domestic unit had closed flat at 60.11 per dollar on Monday. The currency market remained closed on Tuesday due to a bank holiday on account of Ram Navami.

A higher opening in the domestic equity market and strengthening of other Asian currencies against the dollar overseas also supported the rupee, forex dealers said.

Meanwhile, the benchmark BSE Sensex rose about 100 points (0.46 per cent) to 22,446 points in the morning trade.

The RBI is actively absorbing flows to slow the rupee’s rise since September 2013, whilst simultaneously boosting the foreign reserves stock to ward off bouts of volatility, said Radhika Rao, Economist at DBS Group.

Call rates, bonds

The overnight call money rate, interest rate at which banks borrow money from each other to overcome short-term liquidity mismatches, was trading weak at 8.2 per cent from its previous close of 9.1 per cent on Monday.

Yield on 10-year benchmark 8.83 per cent government bond, maturing in 2023, softened a tad to 9.09 per cent from Monday’s close of 9.1 per cent. Prices of the security were trading slightly higher at Rs 98.29 from Rs 98.27. Bond prices and yields move in the opposite direction.

Source : The Economic Times

Narendra Modi-led govt to strengthen Indian rupee, lead to stocks rally: Nomura : 09-04-2014


Japanese brokerage Nomura has said a Narendra Modi-led government will help the rupee jump to 58 against the US dollar and trigger up to a 10 per cent rally in the stock market.

 The report titled ‘India’s defining moment’ is authored by Nomura India chief economist Sonal Varma and her team and the brokerage’s global political analysts Alastair Newton and Craig Chan.

It describes the ongoing elections as “the most important in many years” for financial markets, and “a make-or-break event for the nation’s medium-term prospects”.

 Blaming the “imprudent” fiscal policy and a lack of supply-side reforms, the report notes that animal spirits are low and the economy is stuck in a stagflation-type situation.

“Hence, the outcomes of these elections are important,” it said, as a stable government focused on economic reforms could reinvigorate the dormant animal spirits, ease business uncertainty and address the supply bottlenecks.

 A clear mandate can swing investor sentiment significantly as prospects of higher productivity and a revival of the investment cycle boost potential growth, ease supply-side constraints and make room for rate cuts, which may further boost investments.

 But, it said that “if the election results in a hotchpotch coalition or a third front, it would diminish prospects of structural reforms to revive potential growth and could risk significant capital outflows and monetary policy tightening even further.

 ”Hence, we see the forthcoming elections as a make-or- break event for the medium-term prospects”.

The Modi-effect can prop the rupee to 58 to the dollar and GDP to 6 per cent in 2015, says the report, adding that it will have only a little impact on growth this year as it sees the economic expansion to be just 5 per cent.

 On the impact on the economy, the report, however, sees a medium-term positive spin.

“It can help “accelerate economic reforms and coupled with continued prudent monetary policy, set the stage for a steady improvement in the nation’s macroeconomic fundamentals …in turn will take GDP to 6 per cent in 2015.”

Source : PTI

Nandan Nilekani’s Aadhaar project a political gimmick: Narendra Modi : 09-04-2014


BANGALORE: BJP prime ministerial candidate Narendra Modi on Tuesday subjected InfosysBSE -1.34 % co-founder Nandan Nilekani to a prolonged attack over the unique identity card, Aadhaar, to boost the prospects of his party colleague Ananth Kumar facing an uphill task to retain his Bangalore South seat.

“Congress finds itself in such a bad shape today that it has fielded a man worth thousands of crores of wealth, but with no aadhaar (credentials) whatsoever for himself,” the Gujarat chief minister said at a BJP rally near Electronic City in the Bangalore South constituency.

BJP had strategically chosen the venue to take its fight to the IT heartland of Electronic City — which is home to a number of IT companies, including Infosys, the firm Nilekani co-founded. The party, unsure of which direction the votes of IT professionals swing, brought Modi into their midst to speak at length on Aadhaar, ‘sluggish’ IT exports and ‘governance deficit’.

Kumar has been under incessant onslaught from Nilekani, who spares no opportunity to call him an ‘absentee’ MP with scant respect for his constituency. In his Hindi speech, Modi wondered whether Aadhaar made any sense and said Congress was unable to convince even the Supreme Court which has been pulling up the government over the project. “It is a political gimmick with no vision,” Modi alleged.

He said he had raised many questions on Aadhaar from the security point of view on how it would enrol people in border areas and how illegal immigrants would be prevented from securing a card. “The people who thought of themselves as having given birth to IT in this country refused to listen to a common man like me. Even the SC has demanded answers,” Modi said and alleged the Aadhaar programme was a bundle of lies in whose name the treasury was looted.

A day after Congress vice-president Rahul Gandhi claimed credit for his party for developing Bangalore into an information technology hub, Modi sought credit for the NDA regime under Atal Bihari Vajpayee for bringing a comprehensive IT law, which he said boosted IT exports.

When NDA ruled the country, the country registered 40% growth in annual IT exports, but the same sank to 30% during the first five years of the UPA regime, and to 9% during UPA-II.

“I have come to the land of IT. Please tell me how you will explain this,” Narendra Modi said

Source : Business Line

Financial Scene: No policy action, but big news : 08-04-2014


The monetary policy statement of the Reserve Bank of India (RBI) presented on March 1is significant in several ways. The fact that there was no change in monetary or liquidity measures did not surprise any one.

This is one policy statement whose rationale could be easily understood. As Governor Raghuram Rajan said at the press conference, the only thing surprising about today was the lack of surprise.

The RBI’s inaction did not make it a non-event. Part B of the RBI statement, dealing with developmental and regulatory issues, catalogues activities that are critical for the financial sector. Despite their importance, they were discussed only in the annual and half-yearly policy statements. It is hoped that the RBI will make this a regular feature in all its bi-monthly statements. The next one will be on July 3.

There were some doubts as to whether the RBI could have effected an interest rate cut in this election season. The argument went like this. With the model code already in force, does the RBI have the leeway, for instance, to change the repo rate when the government is prevented from making any policy announcement?

Own conviction

The RBI’s reference to the Election Commission on new bank licences seemed to lend credence to that view. However, while the central bank was playing it safe at that time, it was in no way constrained in cutting the repo rate or the CRR (Cash Reserve Ratio), if it had to. In other words, it was not some external compulsion in the form of Election Commission diktats, but the RBI’s own conviction to maintain the status quo that carried the day.

Even on bank licences, the RBI, having secured the Election Commission’s go ahead, has said that it will not wait until a new government is formed. Indeed, the first two in-principle clearances were given the very next day to IDFC and Bandhan Financial Services Private Limited.

The important message is that the monetary policy document is an economic and regulatory statement, and there is no reason why even in the run up to the polls, it should acquire a political colour.

The rationale for the policy stance is always rooted in the evolving macro-economic situation. Economic growth is poised to go up from below 5 per cent to around 5.5 per cent (in a range of 5 to 6 per cent) in 2014-15. Factors that may pull back GDP growth include unsatisfactory monsoons, uncertainty in the setting up of minimum support prices, and the new government’s approach to macroeconomic problems such as the fiscal deficit.

On the positive side, easing of domestic supply-side bottlenecks and clearance of stalled projects will help pick up activities. The current account deficit has narrowed considerably on the back of sustained forex inflows. Some deft moves, on the part of the government, have helped.

The RBI, which has set the CPI inflation target at 8 per cent for January, 2015, enumerates several upside risks: vegetable prices shooting up again, global commodity prices rising once again due to economic recovery in the advanced economies and so on. But there is an emphatic commitment on keeping the economy on a disinflationary glide path that is intended to hit 8 per cent CPI inflation by January 2015, and to 6 per cent a year later.

It is in this context that the RBI gives a kind of assurance that if inflation decelerates as intended, there will not be any need to tighten monetary policy. Explaining the reasons behind holding rates, it says that past rate increases should be allowed to work through the system.

The Urjit Patel Committee’s report figures prominently in the statement. Its suggestion to reduce liquidity access to overnight repos while making a corresponding increase in term repos has been accepted.

Other recommendations accepted include adoption of CPI as the key measure, explicit recognition of the ‘glide path’ for disinflation and transition to a bi-monthly monetary policy cycle.

For markets, the inflation-indexed bonds are to be made more customer-friendly. Foreign investors will be encouraged to invest more, and for that purpose entry costs will be eased and the risks from volatility will be reduced.

The problem of bad loans looms large over the banking system. The RBI will constantly review the measures put in place, and make necessary adjustments to the policy framework.

It is clear that many of the non-monetary policy measures will figure prominently in the bi-monthly policy statements.

Source : The Hindu

New govt to decide on revising growth estimates for 12th Plan : 08-04-2014


The new Government will take a call on revising the average economic growth estimate for the 12th Plan, which kicked off on April 1, 2012 and will end on March 31, 2017.

Meanwhile, the Plane panel is preparing statements of facts on the economy to help the new Government make a mid-term appraisal. Officials have made it clear that the current Commission will not propose any revised growth estimates.

The 12th Plan originally set an average growth target of 8 per cent growth over the five-year period.

“The statements of facts will basically present conditions and challenges,” a senior Plan panel official told Business Line.

The first two years of the Plan (2012-13 and 2013-14), have estimated growth rates of 4.5 per cent and 4.9 per cent, respectively.

The next three years will now require a growth of over 9 per cent annually to achieve the average growth rate of 8 per cent over the full Plan period, which seems to be a real challenge.

The official said in the last one-and-half years, the present Government had tried to prepare the ground for growth to accelerate in current fiscal year and the years to come.

“With clearances for projects worth over ₹3 lakh crore through the Cabinet Committee on Investment, irrespective of the coalition coming into power, the growth rate could be between 6-6.5 per cent during 2014-15 and over 7-7.5 per cent during 2015-16,” the official said.

Global gloom

However, given the state of the global economy, he said, “Uncertainty is not behind us, and the fact is that the world is more uncertain,” adding that the best solution would be to maintain a low-risk profile while pushing for higher growth and achieving a lower fiscal gap.

Meanwhile, another senior official said a broad draft of the mid-term appraisal will also be prepared, which will include the reasons for not achieving the targets and analysing the shortcomings.

There will be one chapter focussing on recommendations for course correction during the last two years of the Plan period. These recommendations will be related to policy and schemes.

“The first two years of the Plan have not achieved the target of 8 per cent, so the thinking is to revise the budgetary outlay downward,” he said, adding that the mid-term appraisal would offer a window to make adjustment in inter-sectoral allocations on the basis of the changing requirements.

The plan is to formulate the draft mid-term appraisal by October and seek approval from the full Planning Commission, the Cabinet and finally from the National Development Council (the Centre-State body).

Source : Business Line

Serious consequences if Narendra Modi becomes PM: P. Chidambaram : 07-04-2014


Tere will be serious consequences if Narendra Modi becomes the Prime Minister, Union Minister P Chidamabarm today said, and warned BJP that it too will pay a heavy price for letting Gujarat Chief Minister and his “coterie” “take over” the party.

The Congress leader said BJP is now a shadow political party which has not been able to come out with its Lok Sabha election manifesto though the first round of voting will be tomorrow.

But the BJP was quick to hit back at Chidambaram, with Arun Jaitley saying the Minister’s remarks reflect that the Congress is resigned to its defeat and is reeling under “great sense of depression”.

Targeting the BJP Prime Ministerial candidate, Chidambaram said, “Modi has taken over the party. He has over taken the party. It is no longer BJP government. It is Modi government. In Hindi the slogan is not ‘bha ja pa sarkar’, it’s ‘Modi sarkar’.

“Yesterday, he has the audacity to say ‘vote for me’ and he says nothing can prevent me from becoming the PM. I think the BJP is now a shadow of a political party. It is being taken over and overtaken by an individual and his coterie.”

Chidambaram said, “I think, BJP will pay a heavy price for this kind of situation where an individual has usurped the party, which is why BJP is unable to publish its manifesto, even when the first round of voting is going to take place tomorrow”.

“There will be serious consequences if Modi became the Prime Minister,” he said.

Jaitley retorted by saying that the Congress can comment once the Modi government is formed.

“Chidamabaram’s statement presumes that Narendra Modi is becoming the PM and now he is preparing for the next round of

politics.

“Well, let him take over and then they are entitled to comment on his performance.”

“I see a great sense of depression in the Congress… when there is an election, they should depend on voter’s choice. Ultimately what the voters desire, will prevail.”

Source : PTI

Things you should know about e-payment of service tax : 07-04-2014


From 1 January 2014, all those who paid a service tax of more than Rs 1 lakh in the previous financial year will be required to pay the tax using Net banking. It can be availed of only if the assessee has a bank account with Net banking facility, and the bank is among those registered for providing this facility.

Procedure

To pay the tax, the assessee needs to log on to the NSDL-CBEC website, www.cbec.nsdl.com. After clicking on the e-payment menu, he needs to enter the 15-digit assessee code, select the type of duty/tax and bank name. He can then click on the ‘proceed’ button.

VerificationThe assessee will be guided to a page where he can verify the details and can also modify or edit these, if incorrect. After verification, the assessee must click on the ‘submit’ button, which will direct him to his bank’s website.

Verification

The assessee will be guided to a page where he can verify the details and can also modify or edit these, if incorrect. After verification, the assessee must click on the ‘submit’ button, which will direct him to his bank’s website.

E-payment

He can log on to the online banking facility with his user name and password. He will be directed to a page with details entered on the NSDLCBEC website. To pay tax, he will need to enter the amount to be paid for each accounting code, and after verification, confirm the payment.

Acknowledgement
On successful payment, a printable challan counterfoil with Challan Identification Number (CIN) will be displayed, along with the payment details and bank name through which the payment was made.

Points to note:

> The challan counterfoil should be retained as proof of payment of tax.

> Assessees can visit the NSDL-CBEC website to know which banks provide the e-payment facility for service tax.

> This website also allows an assessee to pay excise duty by following the same procedure

Source : The Economic Times

Experts say new Govt will meet NRIs’ demands : 04-04-2014


Experts at a seminar have urged the new Government that will be formed at the Centre to give priority to the welfare of NRI’s, who sent home $75 billion last year.

Participating in a discussion on ‘What NRI’s demand from the new Government’, organised by the Global Organisation of People of Indian Origin (GOPIO) here, leading NRIs, professionals, social activists and legal advisors highlighted various problems being faced by Indians, especially Keralaites, living and working abroad.

Record Remittances

KV Shamsudheen, Chairman of Pravasi Bandhu Welfare Trust pointed out that Keralites contribute 19 per cent of the total remittance made by NRIs, but only a part of it being deposited in banks.

However, the Government has not taken any concrete measures to tap this immense potential. Instead, there are a number of rules and regulations that are discouraging NRI investments, he said.

Rules relaxation

CJ George, Managing Director, Geojit BNP Paribas Financial Services said that the Government should extend all possible help to increase NRI investments. Abraham Tharyan, Executive Director of South Indian Bank said that a corruption-free country would invite more participation from NRIs on development issues.

PC Cyriac, President of Gopio, Kochi, who was the moderator at the panel discussion, said that the Government should sort out confusions regarding policy making and implementation, and provide the best infrastructure facilities to attract genuine investors from abroad.

Source : Business Line

Rupee weakens to 60.29 on dollar demand : 04-04-2014


The rupee depreciated by 13 paise to 60.29 against the US dollar in early trade today at the Interbank Foreign Exchange market today due to increased demand for the American currency from importers.

Euro’s weakness against the US dollar overseas and a lower opening in the domestic equity market also put pressure on the local unit, forex dealers said.

The rupee had lost 26 paise to close at 60.16 against the dollar yesterday on fresh dollar demand from banks and importers in view of the US currency gaining overseas and weakness in local equities.

Meanwhile, the benchmark BSE Sensex fell 78.67 points or 0.35 per cent to trade at 22,430.40 in the opening session.

Source : PTI

Rupee seen largely steady; gains capped at 59.60 : 03-04-2014


Rupee was expected to open little changed around 59.90/92 compared with its close of 59.90/91 on Wednesday.

Shares touched a new high for the eighth straight session on Wednesday and non-bank financial companies such as IDFCBSE 0.23 % Ltd surged after the election commission allowed the central bank to announce new bank licences.

Gains in the rupee were likely to be capped around 59.60 on likely dollar buying from the central bank, a senior trader with a state-owned bank said.


RBI was suspected to have been buying dollars in recent sessions to shore up its foreign exchange reserves, which now stand at $298.64 billion, their highest since December 2011.

Traders will watch the domestic share market for cues on foreign fund flows. The rupee was seen in a range of 59.60-60.05 per $1 for the session.

Source : PTI

Indian rupee touches fresh 8-month high of 59.77 against US dollar : 02-04-2014


The rupee strengthened by 14 paise to touch a fresh eight-month high of 59.77 against the US dollar in early trade today at the Interbank Foreign Exchange market.

Increased selling of the dollar by exporters amid sustained foreign capital inflows also supported the rupee, dealers said.

Besides early gains in domestic equity markets, the dollar’s weakness against other Asian currencies overseas and the RBI’s decision to keep key policy rates unchanged in its first bi-monthly monetary policy statement yesterday also helped rupee post gains, they added.

The rupee had gained 40 paise to close at an eight-month high of 59.91 against the dollar on Friday. Forex and money markets remained closed on Monday and Tuesday for Gudi Padwa and annual accounts closing.

Meanwhile, the benchmark BSE Sensex rose by 130.06 points, or 0.58 per cent, to hit a new record-high of 22,576.50 in opening trade.

Source : PTI

Direct Tax Code: 35% tax for super rich, no change in exemption limit : 02-04-2014


Finance minister P. Chidambaram released for public discussion the Direct Tax Code (DTC), 2013, that proposes extra taxes on the super rich, a lower-than-earlier proposed threshold for taxing offshore sale of Indian assets and a review of the General Anti-Avoidance Rules (GAAR).

P. Chidambaram reiterated his appeal to political parties to pass in 2014-15 the DTC Bill that was originally introduced in Lok Sabha in August 2010. The Bill would lapse with the current Lok Sabha and needs to be re-introduced by the next government for its passage.

P. Chidambaram decided to revise the original 2010 code to take into account several legislative changes that happened subsequently, instead of proposing separate amendments to the code.

The major changes proposed in the revised Bill include a 10% additional tax on those who receive dividends of more than Rs 1 crore a year.

The idea is to tax high-flying corporate captains who spend enough time abroad to avoid paying taxes on their worldwide income in India. Promoters and large shareholders of many big companies thus pay only 15% tax in India on the dividend they receive and no income tax.

The new proposal, if becomes law, will make them pay an extra 10% tax on the dividend they receive.

Another proposal is to introduce a fourth slab of 35% tax rate for individuals and Hindu Undivided Families (HUFs) with income of over Rs 10 crore. Tax on wealth at the rate of 0.25% on assets above Rs 50 crore is proposed on all physical and financial assets with the exception of a few.

In the revised code, the finance ministry has accepted 153 of 190 recommendations made by a parliamentary standing committee, which includes lowering the age for tax exemption for senior citizens to 60 years from 65. It, however, did not accept the Yashwant Sinha committee’s suggestion that income tax exemption limit could be raised to Rs 3 lakh and the remaining slabs could be relaxed.

As per the exisiting structure, there is no tax on income of up to Rs 2 lakh per annum; 10% on Rs 2-5 lakh; 20% on Rs.5-10 lakh and 30% on income beyond Rs 10 lakh.

“The new DTC 2013 draft is more of an announcement by the government that it has completed its work on the code, which has been in process from 2010. From here, whichever government assumes, it can take it forward in the present form or any other revised form, said Sunil Kapadia, Tax Partner, EY.

The code also sharply reduces the value of Indian assets involved in a global transaction that would trigger tax claims in India.

Source : Business Line

P. Chidambaram: PetrolMin, RBI ‘too cautious’ over gas price hike, new bank permits : 01-04-2014


With key decisions on gas price hike revision and new bank permits left hanging, Finance Minister P. Chidambaram on Monday said the Petroleum Ministry as well as the Reserve Bank of India (RBI) have been over cautious in seeking approval from the Election Commission.

P. Chidambaram’s comments come at a time when any new proposal by the UPA will have to be first cleared by the poll panel to ensure that it does not violate the Model Code of Conduct, which is in effect for the upcoming General Elections.

Chidambaram stressed that the government has no role to play in the process of granting new bank permits. “RBI governor Raghuram Rajan has made it clear that he referred the decision to the Election Commission out of abundant caution,” he said responding to another query.

Stressing that the process of granting bank licenses should not be interrupted, the finance minister said that its interruption would send a signal to the world that the government has a role to play in the grant of these permits.

The Election Commission was set to meet on Monday to decide on the big ticket proposal but its meeting was postponed dashing expectations of any announcement on new bank permits in the RBI’s monetary policy statement on Tuesday.

Meanwhile, responding to a query on the postponement of the gas price hike, Chidambaram said, “There was no obligation of the ministry of petroleum and natural gas to send it to the Election Commission. The decision by the Cabinet was taken some two to three months ago. I think they did it out of abundant caution.”

Defending the Cabinet decision, he further said, “The Cabinet decision is the right decision and I will defend it. Today, we are importing one unit of gas at a much higher price.”

Based on the Rangarajan formula, the Cabinet Committee on Economic Affairs had in June 2013 approved an increase in gas prices from April 1,

2014, which was notified in January this year. But the Election Commission has ordered its deferment on the grounds that it should be the decision of the new government formed after the General Elections.

Source : Business Line

Monetary policy review: Guv Raghuram Rajan delivers no surprises, holds interest rates : 01-04-2014


As expected, Reserve Bank Governor Raghuram Rajan today kept the key policy rate (repo) unchanged since retail inflation still remains “sticky” but introduced steps to increase liquidity and contain volatility in the money market.

The RBI, in its first bimonthly monetary policy statement, left the short-term lending rate or repo rate unchanged at 8 per cent and the cash reserve ratio static at 4 per cent. It halved the overnight call money rate to 0.25 per cent and increased the 7-day and 14-day repo limits to 0.75 per cent from 0.50 per cent.

“At the current juncture, it is appropriate to hold the policy rate, while allowing the rate increases undertaken during September 2013-January 2014 to work their way through the economy,” said Raghuram Rajan, who had in previous policy announcements surprised the markets with policy rate changes.

If inflation continues along the glide path of reaching 8 per cent by January 2015 and 6 per cent by the year after, the Governor promised there won’t be any rate hikes.

On liquidity moves, Raghuram Rajan said the primary objective is to improve transmission of policy impulses across the interest spectrum and improve liquidity in the system.

“The term repo has evolved as a useful indicator of underlying liquidity conditions. It also allows market participants to hold liquidity for a longer period…evolving market-based benchmarks for pricing various financial products,” he said.

On inflation, the Governor said he sees retail inflation softening in 2014 to under 6 per cent.

“Excluding food and fuel…retail inflation remained sticky around 8 per cent. This suggests that some demand pressures are still at play,” he said.

The RBI pegged 2014-15 GDP growth at a central estimate of 5.5 per cent. It said the FY14 current account deficit would be about 2 per cent of GDP.

“Most recently, export growth has slowed partly because of slowdown in demand in partner countries as well as a softening of prices of exports of petroleum products and gems.

And jewellery (offset by a reduction in the prices of oil and gold imports),” Rajan said.

“Whether the export slowdown persists as global growth picks up once again remains to be seen. In February, there was a turnaround in portfolio flows as investors largely priced in the effects of taper by the US Fed and responded to economic and geo-political developments in emerging markets with re-allocations,” he added.

On liquidity, he said the central bank will continue to monitor conditions and ensure adequate flow of credit to the productive sectors.

“Liquidity conditions have tightened in March, partly on account of year-end ‘window dressing’ by banks, though an extraordinary infusion of liquidity by the Reserve Bank has mitigated the tightness,” he said.

The Reserve Bank will propose measures to reduce such practices, he added.

Bank of Baroda Executive Director Rajan Dhawan said the RBI will wait for additional data before deciding on the next policy.

According to State Bank of India Managing Director P Pradeep Kumar, the RBI’s next policy would be data driven.

The second bimonthly monetary policy statement is scheduled to be announced on June 3.

(Reuters) Governor Raghuram Rajan-led Reserve Bank of India (RBI) left its policy interest rate unchanged on Tuesday, as expected, and said it does not expect further near-term policy tightening if headline inflation continues to ease towards the bank’s targeted level.

RBI indicated today that it will announce in-principle approval of new bank licences after consulting Election Commission.

However, Raghuram Rajan added that RBI to give bank licences on tap.

While inflation is a concern, Raghuram Rajan said he was not moved by vegetable prices.

The RBI kept its key repo rate at 8.00 percent, in line with the forecast of all 53 economists in a poll last week.

Since taking office in September, RBI Governor Raghuram Rajan has raised the repo rate three times by a total of 75 basis points.

India’s consumer price index inflation eased to 8.10 percent in February, near

The RBI’s January 2015 target of 8 percent, while the wholesale price index slowed to a 9-month low of 4.68 percent.

The RBI wants CPI inflation to ease further to 6 percent by January 2016.

“The Reserve Bank’s policy stance will be firmly focused on keeping the economy on a disinflationary glide path,” Raghuram Rajan said.

“If inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture,” he said in his policy statement.

Raghuram Rajan expressed concern about risks to growth in an economy expanding at under 5 percent, its slowest in a decade. He said growth in the fiscal year that began this month is expected in a range of 5 to 6 percent, with downside risks.

“Lead indicators do not point to any sustained revival in industry and services as yet,” Rajan said.

The RBI also reduced the availability of overnight funds from its repo window for banks and increased the amount that banks may borrow from its term repo window in a bid to reduce lenders’ reliance on short-term central bank funding.

Indian stocks were little changed, while the local bond and foreign exchange markets were closed on Tuesday.

With India heading for elections running from April 7 to May 12, Rajan had been expected to wait for a glimpse of the next government’s economic policies as well as the outlook for monsoon season rains that begin in June before making a policy move, economists said.

“With upcoming elections adding another event risk to the horizon along with the likelihood that poor weather conditions might feed into inflation yet again, the prudent bias will be to maintain the tight hold on policy levers,” Radhika Rao, economist at DBS in Singapore, said after the policy statement.

HIGHLIGHTS

* Raghuram Rajan says RBI will change incentive structure for banks

* RBI rate appropriately set for now

* Industrial activity a concern

* Export growth slowed

* To provide sufficient liquidity

* To reduce access to overnight repos

* New combined CPI accepted

* Outlook for monsoon uncertain and that means risk for inflation.

Source : The Financial Express

RBI likely to hold rates : 28-03-2014


The Reserve Bank of India is unlikely to cut rates in its forthcoming monetary policy on April 1 even though economic conditions seem to have eased recently with some moderation in inflation and financial market stability, thanks to the election euphoria.

“I expect the RBI to keep interest rates on hold in the upcoming monetary policy as wholesale price index and consumer price index (CPI) inflation have come down sharply, and the RBI’s target of 8 per cent CPI inflation by January 2015 looks feasible. I believe that it would be premature to cut interest rates though as inflation is down but not out as yet,” said D. K. Joshi, Chief Economist, Crisil.

“We believe that the RBI will ensure higher real interest rates till such time that domestic macro-economic adjustments are attained and, hence, I expect the RBI to maintain status quo in the upcoming policy announcement,” said Dhananjay Sinha, Head-Institutional Research, Economist and Strategist, Emkay Global Financial Services.

CPI inflation

CPI inflation eased to a 25-month low of 8.1 per cent in February.The rupee has appreciated sharply and the equity market has rebounded on the back of FII inflows. Besides, contractions in current account and fiscal deficits are indicating some comfort. But will this be enough for the RBI to start monetary easing rates? “In my view”, said Mr. Sinha, “while economic indicators provide some comfort, it will be too early for it to reverse gear on policy rates.”

Further, core CPI has remained sticky at 7.9-8.1 per cent since November 2013, reflecting the high wage inflation as well as inclusion of several services in this basket. To an extent, the non-tradable nature of some services afford higher pricing power to producers, enabling a greater pass through of input price pressures to final prices, even when domestic demand is subdued. As a result, core CPI is likely to remain at elevated levels in the near-term.

“While consumer inflation is now close to the target of 8 per cent for the end of 2014 suggested by the Urjit Patel Committee, monetary easing is unlikely in the upcoming policy review,” said Aditi Nayar, Senior Economist, ICRA (an associate of Moody’s Investors Service).

Said Ms. Nayar, “With the clearer picture on the magnitude, temporal dispersion and geographic spread of rainfall as well as its impact on sowing of various crops likely to emerge only by July-August, a monetary policy response is unlikely in the intervening period.”

Source : The Economic Times

Rupee up 18 paise against dollar : 28-03-2014


The rupee recovered by 18 paise to trade at 60.12 against the U.S. dollar in early trade today on selling of the American currency by banks and exporters amid sustained foreign capital inflows.

Besides, a higher opening in the domestic equity market and strengthening of other currencies against the dollar overseas also supported the rupee, forex dealers said.

The rupee had dropped 17 paise to close at 60.31 against the dollar in yesterday’s trade.

Source : PTI

Know all about wealth tax : 28-03-2014


In India, most people focus all their tax planning skills on working out how to save taxes on their income. They invest in 80C instruments, buy tax-free bonds, keep meticulous track of capital gains. But if you’re an HNI you need to know about the other direct tax that all of us are subject to — wealth tax.

Income tax is payable on the income that you earn regularly, whereas wealth tax is payable on your assets, the same assets you buy with your income after shelling out income tax.

How it’s computed

Wealth tax is computed on the market value of all the assets you own. You need to pay it whether or not they yield any returns. Tax laws say that every individual and Hindu Undivided Family whose net wealth (assets less liabilities incurred to acquire the assets) exceeds ₹30 lakh is required to pay wealth tax.

Net wealth is the value of all assets (that are chargeable to wealth tax) held by an individual on the valuation date in excess of the value of all debts incurred in relation to these assets.

The tax, based on the value of the assets as on March 31, is levied at the rate of 1 per cent of the amount that exceeds the ₹30-lakh limit. Therefore, wealth tax will be applicable on an asset even if purchased at the fag end of the year. Assets sold during the year escape the levy.

Some of India’s Double Taxation Avoidance Agreements (DTAAs) provide relief from double taxation for wealth tax as well. So, if you have paid wealth tax in any other country, you can expect some relief.

Who is liable?

Residential status is key to deciding wealth tax liability. The thumb rule is that resident Indians are subject to wealth tax on their global assets, while non-resident Indians and foreigners are liable to pay tax only on their assets located in India.

NRIs come under the ambit of wealth tax on assets held here. But if a non-resident returns to India to reside here, the assets brought in by him or her are not liable to wealth tax.

Assets acquired by an NRI from the money brought in within one year of his or her return are also exempt. This exemption holds good for a period of seven years after the return to India, says Section 5(1)(v) of the Wealth Tax Act.

Which assets?

Wealth tax is payable on assets such as real estate and bullion owned by the investor as well as on deemed assets such as those owned by a spouse. Assets such as shares, securities, mutual funds and fixed deposits, which are generally termed as ‘productive assets’, are exempt from wealth tax. Though there is a long list of items such as yachts, boats, aircraft, among others, that are subject to wealth tax, the assets commonly owned are real estate, jewellery and cars.

Home: One residential home is exempt from wealth tax, while ownership of more than one house will attract wealth tax liability. But if a property is used to conduct business or if it forms a part of stock-in-trade or has been rented out for at least 300 days in a year, wealth tax is not applicable on such property.

Vehicles: Tax is levied on the market price of the car, except where it is used in a car hiring business.

Jewellery: Ornaments made of gold, silver, platinum, bullion or any other precious metal and precious or semi-precious stones are subject to tax. This includes precious gems sewn into clothes or set into furniture. Further, cash-in-hand in excess of ₹50,000 is also subject to wealth tax.

Lastly, if you are liable to wealth tax, transferring the assets to your spouse will not help. Assets gifted to a spouse, a minor child or a son’s wife will be, notwithstanding the gift, deemed to belong to the taxpayer himself or herself.

Checks and balances

Currently, as it is mandatory to quote PAN (permanent account number) for all financial and property transactions, it is easy to link all Indian transactions of an individual.

The income-tax provisions require residents and those ‘ordinarily resident’ to disclose foreign assets (that is, immovable property, other assets, bank accounts and financial interests) in their tax return.

Online filing of tax returns and computerisation of tax records make detection and prosecution a simple affair. Maintaining a statement of assets owned by an individual will go a long way in simplifying your wealth-tax filing.

Source : Business Line

Rupee down 11 paise against dollar in early trade : 27-03-2014


The rupee dropped 8 paise to 60.22 per dollar in morning trade on Thursday due to month-end demand for the US currency from importers, triggered by its firm value overseas.

However, sustained foreign capital inflows into equity market restricted the rupee’s fall, forex dealers said.

The rupee resumed lower at 60.21 per dollar as against Wednesday’s closing level of 60.14 at the Interbank Foreign Exchange (Forex) Market.

It hovered in a range of 60.27—60.17 per dollar before quoting at 60.22 at 1000 hours.

The month-end dollar demand from importers, mainly oil refiners, affected the value of rupee against the American currency, dealers said.

In the global markets, the euro was under pressure against the US dollar on Wednesday, dragged lower as European monetary policy officials indicated willingness towards supporting more stimulus measures to aid the regional economy.

Meanwhile, the benchmark BSE Sensex rose by 83.92 points, or 0.38 per cent, to 22,179.22 at 1000 hours, after hitting an all-time high of 22,188.63 in early trade.

Source : Business Line

TARC to look into amalgamation of direct, indirect tax dept : 27-03-2014


The Tax Administration Reform Commission (TARC) set up by the Finance Ministry to suggest measures to prevent economic offences among other things, will soon look into amalgamation of Direct Tax and Indirect Tax Departments.

“In business practices, companies pay corporate income tax, companies also pay Value Added Tax (VAT) or GST. If we amalgamate Direct Tax and Indirect Tax Departments, it would be so much easier for companies to file returns and so on. We, in commission (TARC) are going to look into the issue,” TARC Chairman and Advisor to Finance Minister Parthasarathi Shome said on Wednesday at an event organised by industry body ASSOCHAM.

Citing a survey by Paris-based think tank OECD, Dr. Shome added, “Among 60 per cent of countries that were surveyed by OECD, a vast majority of countries have already amalgamated the two departments (Direct Tax and Indirect Tax Departments).”

He said the Commission is also looking into the issue – whether the judicial powers given to the Assessing Officer should be reviewed.

“We are discussing whether it is an optimal level (AO),” Dr. Shome said.

The TARC, mandated with job of reforming the entire gamut of tax administration, is likely submit its first report by May end.

The TARC was given the tenure of 18 months time to give its final report which will go to the next government for follow up action.

Dr. Shome also said tax rates should not be too progressive because that would kill the incentive to save and invest.

However, he asserted that the personal tax rates in India, measured in purchasing power parity are among the lowest in the world.

Dr. Shome also said policy direction has been towards bringing more number of people in tax net which is about 3.6 crore at present.

“We can go up to 5 crore that will enable tax rationalisation and tax rate can also come down,” Dr. Shome said.

Source : The Hindu

Govt notifies more sections of new Companies Act : 27-03-2014


The government on Wednesday notified more than 180 sections of the new Companies Act, as it moves to make the legislation operational from next month.

The Companies Act, 2013 replaces the nearly six decade old law that governs corporates in the country and also provides for strong measures to ensure good corporate governance as well as to protect the interest of investors.

Apart from various sections, the Corporate Affairs Ministry on Wednesday also notified six schedules of the new law.

With this all the seven schedules of the Companies Act, 2013 have been notified.

The detailed rules for various sections are expected to be put out in the coming days.

The voluminous legislation is spread across 29 chapters, seven schedules and 470 sections.

With the latest notification, main requirements of the new company law related to incorporation, management, board functioning accounts and audit, would be operational from April 1.

“The Companies Act 2013 is finally a reality and has been substantially operationalised with the notification of 183 sections earlier today, in addition to the 100 sections notified earlier,” Sai Venkateshwaran, Head of Accounting Advisory Services, KPMG in India said.

On March 20, the ministry had received Election Commission’s approval for notifying rules related to various sections of the new Companies Act.

With the Election Commission of India announcing the schedule for the Lok Sabha polls, the Model Code of Conduct came into force from March 5. Consequently, the ministry sought the Commission’s nod for notifying the rules.

In late February, the ministry notified rules for CSR (Corporate Social Responsibility) spending. Under the legislation, certain class of companies have to shell out at least 2 per cent of their 3-year annual average net profit towards social welfare activities.

Mr. Venkateshwaran noted that today’s notification has come practically in the last week of the year, giving corporates very little time to understand the ramifications of the detail in the final rules.

“… one does hope the rules contain some additional transitional provisions that would provide companies some reasonable time to comply with the new requirements,” he added.

Notifications related to National Financial Reporting Authority (NFRA), Investor and Education Protection Fund, sick companies, special courts and National Company Law Tribunal (NCLT), among others, would be coming later.

The Companies Bill 2013 had received approval from the Parliament in August.

Source : PTI

Rupee hits seven-month high : 26-03-2014


The rupee continued its rally against the American currency in early trade for the fourth trading day, gaining another 23 paise to 60.25 per dollar on persistent selling of the US unit by banks and exporters on the back of sustained foreign capital inflows.

 Weakness of dollar in the overseas market also boosted the rupee value, a forex dealer said.

 The Indian currency resumed higher at 60.28 per dollar as against the last closing level of 60.48 at the Interbank Foreign Exchange (Forex) Market and firmed up further to quote at 60.25 per dollar at 1000hrs (IST).

 Sustained selling of dollars by banks and exporters in view of good foreign capital inflows into equity market was the main factor behind rise in rupee value.

 In New York market, the dollar cut its rise after a round of mixed US data on Tuesday, but held narrowly higher against key rivals.

Source : PTI

Stable UPA Govt providing strength to Indian economy: Chidambaram : 25-03-2014


Finance Minister P Chidambaram today rejected media analysis that the “hope” of a stable Government after elections is bringing in investments and driving up the capital market and the value of Rupee.

He maintained it is not “hope” but the “fact” of a stable Government provided by UPA and the numerous measures taken in the last 18 months that have provided stability and strength to the Indian economy.

“I am amused to read in some sections of the media that it is the ‘hope’ of a stable Government that is bringing in investments and driving up the capital market and the value of the Rupee. It is not ‘hope’, but the ‘fact’ of a stable Government provided by the UPA and the numerous measures taken in the last 18 months that have provided stability and strength to the Indian economy,” he said.

Chidambaram, who is on a campaign here in support of his son Karti in Lok Sabha elections, said, “If there is any hope that is driving the market, I believe it is the hope that the new Government will follow the ten-point agenda that I had spelt out in my Interim Budget speech on 17.2.2014“.

The Minister said, “I can assure the people and the investors that a Congress-led Government will faithfully implement the ten-point agenda”.

Source : Business Linea

Rupee hits more than 7-month high; shares in focus : 25-03-2014


The rupee strengthened to its highest level in more than seven months on Tuesday, tracking broad global losses in the dollar and as foreign investors continued to buy into a record-setting rally in domestic shares this month.

The US dollar nursed broad losses early on Tuesday, having come under pressure late in New York as investors bought the euro and drove the Australian dollar to its highest this year.

The partially convertible rupee trading at 60.50/51 per dollar at 0336 GMT, its strongest level since August 12 and higher than its Monday’s close of 60.77/78.

Overseas investors bought Indian shares worth Rs 1,465 crores and Rs 1,056 crores worth of index futures on Monday, when shares hit a record high, provisional exchange data showed.

Source : PTI

Rupee rises 24 paise against dollar in early trade : 24-03-2014


The rupee appreciated 24 paise to trade at 60.65 against the US dollar in early trade today on selling of the American currency by banks and exporters and sustained foreign capital inflows.

Besides, a higher opening in the domestic equity market and strengthening of the euro against the dollar overseas also supported the local currency, forex dealers said.

The rupee had surged 45 paise, its biggest daily gain in two weeks, to close at 60.89 against the dollar on Friday on massive capital inflows.

Meanwhile, the benchmark BSE Sensex rose 124.18 points, or 0.57 per cent, to 21,879.50 in early trade today.

Source : Business Line

Hopefully next govt will be able to implement GST: Montek Singh Ahluwalia : 24-03-2014


Planning Commission Deputy Chairman Montek Singh Ahluwalia today exuded confidence that whoever forms the next government would be in a position to implement key reforms, including the Goods and Services Tax (GST).

Stressing on the need to bring in GST, Ahluwalia said economists widely believe that it not only helps improve the fiscal situation, but also boosts the efficiency of the entire system.

“I am quite hopeful that at the end of the elections, whichever government comes to power, it will be in a position to get moving on some of the major reforms, one of which is GST,” Ahluwalia said at an event here.

GST, the proposed new indirect tax regime, will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT).

GST has missed several deadlines for its roll-out due to differences between the states and the Centre over the contentious issue of revenue sharing.

Ahluwalia termed the present slow growth rate a short-term phenomenon and assured that India can grow at 7-8 per cent.

“My view is that the current slow growth rate represents a short-term aberration… I will say that, for India, the sustainable growth rate is between 7-8 per cent.

“The macroeconomics can be put right, which is not absolutely right at the moment but is getting better,” he said.

Suggesting steps needed for accelerating growth, Ahluwalia batted for speedy regulatory approval for the large projects. “We have to proceed with acceleration of implementation of the large projects through improved regulatory system, and I thinks that’s happening,” he said.

He added that there is a need to look at the financial constraints which are affecting Indian banks and hoped that RBI was studying that.

Source : PTI

 

Given a choice, people want jobs over subsidies, says FM P. Chidambaram : 24-03-2014


While stating that Aadhaar cash transfers will have to be thought through completely in the light of the problems faced in implementing LPG cash transfers, finance minister P Chidambaram said that, given a choice, people will choose a job over subsidies. The finance minister’s statement, in an interview to the Express Group, assumes significance in the context of the elections being pitched as a jobs-versus-dole one.

Chidambaram, however, said that pitching the elections in that manner was an oversimplification since the issues in each state were different. UPA-I’s success was, he said, “in part, due to the welfare measures that we took. But in large part, it was due to the growth that we created and the economic opportunities we created, including jobs.”

On the important question of inflation-targeting, the finance minister reiterated that he didn’t agree with the argument that Reserve Bank of India (RBI) had to target only inflation but, to the extent price stability was one of the RBI’s goals, along with growth, the inflation target would be set by Parliament.

Until Parliament started behaving responsibly, he said, the next government — whoever formed it — would have the same problems UPA-II had in getting critical Bills like those on the goods and services tax and the Direct Taxes Code through. “That is why the BJP does not speak about these issues. The BJP’s prime ministerial candidate does not meet the media. On any issue, on coal nationalisation Act, have they taken a stand? If you don’t revisit that Act, the same problems that we face will be there for the next government as well… We are talking about it, the NDA doesn’t talk about it, the BJP doesn’t talk about it,” he said.

Much of the paralysis in governance, he said, “is attributable to the fact that Parliament is paralysed. More than the executive, it was Parliament that was paralysed by mindless opposition and obstruction.”

Chidambaram rejected the view that the banking sector was facing a crisis on non-performing assets — a large

Source : The Hindu

P. Chidambaram opts out of Lok Sabha race, son given Congress ticket : 21-03-2014


Union Minister P. Chidambaram has opted out of the Lok Sabha election with the party tonight nominating his son Karti from his constituency Sivaganga in Tamil Nadu while another Union Minister Ghulam Nabi Azad was brought as a candidate from Udhampur in Jammu and Kashmir.

Soon after the announcement, Karti said,”my father has contested nine elections and thought it is time to give way. He is definitely not retiring from politics.”

The name of Azad and Karti figure in the list of 50 Congress Lok Sabha candidates announced today, which also brought an end to speculation over remaining two Lok Sabha seats of Delhi West Delhi and South Delhi with the party re-nominating sitting MPs Mahabal Mishra and Ramesh Kumar.

Congress had already nominated sitting MPs in five other seats of Delhi. With the announcement today, all seven sitting MPs of Congress stand re-nominated.

AICC general secretary Digvijay Singh’s brother Laxman Singh has been fielded from Vidisha in Madhya Pradesh from where Leader of Opposition Sushma Swaraj is the sitting BJP MP. Singh’s son in-law Paranjayaditya Singh Parmar, whose name figured as a candiate from Panchamahal seat in Gujarat in the second list has been dropped. Ramsingh Parmar is the new candidate from the seat.

Former Union Ministers Mani Shankar Aiyar has been nominated from his traditional seat of Mayiladuthurai and R Prabhu from Coimbatore.

Source : The Hindu

Rupee up 30 paise against dollar in early trade : 21-03-2014


The rupee today recovered by 30 paise to 61.04 against the dollar at the Interbank Foreign Exchange market on increased selling of the US currency by exporters and banks.

Forex dealers said a higher opening in the domestic equity market and strengthening of the euro and yen against the dollar overseas supported the rupee.

The rupee had depreciated by 39 paise, logging its biggest daily loss in nearly two months, to end at 61.34 yester yesterday on fears of capital outflows from emerging markets after Federal Reserve signalled a sooner-than-expected hike in US benchmark interest rates.

Meanwhile, the benchmark BSE index Sensex recovered by 130.02 points, or 0.59 per cent, to 21,870.11 in early trade today.

Source : The Economic Times


SEBI bars FTIL from holding shares in stock exchanges : 20-03-2014


The Securities and Exchange Board of India (SEBI), on Wednesday, ordered that Financial Technologies (India) Ltd (FTIL) is not a ‘fit and proper person’ to acquire or hold any equity share in a recognized stock exchange or clearing corporation, either directly or indirectly. The order also covers warrants that FTIL may be holding.

 The capital market regulator also said that FTIL should divest all its existing equity holdings in MCX-SX, MCX-SX Clearing corporation Ltd (MCX-SX CCL), Delhi Stock Exchange Ltd (DSE), Vadodara Stock Exchange Ltd (VSE) and National Stock Exchange of India Ltd (NSEIL) within 90 days.

FTIL has also been told that it shall cease to be entitled to exercise voting rights in respect of those shares or instruments, with immediate effect. SEBI’s order is based on the order of the Forward Markets Commission passed on December 17,2013, which found FTIL as not being ‘fit and proper’ to hold more than two per cent of the equity of Multi Commodity Exchange.

   SEBI issued today’s order in the aftermath of the decision taken by the commodity market regulator against FTIL, which was also a promoter of the scam-tainted National Spot Exchange Ltd (NSEL)  SEBI’s order observed that commodity future exchange and stock exchange basically discharge similar functions and obligations except that the two exchanges deal in different underlyings —physical commodity being underlying in the commodity futures exchange and the securities being the underlying in the stock exchange.

Further it stated that systems and processes such as trading platform, clearing and settlement are similar in both the markets. Settlement defaults in both the markets pose systemic risk to the respective markets. “The regulatory objective in both the exchanges are same as far as investor protection, market integrity, transparency, fairness and governance are concerned. “ SEBI added.

Both the markets are connected through substantial number of common stakeholders and flow of finance.

Commodity future exchange as well as stock exchange and clearing corporation are market infrastructure institutions of the financial markets needing the same level of integrity and governance standards.

 SEBI concluded that a person who is not ‘fit and proper’ to hold shares in commodity future exchange cannot be a ‘fit a proper person’ to hold share in the recognized stock exchange and the clearing corporation. “He poses same danger to the interest of securities market as to the commodity futures market as both the market require the same standard of integrity. Thus, there is no doubt that the declaration of FTIL as not ‘fit and proper person’ by FMC has direct bearing on the securities market.”

 Source : The Hindu

Rupee near 1-week low after Yellen comments : 20-03-2014


Rupee was near one-week low of 61.40 in early trading after US Federal Reserve Chair Janet Yellen’s comments lead to investors shunning risk assets.

The rupee-dollar pair saw some profit-taking, now at 61.32/33 versus its previous close of 60.95/96.

The dollar’s index against six major currencies currently was down 0.02 per cent.

Most other Asian currencies like the Indonesian rupiah and the Taiwan dollar were weaker against  a basket of major currencies early on Thursday, having posted solid gains after comments from Yellen prompted markets to bring forward interest rate hike expectations.

 Source : PTI

SEBI clarifies : 19-03-2014


With reference to the article published in The Hindu, dated March 17, 2014, captioned “When the hunter turns hunted”, the Securities and Exchange Board of India (SEBI) has responded with the following statement:

The article inter alia, refers to a letter written by Dr K.M Abraham, former Whole Time Member, SEBI. The article also quotes widely from the said letter. In this regard, we would like to clarify as follows: While not commenting on the other parts of the article, our clarification is limited to the reference to the letter of Dr K M Abraham. The letter of Dr Abraham was part of the Public Interest Litigation (PIL) challenging the appointment of Chairman, SEBI filed before the Hon’ble Supreme Court of India.

The Court dismissed the PIL and also the allegations made in the letter of Dr. Abraham. While dismissing the PIL,  the Court inter alia, observed “it is manifest that the letter written by Dr Abraham was clearly motivated and espoused no public interest.” An application for impleadment filed by Dr Abraham before the Court in the above PIL was also dismissed by it. Dismissing the impleadment application, the Hon’ble Court, inter alia, observed “so far as Dr Abraham is concerned, we find that the remarks have been made only for the purpose of decision of the writ petition….”

When the highest court of the land has expressed its views it would be only in the fitness of things that the reference to the letter should have been made by mentioning all related facts and in a fair manner.

— N. Hariharan, Chief General Manager, Communications Division, SEBI.

Source : The Hindu

Rupee up 11 paise against dollar in early trade : 19-03-2014


MUMBAI: The rupee strengthened by 11 paise to 61.08 against the US dollar at the Interbank Foreign Exchange in early trade today.

Fresh selling of the dollar by exporters amid sustained foreign capital inflows supported the rupee, dealers said.

Early gains in domestic equity markets and dollar’s weakness against major currencies overseas also helped rupee post gains, they added.

The rupee had closed flat at 61.19 against the dollar yesterday on alternate bouts of of buying and selling.

Meanwhile, the BSE benchmark index Sensex rose by 60.81 points, or 0.27 per cent, to 21,893.42 in early trade. 

Source : The Economic Times


Rupee up 22 paise against dollar in early trade : 18-03-2014


The rupee gained 22 paise to 60.97 against the dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the US currency by exporters amid a higher opening in the domestic equity market.

Besides, the WPI inflation that eased to a nine-month low in February, raising expectations that the RBI would leave interest rates unchanged at its policy review next month, supported the rupee, forex dealers said.

In volatile trade, the rupee had shed two the rupee had shed two paise to close at 61.19 in the previous session on Friday.

Forex and Money markets remained closed yesterday for ‘Holi’ festival.

Meanwhile, the benchmark BSE Sensex rose 137.66 points, or 0.63 per cent, to 21,947.46 in early trade today.

Source :  The Economic Times

Rupee rallies after better-than-expected CPI data : 13-03-2014


The rupee and bonds rallied on Thursday after retail inflation data released after market hours on Wednesday came in above expectations, but further sharp gains are unlikely as investors expect the central bank to keep rates on hold in April, dealers said.

The partially convertible rupee was trading at 60.94/95 per dollar versus its last close of 61.2150/2250.

The benchmark 10-year bond yield was trading at 8.70 per cent after opening at 8.68 per cent, according

to the central bank’s reporting platform data. It had closed at 8.72 per cent on Wednesday.

Source : PTI

Rupee weakens to 61.07 : 12-03-2014


The rupee opened weak at 61.10 per dollar against the previous close of 60.95 amid weak trade data.

At 10.08 am, the rupee was quoting at 61.07.

After recording positive growth for seven consecutive months, exports contracted by 3.67 per cent in February although the trade deficit showed a marked improvement mainly on account of a significant decline in gold imports.

“Weak trade data and weakness in the domestic equity market weighed on the domestic unit. The rupee is likely to trade between 60.50 and 62 a dollar in the short term,” said a dealer with a public sector bank.

The inter-bank call money rate, the interest rate at which banks borrow money from each other to overcome short-term liquidity mismatches, opened flat at 8.15 per cent against the previous close.

The 8.83 per cent 10-year benchmark bond maturing in 2023 rose to ₹100.57 from the previous close of ₹100.60, while its yield remained flat at 8.73 per cent.

Source : The Hindu

Rupee strengthens to 60.63 in early trade : 11-03-2014


The rupee gained 10 paise to open at 60.75 against the previous close of 60.85 on heavy capital inflows amid a higher opening in the equity market.

At 10.06 am, the domestic unit further gained to trade at 60.63 per dollar.

The rupee had appreciated 22 paise to close at an over seven-month high of 60.85 against the US currency in the previous session on heavy capital inflows into equities that surged to a fresh record.

Abhishek Goenka, Founder and CEO of India Forex Advisors said, “Foreign funds have bought $852.10 million in equities and $5.6 billion in debt so far in 2014.”

The inter-bank call money rate, the interest rate at which banks borrow money from each other to overcome short-term liquidity mismatches, opened higher at 8.25 per cent against the previous close of 7.10 per cent.

The 8.83 per cent 10-year benchmark bond maturing in 2023 rose to ₹100.58 from the previous close of ₹100.48, while its yield softened to 8.73 per cent from 8.75 per cent.

Source : PTI

Looking for tax breaks? Here are few less-known options : 11-03-2014


MUMBAI: Many individuals typically wit till the last moment to finalise their tax savings plan, say experts. In the haste to exhaust the 1-lakh deduction limit available under Section 80C, these individuals tend to overlook certain tax deductions already earned during the course of the year. The deadline for making tax-saving investments is March 31.

“Those who are investing for reducing their tax outgo should first determine the actual tax benefits they would get before making investment in haste. For example, some of those in the 10% tax bracket might be better off by paying 10% income tax and keeping the rest of the money at their disposal rather than locking the money away for many years in a tax-saving investment, just to save on that 10%,” says Vaibhav Sankla, director, H&R Block, a tax consultancy firm.

First-time Home Buyers

If you have purchased a house in this financial year, you will be entitled to a deduction of up to 1 lakh on interest paid under Section 80EE. This is in addition to the deduction under Section 24 on home loan interest. Moreover, if the interest paid during the year is less than 1 lakh, the unclaimed deduction can be used in the following year.

A Few Little-known Exemptions

Most home loan borrowers know the benefits available for the interest and principal payments under Sections 24 and 80C respectively. However, many of them are not aware of certain extra benefits. “You can claim deductions on interest paid on loan taken from friends and relatives too. Similarly, processing fees paid to your housing finance company would also be eligible for deductions,” says Sankla.

Preventive Health Check-ups

Introduced during financial year 2012-13, this deduction is part of Section 80D exemption, which allows deductions on health insurance premium. If you have undergone health check-ups this year, you can claim a deduction of up to 5,000. Bills from diagnostic centres can be submitted either to your employer or claim the deduction at the time of filing returns. If you haven’t undergone any tests this year, it would be a good idea to do before March 31.

Deductions on Donations

Donations made to charitable organisations and government-approved funds qualify for deductions under Section 80G. Apart from donations to specific funds, which are eligible for a 100% deduction, most are restricted to 50%.

Disability-related Expenses

If you have been taking care of a family member who suffers from physical or mental disabilities, one can avail relief up to 50,000 . In case of severe disabilities (80% or more), the eligible amount is 1 lakh. Dependants could include spouse, children, parents, brothers and sisters of the tax-payer. Differentlyabled tax-payers can claim a similar exemption for themselves under Section 80U.

 Source : The Hindu

Rupee falls 22 paise against dollar in early trade : 10-03-2014


The rupee dropped 22 paise to 61.29 against the US dollar in early trade today at the Interbank Foreign Exchange market on fresh demand for the American currency from importers.

The rupee had gained 4 paise to close at a new three-month high of 61.07 against the US dollar on Friday helped by heavy capital inflows.

Forex dealers said a weak opening in the domestic equity market also weighed on the rupee, but the dollar’s weakness against the euro limited the fall of the local  currency.

Meanwhile, the benchmark BSE Sensex fell by 47.30 points, or 0.22 per cent, to 21,872.49 in early trade today.

Source : The Hindu

How well do you know the tax rules? : 10-03-2014


How well do you know the tax rules?

1) The interest earned on a bank fixed deposit is…

a. Fully taxable as income. b. Exempt up to Rs 10,000 a year. c. Not taxable if TDS is deducted. d. Tax-free if it’s a tax-saving FD.

44% of the respondents said FD interest is exempt up to Rs 10,000 a year.

2) Which of these cannot be claimed as deduction?

a. School fees of two children. b. Interest paid on education loan. c. Charges for medical check-up. d. Premium of travel insurance policy

23% didn’t know about deductions under Section 80C, 80D and 80E.

3) An individual won’t get tax deduction for…

a. Voluntary contribution to PF. b. Life insurance of child over 18. c. Employer’s contribution to PF. d. Health cover of earning spouse

31% said premium paid for health cover of working spouse is not eligible for tax deduction.

4) Which of the following will  be taxable?

a. Gift of Rs 2 lakh to earning spouse. b. Gift worth Rs 75,000 to a friend. c. Rs 50 lakh property gifted to son. d. Rs 1 lakh wedding gift to colleague.

35% said a gift worth Rs 1 lakh to a colleague on wedding is taxable.

5) HRA is not tax-exempt if you pay rent to…

a. Your non-working mother. b. Your minor child. c. Your retired father. d. Your real brother or sister.

15% believe you can’t claim HRA exemption if you pay rent to your parents.

6) There are additional tax benefits for people with…

a. Only one girl child. b. A disabled dependant. c. A large family to take care of. d. No pension benefit from employer.
87% say you get addiitonal tax benefits if you have a disabled dependant.

7) If you have a second house lying vacant, you have to…

a. Pay tax on rent not received. b. Include in wealth tax. c. Pay property tax on it. d. All of the above.

63% say you have to pay tax on the rent even if the house is lying vacant.

8) If one earns rent on property, how much of it is taxable?

a. Full amount taxable as income. b. Only 70% is taxable. c. No tax if out of municipal limit. d. No tax if house is on ..

a loan. 40% said full amount is taxable as income from house property.

9) One doesn’t have to file tax return if…

a. TDS has been deducted. b. After Sec 80C savings, tax is nil. c. Income is below Rs 2 lakh a year. d. One is a senior citizen with pension.

14% believe senior citizens with pension income dont have to file returns.
10) Which of the following statements is not true?

a. Annual PPF limit is Rs 1 lakh. b. Health premium deduction limit is Rs 20,000 for seniors. c. Stock investors can cut tax further with RGESS funds. d. Insurance plans must give a cover of 10 times the annual premium for tax benefits.
Source : PTI

Interest rates hiked on some small savings schemes : 05-03-2014


Ahead of the announcement of the general election dates, the Finance Ministry has raised interest rates on some of the small savings scheme.

However, there is no change in interest rates on five years National Saving Certificates (NSC) and Public Provident Fund.

The new rates will be applicable from April 1.

Any fresh deposit or accretion in the existing ones on or after April 1 will enjoy the benefit of new rates.

According to the Finance Ministry statement, interest rates on 1-, 2-, and 3-year term deposits will now be 8.4 per cent as against 8.2, 8.2 and 8.3 per cent respectively.

Similarly, 5-year term deposits will now have 8.5 per cent rate of interest against 8.4 per cent currently.

Interest rate on 5 years recurring has also been revised. Investment in 10-year NSC on or after April 1 will earn you 8.8 per cent rate as against 8.7 per cent.

Despite revision in the interest rate, small savings are still less attractive than bank deposits, despite the benefit of tax saving. It means money deposited in one or various schemes of up to ₹1 lakh will be deducted from total taxable income.

In this way, the effective rates on returns on small savings are higher than bank deposits except 5-year tax savings bank deposits.

Interest rates on small savings are aligned with Government securities of similar maturities with a spread of 25 basis points with two exceptions.

The spread on 10-year NSC (new instrument) will be 50 basis points and on Senior Citizens Savings Scheme 100 basis points. The Government has retained the GPF interest rate at 8.7 per cent.

These recommendations are based on the Shyamala Gopinath Committee.

 Source : PTI

Rupee Re opens weaker at 61.92 : 05-03-2014


MUMBAI, MAR 5:

The rupee opened weaker at 61.92 per dollar against the previous close of 61.85 on the back of fresh dollar demand.

The domestic unit gained on Tuesday due to an easing of the Ukraine crisis.

Most Asian currencies started gaining after Russia’s president ordered troops engaged in military drills in central and western Russia to return to base. This calmed fears of a possible war in Ukraine.

According to dealers, the rupee is likely to trade in the 61.80 to 62.50 range for the rest of this week.

Call rates higher, yields fall

The inter-bank call money rate, the rate at which banks borrow money from each other, opened higher at 7.75 per cent from the previous close of 7.10 per cent.

The yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, softened to 8.82 per cent from 8.90 per cent. Bond prices rose to Rs 100 from Monday’s close of Rs 99.93.

Bond prices and yields move in opposite directions.

Source : Business Line

Re opens lower at 62.12 : 04-03-2014


The rupee opened lower at 62.12 per dollar against the previous close of 62.04 on tensions of the possibility of a war between Ukraine and Russia.

Such an event would send crude oil prices soaring. There were reports of investors seeking refuge in relatively safe haven US economic assets to counter the risk of a further escalation in tensions.

The rupee is likely to trade in the 61.80 to 62.50 range for the rest of this week.

The inter-bank call money rate, the rate at which banks borrow money from each other, opened higher at 8 per cent against the previous close of 7 per cent. Yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, opened flat from the previous close at 8.90 per cent. Bond prices fell to ₹99.49 from ₹99.50.

Source : PTI

Petrol, diesel prices hiked again, but OMC stocks remain subdued; IOC, HPCL in red : 03-03-2014


MUMBAI: Shares of oil marketing companies were subdued in line with the market even as fuel retailers hiked diesel prices by 50 paise per litre and petrol prices by 60 paise a litre over the weekend.

This is the second time that petrol prices have been increased in the current year. Petrol price will cost Rs. 73.16 a litre and diesel will be sold at Rs. 55.48 per litre in Delhi.

OMCs have hiked diesel retail prices regularly since January 2013 and have increased diesel retail prices by approximately by Rs 8 per liter since January 2013.

Indian Oil CorporationBSE 0.50 % (IOC) said the petrol prices were hiked because of rise in international oil rates and weak rupee against the US dollar. The hike in diesel price is in line with the January 2013 decision of the government to raise rates by up to 50 paise per month till the under-recoveries become nil.

The government move despite state elections has “curtailed under-recovery on diesel despite a sharp depreciation of Rupee versus the US Dollar,” said Kotak Institutional Equities report.

“We compute meaningfully lower under-recoveries on petroleum products at Rs 0.9 billion in FY2015E and Rs 0.7 billion in FY2016E versus Rs 1.4 trillion in FY2014E based on our assumptions of (1) continuation of monthly hikes in diesel retail prices until full deregulation and (2) moderation in global oil prices,” the report added.

The brokerage is positive on BPCL, HPCLBSE 1.34 % and IOCLBSE 0.60 % given inexpensive valuations, which do not factor in potential benefits from a likely decline in fuel subsidies.

“The ongoing diesel deregulation process will lead to lower fuel subsidies, which will reduce working capital requirements, result in lower interest expense and improve visibility on profitability for the downstream oil companies,” the analysts at the brokerage said in the report.

At 10:40 a.m.; IOCBSE 0.60 was down 0.24 per cent, HPCL edged 0.04 per cent lower and BPCLBSE -0.46 % was slipped 0.25 per cent.

Source : The Hindu

Rupee Re opens weaker at 61.93 : 03-03-2014


MUMBAI: The rupee weakened by 18 paise to 61.93 against the US dollar in early trade today at the Interbank Foreign Exchange market due to appreciation of the American currency overseas.

Increased demand for the dollar from importers also put pressure on the rupee. Dealers attributed the fall in rupee to dollar’s gains against euro overseas and a lower opening of the domestic equity market.

The rupee had gained 23 paise to close at an over five-week closing high of 61.75 against the US dollar in its previous trading session on selling of the American currency by exporters and positive cues from local equities. Meanwhile, the benchmark BSE Sensex fell by 54.16 points, or 0.26 per cent, to 21,065.96 in early trade today.

Source : PTI

Paid too much TDS? Here’s how you can get it back : 03-03-2014


Deepak Sharma’s salary cheque for February looks like it has been on a crash diet. The Delhi-based sales manager with an FMCG company was not able to submit the documents of his Section 80C investments on time, so his company deducted an additional Rs 28,000 as TDS. “I had to give the investment proof by 15 February but could not get all the documents together,” he rues. The company took into account only the Rs 30,000 he contributed to the Provident Fund and his child’s school fees of Rs 42,000 but Sharma could not get deduction for his insurance premiums and the PPF investments.

Worse, he didn’t get any exemption for his house rent allowance. “Initially, my landlord was not willing to give his PAN number in the receipt. It took me almost a week to convince him, which delayed the whole process,” says Sharma. Mumbai-based Ashok Khanna is in the same boat as Sharma, though his problem is a little different. His company also deducted a higher TDS, but it was because Khanna’s tax planning was abandoned midway.

“Due to some unforeseen expenses, I could not invest Rs invest Rs 30,000 by the deadline set by my employer,” says the junior manager in a pharma company. Are you facing a similar problem? If, like Sharma, you were not able to submit your investment proof on time, you can do so before the salary and deductions are computed for March. Your company will adjust the excess TDS and you may be spared further tax deduction in the last month of the financial year.

Similarly, if you have not exhausted your tax-saving limit under Section 80C till now, you can still do so. If you submit the proof before the next salary cycle, any excess TDS deducted from your salary will be adjusted in the salary for March.

Getting a refund

Even though you will be able to get the tax adjusted and avoid another hefty TDS in the March salary, many of you may have already paid excess tax. The only way you can get it back is by filing your tax returns. The sooner one files the return, the earlier he gets his refund. Now that the CBDT has made it mandatory for taxpayers to quote their bank account number and the bank’s IFSC code in the tax form, refunds are much quicker. If you are lucky, you get the refund in two to three months, but be prepared to wait for a longer period.

If the tax refund gets delayed due to any reason, the taxpayer is entitled to a 6% interest on the amount. The interest will start accruing from the first month of the assessment year (April 2014 in this case). However, no interest is payable if the refund amount is less than 10% of the tax payable during the year.

Source : The Economic Times

Government’s fiscal deficit breaches target on slower revenues, higher fund release : 01-03-2014


Government’s fiscal deficit breaches target on slower revenues, higher fund release

NEW DELHI: The government’s fiscal deficit in the first 10 months (April-January ) reached 101.6% of the revised estimate due to slower revenues and large fund releases.

“It should get corrected this month,” said a finance ministry official. Finance minister P Chidambaram, who had repeatedly said that the red line of 4.8% of GDP will not be breached, has pegged fiscal deficit for 2013-14 at 4.6% of GDP in the interim budget, lower than the budget estimate.

According to Controller General of Accounts data, fiscal deficit during April-January 2013-14 stood at Rs 5.32 lakh crore or 101.6% of the revised estimates presented in the vote on account on February 17. The government’s total expenditure, however, was only 79.8% of the revised estimates of Rs 5.90 lakh crore.

Revenue receipts stood at Rs 7.21 lakh crore or 70.1% of the revised estimates. However, advance tax payments in March and pay off of some debt by the government is expected to keep the deficit within the budgeted numbers when the final data comes out.

Economists, however, raised alarm bells. “Net of the States’ share in Central taxes, we expect the shortfall in the Central Government’s tax collections to be around Rs 10,000 crore.

While this may result in slippages relative to the revised estimate of 4.6% of GDP, the fiscal deficit is unlikely to exceed the projection of 4.8% of GDP that had been made at the time of the Budget for FY14,” said Aditi Nayar, senior economist, ICRA.

Source : The Economic Times

Probe sought into FEMA violations in forex derivative contracts : 28-02-2014


Banks accused of pushing the burden of such losses ‘unilaterally’ on exporters

In the wake of unforeseen problems encountered by the exporting community, a demand is now gaining ground for an investigation into foreign exchange derivative contracts.

The demand has picked up steam with a Member of Parliament dashing off a letter to the Prime Minister demanding a “comprehensive independent investigation into malafide dealings in inherently toxic derivatives, which have led to huge losses for exporting units”.

In his letter dated February 3, 2014, T. K. Rangarajan, a Member of Parliament, alleged that the hedging undertaken by banks on behalf of exporters “were done in flagrant violation of FEMA (Foreign Exchange Management Act) and the RBI (Reserve Bank of India) guidelines.’’ Asserting that such derivative contracts entered into with ‘brazen violations’ had led to losses, he accused banks of pushing the burden of such losses ‘unilaterally’ on the exporters.

Hedging “is the most basic recourse” exporters adopted to insulate themselves against vagaries of international marketplace, Mr. Rangarajan said. Banks undertook the hedging exercise on behalf of exporters. It was assumed that the intermediation of the banker would be directed to secure the interest of its charge — the exporter, he added. “However, it is now coming to light that banks had undertaken hedging which betrayed major irregularities and improprieties,” he alleged in his letter to the Prime Minister.

“The derivatives were inherently flawed, exotic and toxic products, which were responsible for the global meltdown,” he said. Mr. Rangarajan alleged that the bankers were aware of the ‘toxic nature’ of the derivatives. Yet, “they subordinated the interest of exporters to the profit of the foreign entities for commission for their respective banks,” he pointed out.

“Alleging grave financial misdemeanour by certain banks,” he urged the Prime Minister to institute a comprehensive investigation into the whole issue.

Source : The Hindu

Rupee down 14 paise against dollar : 28-02-2014


The rupee fell by 14 paise to 62.12 against the dollar in early trade today at the Interbank Foreign Exchange due to month-end demand for the American currency from importers, including oil firms.

Besides, euro’s weakness against the US dollar overseas also put pressure on the local unit but a higher opening in the domestic equity market limited the fall, forex dealers said.

Meanwhile, the benchmark BSE Sensex rose 123.82 points, or 0.59 per cent, to trade above 21,000 level at 21,110.81.

The rupee had lost four paise to close at 61.98 against the dollar in the previous session on Wednesday. The forex and money markets remained closed yesterday for “Mahashivratri”.

Source : PTI

Rupee trading flat at 61.94 : 26-02-2014


The rupee opened almost flat at 61.97 per dollar against the dollar as the exporters sold the American dollars amid high capital inflows on Tuesday.

At 11.50 am, the rupee was quoting at 61.94 against the dollar.

On Tuesday, the Indian currency ended at 61.95.

“Apart from dollar inflows, exporters also sold dollars in the market,” said a dealer with a public sector bank.

According to the dealer, the market is comfortable at these levels. “We see the rupee moving in the 61.70 to 62.40 per dollar range during the week ahead,” he said.

The inter-bank call money rate, the rate at which banks borrow money from each other to meet short-term requirements, opened higher at 8.05 per cent from a close of 7.30 per cent.

Yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, softened a tad to 8.86 per cent from its previous close of 8.87 per cent. Bond prices rose marginally to Rs 99.75 from Rs 99.69.

Bond prices and yields move in the opposite direction.

Source : Business Line

RBI wants to supersede United Bank of India board, writes to FinMin : 26-02-2014


The Reserve Bank of India has written to the finance ministry recommending the superseding of the board of the troubledUnited Bank of India, among other solutions, reports Arun S in New Delhi.

Confirming the letter, financial services secretary Rajiv Takru told FE: “Superceding the board is an administrative alternative that the RBI has suggested. But we are waiting for the inquiry report, which we should get soon.” If someone on the board is found guilty, Takru added, the question of supersession would be looked at.

While merging UBI with another bank is a possibility, ministry sources said it was not high on the agenda at the moment. These options, sources said, were ‘politically sensitive’ and would be employed only as a last resort in an election year. Zonal managers of UBI have been given NPA-reduction targets and told to submit daily reports to the two executive directors on this. From Rs 2,902 crore in December 2012, UBI’s NPAs rose to Rs 8,546 crore in December 2013. Its tier-1 capital is 5.6% versus the RBI-mandated 6.5% in March 2014.

United Bank of India (UBI) chairman and managing director Archana Bhargava resigned from her post even as the bank faces a probe by the Reserve Bank of India (RBI) and the government regarding the piling up of bad loans in the last two quarters.

Source : The Financial Express

Reforms will focus on efficient tax administration: Shome : 25-02-2014


Parthasarathi Shome helped the UPA-II Government out of a jam caused by the controversial provisions of the General Anti-avoidance Rules (GAAR). He is now heading a panel to reform the national tax administration and suggest long-term roadmap for a policy direction. Business Line caught up with the taxation policy expert at an event organised by Bengal Chamber of Commerce. Excerpts:

Why would the Tax Administration Reforms Commission’s first report mainly focus on the administration’s internal processes?

The proposed reforms’ ultimate goal is to expand the tax base and taxpayers’ base. The reform begins at home. It is more about looking inward to correct anomalies and approaches of a system that increases compliance. The premise is that the tax administration has to be cost effective and efficient. The compliance cost for the taxpayers and administrative cost aspects have been reviewed. Suggestions are being made on administration’s productivity improvement through several process reforms.

We have been studying the existing organisational structure and systemic processes. The commission would also recommend detailed segmented changes.

The idea is to enhance administration’s capacity and skill base so that it can handle increasing tax base with greater efficiency, swiftness and lesser disputes.

The target is also to promote quality decision making at the tax policy level.

Will the measures to control tax or economic offences be the part of the second report?

We have not decided on that now. However, in four more reports, after the first, we plan to focus on other areas of tax administration. Suggestions would be there for using predictive analytical tools to prevent tax and economic offences. The commission would recommend functional measures to enhance information sharing among the enforcement agencies. Steps to improve cross border information exchange also would get the attention.

The Government’s position on the provisions General Anti-avoidance Rules and the related norms on indirect transfers are still ambiguous…

The final report on the indirect transfers had been submitted in October. The Finance Ministry has not uploaded the report on its Web site. The GAAR provisions have, however, not been implemented.

What is the future of double taxation treaties?

In my opinion, at the time of renewal, the treaty documents can plug the identified loopholes.

Source : PTI

Rupee gains 11 paise against dollar : 25-02-2014


The rupee opened 11 paise stronger at 61.95 against the previous close of 62.06 on persistent inflows into the domestic equtiy markets.

The rupee has been supported by inflows into equities and debt this month, despite concerns of a faster withdrawal of the US central bank’s monetary stimulus.

However, reiterating his earlier stance, the RBI Governor said the Indian economy is well placed to weather the financial crisis.

Apart from all these factors, IRFC (Indian Railway Finance Corp) which has raised $500 million via offshore bonds in the last week was also a contributing factor to the gaining rupee, said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The inter-bank call money rate, the rate at which banks borrow money from each other to meet short-term requirements, opened higher at 8.05 per cent from the previous close of 7.70 per cent.

Yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, remained flat at 8.88 per cent from its previous close. Bond prices remained flat at Rs 99.60. Bond prices and yields move in the opposite direction.

 Source : Business Line

Some budget sops to continue indefinitely : 24-02-2014


Some of the stimulus measures announced by finance minister P. Chidambaram in his interim budget will continue indefinitely while some will stay for the full fiscal up to March 31, 2015 as the terminal date of June 30, 2014 is applicable only for excise duty cuts on cars and some capital goods, finance ministry officials said.

One of the reliefs that would stay on is the excise duty relief to locally produced mobile handsets, for which no specific date has been mentioned, up to which it would be applicable. Sources said this benefit will not expire on June 30 this year unless the new government takes a conscious call to reverse this decision.

As per the excise duty restructure on mobile handsets announced in the interim budget, companies like LG and Videocon having production facilities in India and have been paying 6% duty with Cenvat credit, can now opt for paying just 1% duty without Cenvat credit.

About 22 crore mobile handsets are sold in India every year.

Also, the extension of the 6% concessional excise duty on products used extensively in engineering, automobile and construction sectors such as Atkinson cycle engines (used for efficiency), transaxle in vehicles, generators, power control units, motors, battery packs and similar other products specified in chapters 296 and 297 of Excise Tariff Act will be available for the full fiscal up to March 31, 2015, sources explained.

According to Chidambaram, the tax cuts could cost the exchequer about Rs 1,200 crore up to June 30. To make up for the shortfall in indirect tax receipts, the revenue department has to make strong efforts at enforcing compliance and plugging tax evasion.

This assumes importance as the most ambitious indirect tax reform, introduction of a Goods and Service Tax (GST), which would have brought in efficiency and widened the tax base, is still to receive political consensus from central and state policy makers.

 Source : The Financial Express

Rupee down 3 paise vs dollar in early trade : 24-02-2014


The rupee fell marginally by 3 paise to 62.15 against the US dollar in early trade today at the Interbank Foreign Exchange market due to increased demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas, increased demand from importers for the American currency and a lower opening in the domestic equity market also put pressure on the rupee.

The rupee had gained 11 paise to close at 62.12 against the US dollar in the previous session on Friday on selling of the American currency by banks and exporters amid foreign capital inflows fuelling a rebound in shares.

Meanwhile, the BSE benchmark Sensex fell by 62.09 points, or 0.30 per cent, to 20,638.66 in early trade today.

Source : PTI

G20 growth pledge easier in the making than the execution : 24-02-2014


The Group of 20′s proposal to lift economic activity by 2 percent over the next five years has so many holes in it, there’s no wonder it was the first official target that all members felt happy to agree on.

Each country has until November to come up with its own supposedly “concrete” plans, but there is nothing to enforce their implementation except the moral suasion of other members. The International Monetary Fund has said it will be watching for progress on the plans, but it has no power to compel or punish.

The target is also a moving one, as it is based on beating an estimate for growth which itself is just a best guess. Forecasting is by its nature a highly imprecise art and the IMF is forever revising its forecasts up or down. Predicting growth for the next quarter is tough enough, no matter over five years.

“We’re not even sure where we are now on growth. How will we be able to judge if these targets are being met?” said Michael Blythe, chief economist at Commonwealth Bank of Australia.

Indeed, the Germans were reluctant to sign up to any hard target at the G20, but accepted the growth goal because it was not binding. Others also stressed it was an aspiration, not a locked-in promise.

“The results of this process can not be guaranteed from politicians, ” German Finance Minister Wolfgang Schauble said after the deal was signed on Sunday.

And financial markets took little notice of the agreement, instead focusing on Monday on the same concerns they had on Friday — the impact of the U.S. Federal Reserve’s taper of its stimulus and uncertainty over China’s economic performance.

LONG LIST

For the G20, the prospect of higher growth is an incentive to help sell the need for structural reforms around the globe

take some hard decisions now, and end up wealthier and stronger in five years.

The IMF does have a laundry list of reforms that it says will boost growth and productivity. It includes everything from liberalising domestic service industries, to spending more on infrastructure, to attracting more women into the workforce.

Some are country specific, such as boosting private savings in the United States to improving healthcare and the social safety net in China.

But all are politically or fiscally difficult.

“Some of the reforms potentially have  big payoff but they tend to be unpopular and entail hard grind,” says Blythe.

“Take the aging of populations that so many countries are struggling with. There’s no way they can meet future pension obligations, but dealing with that is a politician’s nightmare.”

One theme running through many of the proposals was making it harder for workers to retire early. Australian Treasurer Joe Hockey who hosted the G20 meeting in Sydney, has started a “national conversation” about raising the retirement age toward 70, from the current 65.

JAPAN: THE BAD EXAMPLE

Lowering barriers to trade is another much-touted reform, but the seemingly never-ending talks on the Trans-Pacific Partnership (TPP) show how intractable that can be.

Twelve countries are pursuing a trade deal that optimists have estimated could add nearly $300 billion a year to global income, but the talks are bogged down in disputes over everything from tariffs to patent rights to environmental protection.

Japan has become a particular sticking point as it tries to protect its rice, wheat, beef and pork, dairy and sugar sectors, all of which wield great political influence at home.

The world’s third-largest economy is a perfect example of how hard it will be to meet the G20 goals. Prime Minster’s Shinzo Abe’s so-called third arrow of reforms are exactly the kind of change recommended by the IMF, but they are yet to be launched and are meeting fierce opposition at every turn.

There has been scant progress on breaking the divide between well-protected regular workers and a growing army of temporary staff, while significant immigration remains a social taboo.

“In short, if there is a nice free lunch with plus-2 percent growth out there, why haven’t policymakers found it?” wondered Mark Crosby, an associate professor of economics at the Melbourne Business School. “It’s just not credible.”

Indeed, he argued that there was a good chunk of the world economy where the reforms being suggested would likely to lead to slower, not faster growth.

“How is China going to meet the target, particularly if it is able to achieve the switch from investment-driven to domestic-demand-driven growth which will lead to slower, not faster growth?” asked Crosby.

Still, he saw the aim of increasing infrastructure spending as admirable and said there could be ways to find new financing mechanisms that would be a modest spur to growth.

 Source : The Hindu

Gujarat says no to new taxes & sops in its interim Budget : 22-02-2014


State FM says no decision yet on reducing VAT on petroleum products

Keeping in view the upcoming Lok Sabha elections, the Gujarat government on Friday proposed a vote-on-account in the Gujarat Assembly with no new taxes. The state government’s decision to present a vote-on-account assumes significance as Gujarat Chief Minister Narendra Modi is also the Prime Ministerial candidate of the Bharatiya Janata Party (BJP).

“There wasn’t sufficient time to think over the demand of this year. We have, therefore, decided to present and seek a vote-on-account for the period of April 1, 2014 to July 31, 2014 for the state, to enable us to plan in a sustainable manner. The modified Budget would be presented at a later date and the new initiatives under Plan and non-Plan sections of the Budget would be incorporated at that stage,” said Gujarat finance minister Nitin Patel.

Although there was no announcements for the common man, Patel’s Budget speech described in detail the state government’s achievements during the Modi regime.

The state government has also decided not to decrease value added tax (VAT) and surcharge on petroleum products, claiming VAT rates in Gujarat were similar to that in other states and not higher as perceived. It has estimated the total public debt to reach Rs 1.53 lakh crore by end of FY14 from Rs 1.38 lakh crore in FY13.

Patel informed the Assembly that the estimated Budget for FY15 would be Rs 1,20,390 crore with a net surplus of Rs 732.53 crore. He proposed vote-on-account for a period of the first four months of 2014-15; that is till, July 31. The government will seek the House’s approval for a provision of approximately Rs 40,000 crore for this period. The proposal would be put to vote on February 24 after discussion in the House.

“The economic policies of the Union and the states must be complementary to one another. The Union government has decided to present a vote-on-account for FY15 and, therefore, it is appropriate the policies of state governments are also in line with the approach and direction to be taken by the government that is to be formed at the Centre,” Patel said in his interim Budgetspeech.

The vote-on-account has provisions for expenditure of recurrent nature and existing plan schemes. Total receipts are estimated to be Rs 1,19,527 crore, indicating a rise of 10 per cent over the revised estimates for 2013-14. The revenue receipts are estimated to go up to Rs 95,440 crore, which is 12 per cent higher than the revised estimates of the current financial year.

According to Patel, the estimated plan allocation for 2014-15 was Rs 61,940 crore including extra budgetary resources of Rs 9,729 crore, which mainly include continuous schemes. In 2013-14, the Plan size for the state was Rs 58,500 crore. Development expenditure is estimated at Rs 80,973 crore, up 5.6 per cent from 2013-14 when it was Rs 76,679 crore.

Patel, however, did not give sector-wise estimated allocation of funds for development expenditure, but gave a comparison of allocation compared to 2013-14. Allocation in 2014-15 for women and child development, health and family welfare, tribal and social welfare development has increased by 165 per cent, 159 per cent, 125 per cent and 122 per cent, respectively, over the Plan allocation for FY14.

The finance minister said the budgetary estimates for 2014-15 showed a revenue surplus of Rs 7,697 crore, while fiscal deficit was estimated to be Rs 17,611 crore. The fiscal deficit for the state would be 1.93 per cent of gross state domestic product (GSDP) and was far below the permissible FRBM (Fiscal Responsibility and Budget Management) Act limit of three per cent of the GSDP.

While interacting with mediapersons, Patel was asked if the government was contemplating reducing VAT rate on natural gas. “There is no decision on this at this point of time. Also, let me tell you that VAT rates on natural gas was almost the same in all states of the country. Gujarat is not charging higher VAT for natural gas,” said Patel, justifying the 15 per cent VAT on compressed natural gas.

Terming the interim Budget bland and deceptive, the leader of the opposition party, Gujarat Congress chief Shankersinh Vaghela said the interim Budget was a mere repetition of the governor’s speech given on February 20.

Source : PTI

US tax regulators revise rules for citizens’ foreign bank accounts : 21-02-2014


The US Treasury Department issued final revisions on Thursday to regulations enforcing tax compliance by US citizens and foreign banks holding their accounts.

The revisions to regulations first issued in January 2013 come ahead of the scheduled July 1 implementation of the Foreign Account Tax Compliance Act (FATCA).

The 2010 law was intended to crack down on US citizens hiding assets in overseas accounts and the foreign banks that aid such tax evasion.

“Offshore tax evasion undermines confidence in our tax system and deprives the United States of revenues necessary to protect and provide for its citizens,” Treasury Secretary Jacob Lew said.

“There is significant momentum to implement FATCA across the globe, and we will continue to work closely with our international partners to combat these illicit activities and raise global tax standards.” The revisions come after the Treasury reported that the number of people renouncing US citizenship had soared since the new law took effect.

In the last three months of 2013 alone, more than 600 people filed paperwork to waive their affiliation to the United States, bringing the number to 3,000 in 2013. The rate was up from fewer than 1,000 in 2012 and more than 1,700 in 2011, the International Tax Blog reported.

The US taxes its citizens’ overseas income, unlike most other countries.

Source : The Economic Times

Rupee up 9 paise vs dollar in early trade : 21-02-2014


Rupee higher at 62.16/17 versus 62.26/27 close on Thursday, tracking gains in most other Asian currencies versus the dollar.

A dealer said direction to be flow-based with no major cues.

The rupee-dollar pair was expected to hold in a 62 to 62.50 range during the day, dealers said.

A brisk US manufacturing survey gave Asian stocks markets a lift and bolstered the dollar, though underlying concerns about China’s economic growth kept investors from rushing to buy some emerging market shares.

Traders will watch domestic share market moves for cues on the direction of foreign fund flows.

Source : PTI

Excise duty cut to boost auto sales : 20-02-2014


The cut in excise duty on automobiles in the interim budget will help exports of engineering items, according to the Engineering Export Promotion Council (EEPC) chief.

“The employment-oriented engineering sector, which encompasses a large number of MSMEs, will be contributing about $65 billion to the overall export revenue of $326 billion, as targeted by the government. However, to achieve this target and to improve upon the same, the manufacturing sector needs a big push from the government to sharpen India’s competitive edge in the global market,” said EEPC India Chairman Anupam Shah.

He noted that the government has indicated a growth rate of 6.3 per cent in merchandise exports during the current financial year, despite headwinds in the global market. India’s merchandise exports reached a level of $300.4 billion in 2012-13, registering a negative growth of 1.8 per cent over the previous year. However, during the current year, “we are seeing a definite turnaround,” added Shah.

However, Dinesh Kanabar, Deputy CEO, KPMG in India, noted that the vote on account presented by the Finance Minister was on expected lines.

“The significant positive was the reduction of excise duty on capital goods, which should give impetus to capital spend, and white goods, which should give impetus to consumer spend,” he said.

Kanabar, however, noted that the non-withdrawal of one-year income tax surcharge on individual assessees was “surprising and disappointing.”

‘Positive step’

Dinesh Thakkar, Chairman, Angel Broking said, “The fiscal deficit for FY2014 has been positively reined in at 4.6 per cent of the GDP vis a vis market expectations of 4.8 per cent of GDP.

At least in the interim budget, the Finance Minister has estimated the fiscal deficit target for FY2015 at 4.1 per cent of GDP, presuming higher GDP growth and tax buoyancy, but it remains to be seen whether the estimates are unchanged by the new government that comes to the helm over the coming 2-3 months, he said.

Thakkar noted that the market borrowing programme was estimated to be slightly lower than market expectations, and that was likely to be “positive for yields at least in the near term.

Excise duty cuts have been announced for sectors facing the major brunt of the slowdown, and hence the cuts for automobile production are positive for the automotive sector and for capital and consumer durables goods production, spelling good news for the manufacturing sector.”

Source : PTI

Budget 2014: Brokerages, rating firms doubt FM’s method of fiscal consolidation and targets for next fiscal : 20-02-2014


NEW DELHI: Finance Minister P Chidambaram came in for a barrage of criticism from brokerages and rating companies over fiscal consolidation and how it had been achieved besides being sceptical about meeting what they said were unrealistic targets for next year. Reining in the deficit, they said, may have been achieved by rolling over spending to next year, implying that the next government could find it difficult to meet targets. ET had pointed out on Monday that it was difficult to see how the circle would be squared, given that some of the assumptions made in the interim budget seemed to be overly optimistic.

In his interim budget for 2014-15 presented on Monday, Chidambaram pegged fiscal deficit for the current year at 4.6% and 4.1% for the next financial year, delivering on his promise to not breach the “red line” of 4.8%.

“Similarly, the budget estimates for FY15 also look optimistic on the tax revenue and spending growth assumptions,” Chetan Ahya and Upasana Chachra of Morgan Stanley said in a research report on Tuesday. “In any case, we believe the fiscal deficit estimates for FY15 are largely irrelevant as the final budget to be released post the formation of the new government will override these estimates.”

In an interview to ET NOW on Tuesday, the FM said criticism of the budget’s fiscal deficit targets was unfair. “We have achieved it by collecting as much revenue as we can and to the extent we cannot we have cut expenditure.

Please remember we have collected more than the budgeted estimate in non-tax revenues and to that extent expenditure has not been cut.” The scepticism stems largely from the estimated 19% increase in gross tax collections, with corporate tax expected to rise by 14.6%, personal income tax by 27.2%, excise duty by 11.8%, customs duty by 15% and services tax by a staggering 31%.

The rise in tax collections is premised on a nominal GDP growth of 13.4% and real growth of 6%, targets that experts said are too ambitious.

“The 4.1% target for FY15 is based on nominal GDP growth of 13.4%, total receipts of 15.8% and expenditures up 10.9% — all of which we believe are optimistic,” Citi economist Rohini Malkani said, adding there was “lots beneath the headline”. Ratings agency ICRA echoed this sentiment.

“Curtailing the fiscal deficit to 4.1% of GDP in 2014-15 as indicated by the interim budget estimates seems challenging, given the optimistic assumptions for nominal GDP growth (13.4%), net tax revenue growth (18%) and disinvestment receipts from sale of stake in government companies (Rs 37,000 crore),” it said in a note.

Experts said the subsidy provision of Rs 2.55 lakh crore, almost the same as the revised estimate of last year, looks inadequate, especially that pertaining to fertilizers. The shortfall could be more if the rupee depreciate from 61 to the dollar or crude exceeds $106 a barrel, assumptions made in budget calculations.

“As per our current estimates, we think that a more realistic GFD (gross fiscal deficit)/GDP for FY2015E could be at 4.5%, leading to a gross borrowing number of Rs 6.3 lakh crore,” said Indranil Pan, chief economist, Kotak Mahindra, calling the fiscal consolidation “optical”. As far as 2013-14 numbers are concerned, the biggest criticism is that Chidambaram has pushed spending to next year.

Chidambaram cut plan expenditure by Rs 75,000 crore and will roll over Rs 35,000 crore of the fuel subsidy payout for fourth quarter of 2013-14 to the next fiscal. Meanwhile, higher dividend payouts worth Rs 88,188 crore from public sector banks and other state-owned enterprises helped the government meet the shortfall on account of lower tax revenue and failure to meet the disinvestment target.

Tax revenues fell short of the budgeted Rs 12.36 lakh crore by Rs 76,965 crore due to the slump in growth. “However, it is hardly a secret that this (fiscal consolidation) has largely been achieved by pushing back expenditure and moving forward tax and dividend collections,” HSBC chief economist for India and Asean Leif Lybecker Eskesen said in a note.

The government estimates Rs 88,188 crore through dividends and profit in 2013-14 compared with Rs 53,761 crore in 2012-13. The 2014-15 target is set at Rs 77,229 crore, suggesting that the government may have skimmed off some of what was to come next fiscal in the current year itself.

Questioning the quality of fiscal consolidation is a recurrent theme of many years, arising largely from this being achieved through cuts in capital spending, or so-called productive spending.

“While the finance minister definitely did stick to his commitment of fiscal consolidation, like every other year, the quality of expenditure continues to be compromised,” said Upasna Bhardwaj of ING. Capital spending was only 13.6% of total spending in 2013-14. Not everyone is complaining though, at least not the rating company that had threatened a downgrade.

Moody’s said the interim budget is in line with policy assumptions that underpin India’s Baa3 rating, adding that the new government will determine the longer-term fiscal trends that could impact the country’s credit profile. UBS hailed spending cuts in a pre-election period as being noteworthy.

 Source : The Economic Times

India has met budget deficit target; fiscal position weak: Moody’s : 18-02-2014


NEW DELHI: Global rating agency Moody’s today said India’s interim budget is in line with the policy assumptions that underpin the government’s Baa3 rating with a stable outlook.

The global rating agency has, however, cautioned that India’s fiscal position remains “weak”.

“Moody’s stable outlook on India’s Baa3 sovereign rating incorporates the macro-economic risks posed by the government’s high deficit and debt ratios as well as its recent efforts to control the fiscal deficit through ad hoc measures,” it said in a statement.

The rating also incorporates the medium-term credit support provided by the government’s favourable access to domestic savings for the purposes of financing its large borrowing requirements, the statement added.

The new government which would take office likely by May would determine the longer-term fiscal trends that could impact the government’s credit profile, it said.

Global rating agencies like Moody’s, S&P and Fitch have repeatedly threatened to lower India’s credit rating and a downgrade would mean pushing the country’s sovereign rating to junk status, making overseas borrowings by corporates costlier.

“Moody’s notes that India’s fiscal deficit ratios have declined over the last two years, but its general (central and state) government fiscal deficits remain higher than those of similarly rated peers,” it said.

Moody’s further said the government’s higher-than- budgeted subsidy bill reveals the fiscal position’s exposure to commodity prices and exchange-rate fluctuations.

In the interim budget, the government has said that the fiscal deficit for the current financial year would be contained at 4.6 per cent of GDP. The fiscal deficit, which is the gap between expenditure and revenue, was at 4.9 per cent of GDP in the previous financial year.

India met the target, despite lower-than-budgeted tax revenue growth, partly through non-tax revenues — such as dividends from public-sector enterprises and fees from a telecom airwave auction — and partly through a reduction in certain expenditures.

According to Moody’s, while demonstrating a commitment to meeting its deficit targets, the Indian government’s spending cuts are also likely to constrain GDP growth in the current year.

Thus, “meeting the interim budget’s proposed FY2014/15 deficit target of 4.1 per cent of GDP depends on the pace of GDP growth, commodity prices, and currency trends over the next fiscal year,” it said.

Source : The Hindu

Rupee remains low; dollar demand-supply imbalance : 18-02-2014


Rupee remained low on bunched-up demand for dollar after US holiday on Monday.

The rupee was trading at 62.12/13 vs its last close of 61.84/85 against the dollar.

“Supply is thin and the demand-supply imbalance will keep the pair bid,” a senior dealer with a private bank said.

Dealers cited buying by a large petrochemical company in early session. The rupee-dollar pair seemed to hold 61.90 downside for now, may see movement towards 62.20-62.25. Local stocks were up 0.77 pc.

Source : PTI

Vote on Account 2014: Guide to indirect taxes : 18-02-2014


Proposal: Any service provided by cord blood banks for preservation of stem cells is exempted from service tax.

Impact: A stem cell preservation package costing Rs 80,000 is likely to cost Rs 71,200 only.

P: Excise duty on select goods such as washing machines, laptops, air conditioners, cameras, microwaves, TVs etc covered under chapter 84 and 85 of Central Excise Tariff shall now have a reduced rate of duty from 12.36% to 10.3%

I: Some of the popular goods which may undergo price reduction (in approximate terms) are: Voltas 1.5 tons split AC from Rs 32,700 to Rs. 31,900; Electrolux 240 litres frost free refrigerator from Rs 18,000 to Rs. 17,400; Whirlpool 8 kg top-load fully automatic washing machine from Rs 30,100 to 29,400; Lenovo Ideapad Z 510 laptop from Rs. 59,800 to Rs. 58,100; Samsung’s 28 litres microwave from Rs 14,600 to Rs 14,100; Nikon DSLR D5100 camera from Rs 32,000 to Rs 31,100; and Samsung 40 inch 3D LED TV from Rs 57,500 to Rs 56,150.

P: An option has been given to all mobile handset manufacturers to pay 6% with Central Value Added Tax (CENVAT) credit or 1% without CENVAT credit. CENVAT credit rules provide for a tax credit to manufacturers and service providers.

I: Earlier handsets retailing for more than Rs 2,000 did not have option to pay excise duty of 1%. This option is now available and hence, manufacturers may choose cost-effective credit methods and may pass on the benefit to customers.

P: Excise duty rate for motorcycles, scooters cut from 12.36% to 8.24%

I: Honda CB Unicorn 150cc with on-road price in Mumbai of Rs 76,649 is likely to be cheaper by approximately Rs 2,700 and may now cost Rs 73,949. Honda Activa scooter with on-road price in Mumbai of Rs 56,888 may now cost only Rs 54,900.

P: Excise duty rate on motor vehicles running on petrol, LPG or CNG having engine capacity up to 1200cc and less than 4 metres is reduced from 12.36% to 8.24%.

I: A Maruti SuzukiBSE 2.82 % WagonR (LPG) with on-road price in Mumbai of Rs 5.23 lakh may now cost less by approximately Rs 19,000.

P: Excise duty rate on diesel motor vehicles having engine capacity of up to 1500cc and length not exceeding 4 metres is reduced from 1200cc and less than 4 metres is reduced from 12.36% to 8.24%.

I: A Maruti Suzuki Swift VDi diesel car with on-road price in Mumbai of Rs 7.51 lakh may now be available at a better price of Rs 7.24 lakh.

P: Excise duty rate on a nondiesel motor vehicles having engine capacity of more than 1200cc but up to 1500cc and length less than 4 meters shall be reduced from 24.72% to 20.6%.

I: A Hyundai i20 Sports Automatic petrol car with 1400 cc engine with a Mumbai on-road price of Rs 9.4 lakh may now cost less by approximately Rs 30,000.

P: Excise duty rate on motor vehicles (Sports Utility Vehicles) having engine capacity of more than 1500cc and ground clearance of more than 170mm shall be reduced from 30.9% to 24.72.%

I: The popular SUV Toyota Fortuner with on-road price in Mumbai of Rs 27.91 lakh may be cheaper by approximately Rs 1.25 lakh.

P: Excise duty rate on motor vehicles (non-SUV) having engine capacity of more than 1500cc and length exceeding 4 meters shall be reduced from 27.81% to 24.72%.

I: Mercedes’s flagship car the new S class (SLK 350) (Rs 1.06 cr on-road Mumbai) could be cheaper by Rs 2.4 lakh.

P: Excise duty rate on hybrid motor vehicles (option to run on electric energy) shall be reduced from 12.36% to 8.24%

I: The environment friendly Mahindra Reva costing Rs 7.63 lakh (on-road Delhi) may now be pocket friendly by approximately Rs 27,000.

Methodology: We have taken the MRP of popular brands in this table, factored in a tentative distributor’s margin and then computed the indicative impact of budget announcements.

(Note: The above reduction in rates come into immediate effect and applies up to June 30, 2014. The full-fledged budget could revise these rates.)

Compiled and powered by EY

Haven’t filed tax return? You can do so till 31 March : 17-02-2014


Many taxpayers see the Income Tax Department as a heartless organisation that is ready to haul them over the coals for the smallest of mistakes. However, there is a soft side to the taxman as well, which is evident from the rules for late filing of tax returns. For instance, if you have missed the deadline for filing your income tax return, there’s no need to be worried.

The tax department accepts returns till the end of the assessment year. If all your taxes are paid, you will not be levied a penalty or get a notice for non-filing as long as you file the return for 2012-13 by 31 March 2014. However, if there is some tax to be paid, you will have to give a 1% late payment fee for every month of delay since April 2013. If the tax due is more than Rs 10,000, you should have paid an advance tax. Advance tax is payable in three tranches—30% is to be paid by 15 July of the relevant financial year, 60% by 15 December and 100% by 31 March ..

If advance tax has not been paid, the penalty per month will be applicable from the due date of the advance tax. There’s even a small window of reprieve for the ultra-lazy taxpayers, who haven’t filed their returns for the past two years. They can do so for the income earned in 2011-12 by 31 March 2014. However, this will be treated as a belated return and there could be a `5,000 penalty for late filing depending on the discretion of the assessing officer.

Tax experts say the penalty is rarely slapped if all taxes have been paid. The assessing officer invokes this provision only when there is an additional tax liability. The salaried individuals and retirees, whose income is subject to tax deduction at source, are on dry ground. However, keep in mind that there may be some income on which you have not paid tax. Although there is now a Rs 10,000 deduction on interest earned on savings bank deposits, the income from other bank deposits and infrastructure bonds bought a few years earlier is fully taxable.

Though the tax laws give you a grace period if you file your return late, you also forgo some of your rights as a taxpayer. For one, you cannot modify your tax return if it has been filed after the due date. If you have filed by the due date, you can alter it any number of times before the end of the assessment year, or till the return is assessed. However, after the due date, you are not allowed to change it. So if you miss out on any deduction or exemption, you can’t claim it later.

You also cannot carry forward any short-term or long-term losses if you have filed after the due date. The taxpayers, who have filed by the due date, can carry forward capital losses and adjust them against future capitalBSE -0.71 % gains. They can also carry forward these losses up to eight financial years. For instance, if you had suffered capital losses in 2012-13, these can be adjusted against gains till 2020-21.

However, this benefit is not available to the late filer. The other problem with late filing is that you get tax refunds late.

The earlier you file the return, the faster it is assessed and you receive the refund. Even if it gets delayed due to clerical errors and bureaucratic sloth that government departments are notorious for, you will earn an interest. This is because the interest on refund is calculated from the time that you file your tax return.

5 facts on belated returns:

1) No difference in filing procedure The process of filing before or after the deadline is the same. However, don’t forget to mention in the tax form that the return being filed is a belated one.

2) Responding to a tax notice If the belated return is being filed in response to an income tax notice, mention this in the return. Last year, 9.75 lakh notices were issued for non-filing.

3) Don’t ignore the notice from tax department Prosecution proceedings can be initiated against the taxpayer if he ignores a notice for non-filing of tax return in case the payable tax exceeds Rs 3,000.

 4) Taxman lenient for genuine cases The tax department is considerate if the taxpayer is unable to file returns by the due date due to a genuine reason, such as serious illness or injury.

5) Lower interest on your tax refund If the tax refund is delayed, the taxpayer is eligible for interest, but it starts accruing from the time he files his return. Late returns earn less interest.

Source : PTI

FM P. Chidambaram makes small cars, motorcycles, SUVs cheaper in Budget 2014; analyst highlights 3 positives in speech: 17-02-2014


Finance Minister P Chidambaram presented Interim Budget 2014 in Lok Sabha today, but his speech was disrupted by members protesting over the Telangana issue. However, FM refuses to be cowed down by heckling and made himself heard by raising his voice over the din.

The Interim Budget for the fiscal year 2014/15 will cover expenditure until the government’s term ends in May.

Interim Rail Budget passed by Lok Sabha without discussion

EXPERTS ANALYSE INTERIM BUDGET

RADHIKA RAO, ECONOMIST, DBS, SINGAPORE

“Three positives out of the just concluded speech – the fiscal target in FY13/14 has not only been met but undershot, excise duty rates were cut for a handful of the troubled sectors and (he) assured that fiscal rationalisation will remain on track into 14/15. But, under the hood concerns – primarily on how these deficit targets were met/will be met next year — remain largely unanswered. The cut in the excise duties will also have a bearing on the indirect tax takeaways, putting revenue targets at risk.

“Clarity on the continuity of few of the tax surcharges levied last year is also awaited, with the quality of fiscal consolidation still in question. Nonetheless, while the rating agencies will sift through the details, they are unlikely to act as yet. Their focus has shifted to the post-election growth and reform agenda.”

VIJAI MANTRI, CHIEF EXECUTIVE, PRAMERICA ASSET MANAGERS, MUMBAI

“The market was fixated on the fiscal deficit number and the borrowing program and I think all of them are in line with expectations.

olicy paralysis – laid out a raft of reform steps it has taken.

EXPERTS ANALYSE INTERIM BUDGET

RADHIKA RAO, ECONOMIST, DBS, SINGAPORE

“Three positives out of the just concluded speech – the fiscal target in FY13/14 has not only been met but undershot, excise duty rates were cut for a handful of the troubled sectors and (he) assured that fiscal rationalisation will remain on track into 14/15. But, under the hood concerns – primarily on how these deficit targets were met/will be met next year — remain largely unanswered. The cut in the excise duties will also have a bearing on the indirect tax takeaways, putting revenue targets at risk.

“Clarity on the continuity of few of the tax surcharges levied last year is also awaited, with the quality of fiscal consolidation still in question. Nonetheless, while the rating agencies will sift through the details, they are unlikely to act as yet. Their focus has shifted to the post-election growth and reform agenda.”

VIJAI MANTRI, CHIEF EXECUTIVE, PRAMERICA ASSET MANAGERS, MUMBAI

“The market was fixated on the fiscal deficit number and the borrowing program and I think all of them are in line with expectations.

“Since the last one year India was under so much scrutiny because of a probability of a rating downgrade, we have been in an environment where the policy makers have been constantly communicating with the various stakeholders. So I think what came out in the final document was not surprising, which is a net positive from the market’s point of view given that the finance minister has been able to deliver on his promise.

“I think the interim budget is also positive for the auto industry given the long awaited excise duty cuts, but it also depends on whether the next government will continue this or not.”

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI

“Refraining from populist announcements, the budget has proposed a few measures to support investments and consumption by cutting excise duty. The subsidy payment roll over was along expected lines, so no incremental negative surprise. Overall, one could say that its largely a non-event budget.

“The only positive in the interim is

“Since the last one year India was under so much scrutiny because of a probability of a rating downgrade, we have been in an environment where the policy makers have been constantly communicating with the various stakeholders. So I think what came out in the final document was not surprising, which is a net positive from the market’s point of view given that the finance minister has been able to deliver on his promise.

“I think the interim budget is also positive for the auto industry given the long awaited excise duty cuts, but it also depends on whether the next government will continue this or not.”

SHUBHADA

at the net borrowing program for the year at 4.6 trillion rupees is lower than last year’s 4.8 trillion rupees.”

ANEESH SRIVASTAVA, CHIEF INVESTMENT OFFICER, IDBI FEDERAL LIFE INSURANCE, MUMBAI

“Some tinkering on excise is positive for auto companies. More importantly clarity on fiscal deficit and government’s borrowing program is a greater positive.

“Now we have a roadmap on government borrowing, we were earlier thinking it to be about 6.30 lakh crore (6.3 trillion rupees), and what has come is much better than expectations.

“This is positive for equities. Elections are next to watch. We should now see if markets rally from here on Modi optimism. Any substantial decline would be a buying opportunity.”

P. Chidambaram likely to positively surprise markets on deficit front: StanChart : 14-02-2014


Higher-than-expected non-tax revenue and expenditure cuts may help peg fiscal deficit target below the projected 4.8 per cent in the current fiscal, and project the revenue-expenditure gap next fiscal at 4.2 per cent of GDP, says a report.

“We expect Finance Minister P. Chidambaram to meet the fiscal deficit target of 4.8 per cent of GDP for FY14, which he has defined as the ‘red-line’,” Standard Chartered said in a report today.

“We even see a possibility that the finance minister will positively surprise the market by announcing a deficit below 4.8 per cent,” it added.

Standard Chartered has also projected the FY15 gross market borrowing at Rs 5.8-6 trillion or 4.2 percent of GDP.

The report also said the government will end the current fiscal with a cash surplus of about Rs 1 trillion, despite the cancellation of the Rs 15,000 crore G-sec auction, as national small savings fund collection had exceeded the budgeted amount by Rs 36,100 crore as of end December.

The report said that non-tax revenues, including disinvestment proceeds, could surprise on the upside as dividend flows from state-run enterprises have been higher than anticipated.

“We expect the government to end FY14 with dividend/ profit collection of 0.85 per cent of GDP, exceeding its target of 0.65 per cent,” the report said.

The ongoing spectrum auctions are likely to yield enough revenues to meet the budgeted proceeds, the report said. Already on the ninth day of the auctions, the government is assured of close to Rs 62,000 crore in bid amounts.

The report expects the government to trim expenditure by 0.55 per cent of GDP to meet the fiscal deficit target.

In the run-up to the general elections, Chidambaram will present the vote-on-account next Monday.

The market participants will closely watch the FY15 fiscal deficit target, which will determine the size of market borrowing for the next fiscal year, according to the report.

“The target is widely expected to be set at 4.2 per cent of GDP, in line with the fiscal consolidation plan outlined in October 2012,” according to the report.

The report said since finance minister was committed at that time to reducing the fiscal deficit by 0.6 per cent of GDP annually, he is unlikely to deviate from this plan in his final Budget.

“However, the new government will have the option of revisiting the deficit target and borrowing plans for FY15. This means the borrowing laid out in the interim budget will be valid only for Q1 of FY15, if the new government revises the FY15 fiscal deficit projections,” the report said.

On the GDP growth for the next fiscal, the report expects the government to assume nominal GDP growth for FY15 at 12 per cent.

“We expect the government to project 15.3 per cent growth in tax revenue in FY15. In line with the expected trend in FY14, most of the increase is likely to come from robust income tax and services tax collections,” the report said.

The government is likely to project combined tax and non-tax revenue collection at equivalent to 9.7 per cent of GDP for FY15, marginally better than 9.3 per cent of GDP we expect in FY14, it said.

To meet its likely goal of narrowing the fiscal deficit by 0.6 per cent of GDP in the next fiscal year, the government will have to cut spending by at least another 0.3 per cent of GDP in FY15, the report said.

Meanwhile, a UN report earlier in the day said the government is unlikely to meet fiscal deficit of 4.8 per cent due to low growth and higher subsidy.

“Given the weak growth momentum in the region and the difficulties in raising tax revenues and curbing expenditure growth, fiscal deficits will remain substantial in the near term,” said the UN report titled ‘World economic situation and prospects for 2014′.

“The government is unlikely to meet its target of reducing the deficit to 4.8 per cent in the current fiscal since growth is below projections and the depreciation of the rupee pushes up the subsidy bill,” it said.

 Source : The Economic Times

Rupee edges higher, tracks share gains : 14-02-2014


 Rupee was trading at 62.30/31 versus its close of 62.42/43 on Thursday, tracking gains in most other Asian currencies after weak US retail sales data.


The data has raised some investors’ expectations for a slower reduction in the US Federal Reserve’s monetary policy stimulus programme.

The rupee-dollar pair was seen moving in a 62.20 to 62.60 range during the session.

Local shares were up 0.3 per cent and will be watched for cues on foreign fund flows during the session.

Source : PTI

Notification No.11/2014 dated 13-02-2014


Seeks to amend Notification No. 61/2013 – S.O. 2424(E) dated 8th of August, 2013. – 11/2014 – Dated 13-2-2014 – Income Tax

 

NOTIFICATION NO. 11/2014

DATED 13-2-2014

S.O.399(E) -In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes following amendment to the notification of the Government of India, Ministry of Finance, (Department of Revenue), published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 2424(E), dated the 8th of August, 2013, namely:—

In the said notification, in the Table,—

(i)   serial number 3 and the entries relating thereto shall be omitted;

(ii)   for the serial numbers 7, 8 and 13 and entries relating thereto, the following serial numbers and entries shall be substituted, namely:—

(1)

(2)

(3)

“7.

Rural Electrification Corporation Limited (REC)

6000

8.

National Housing Bank (NHB)

4000

13.

NTPC Limited (formerly known as National Thermal Power Corporation)

2250″

 [F.NO.178/9/2014-(ITA-I)]

(Surabhi Sharma)
Under Secy

 

Rupee up 5 paise against dollar in early trade : 13-02-2014


The rupee edged higher by five paise to 62.05 against the US dollar in early trade today at the Interbank Foreign Exchange on sustained selling by exporters.

The rupee had gained 12 paise to close at three-week high of 62.10 in the previous session.

Besides strengthening of other currencies against the dollar in overseas market, increased capital inflows and fall in retail inflation supported the rupee, forex dealers said.

The Consumer Price Index (CPI), which was released yesterday after market hours, eased to two-year low of 8.79 per cent in January on account of fall in food prices.

The benchmark BSE Sensex rose by 38.38 points, or 0.19 per cent, to 20,486.87 in early trade today.

Source : The Economic Times

Rupee gains 14 paise against the dollar in early trade : 12-02-2014


The rupee opened 14 paise stronger at 62.08 per dollar against the previous close of 62.22 on the back of robust trade deficit data released on Tuesday.

January trade deficit narrowed to a 4-month low of $9.9 billion led mainly by continued contraction in imports. Cumulatively, for April-January period, the trade deficit now remains at $119.9 billion, sharply lower (-27.6 per cent year-on-year) than the $165.8 billion in the corresponding period a year ago.

While, non-oil, non gold and silver imports continued to contract since April, on a more sequential basis some stability is visible as import growth has remained in the positive territory for the past two months, trade data showed.

Investors were keenly watching US Federal Reserve Chair Janet Yellen’s comments on the US economy and monetary policy. Yellen said that if the economy keeps improving, the Fed will take “further measured steps” to reduce the support it’s providing through bond purchases.

She sought to reassure investors that she will embrace the approach to interest-rate policy that her predecessor, Ben Bernanke, pursued before he stepped down as chairman last month

Upasna Bhardwaj, Economist at ING Vysya said, “We expect USD-INR to trade fairly range-bound in the near term (61.50-63.50), with the elections being the key digital event domestically in deciding the direction. Any bouts of appreciation/depreciation beyond this range are expected to keep RBI on guard.”

Market investors will also watch out for consumer inflation data due today.

Call rates open lower

The inter-bank call money rate, the rate at which banks borrow money from each other to meet short-term liquidity mismatches, opened lower at 8.70 per cent against the previous close of 9.15 per cent.

Yield on the 10-year benchmark 8.83 per cent Government security, maturing in 2023, softened to 8.73 per cent from 8.74 per cent. Bond prices rose to Rs. 100.62 from the previous close of Rs. 100.55. Bond prices and yields move in opposite direction.

Source : PTI

RBI examining legal, security aspects of virtual currencies: Chidambaram : 12-02-2014


The government, on Tuesday, said the Reserve Bank of India (RBI) was examining the legal and security aspects of virtual currencies such as bitcoins and litecoins.

“The RBI is presently examining the issues associated with the usage, holding and trading of virtual currencies, including bitcoins, under the extant legal and regulatory framework of the country, including foreign exchange and payment systems laws and regulations,” Finance Minister P. Chidambaram said in a written reply in the Rajya Sabha.

The RBI in last December had cautioned users, holders and traders of virtual currencies about potential financial, operational, legal, customer protection and security-related risks that they were exposing themselves to.

Mr. Chidambaram said the public at large had been informed that creation, trading or usage of virtual currencies as a medium of payment were not authorised by any central bank or monetary authority.

“No regulatory approvals, registration or authorisation has been obtained by entities concerned for carrying on such activities. As such, they may pose several risks to their users,” the Finance Minister said.

At least 93 virtual currencies are at present being used by people across the world over the internet, as also for some offline transactions, and their total valuation has reached $13 billion (over Rs.80,000 crore), out of which bitcoin alone accounts for over $9 billion, according to market estimates.

After the RBI and other central banks across the world warned financial intermediaries about dealing with virtual currencies through traditional channels, the buzz around such denationalised currencies, which were not backed by any assets, had tempered for some time.

Source : The Hindu

Parliament unlikely to pass SEBI Amendment Bill : 11-02-2014


Parliament is unlikely to take up the Bill giving search and seizure powers to the Securities and Exchange Board of India (SEBI) in the current session.

Even though the draft for the legislation is ready with the Parliament’s Standing Committee on Finance, it was not included in the agenda of the Committee which met prior to the Parliament session.

The Bill gives powers to SEBI to initiate recovery proceedings against unscrupulous promoters. Since the promulgation of the Ordinance, in July last year to tackle unregistered collective investment schemes (CIS), SEBI has initiated proceedings to recover an amount in excess of Rs.1,700 crore. Even though it lapsed in September last, the government re-promulgated it as the Parliament was not in session. It lapsed again on January 15, this year, as it was not passed in the winter session.

Technically, as the session is on, the Ordinance cannot be re-promulgated. The amendments bring in any investment scheme above Rs.100 crore, other than those exempted under Section 11AA of SEBI Act like Nidhi funds, chit funds and non-banking finance companies (NBFCs), under the regulatory purview of SEBI and such schemes would have to get registered with the SEBI.

Several crores have been raised by various unauthorised schemes across the country. Investors in such schemes have been mostly gullible people from the lower strata of society who are attracted by the promise of high returns.

Further, there are various investment schemes regulated by different regulators. While NBFCs come under the Reserve Bank of India (RBI), company fixed deposits come under Ministry of Corporate Affairs, insurance under Insurance Regulatory and Development Authority (IRDA) and collective investment schemes come under the regulatory purview of SEBI.

In the case of ponzi schemes, it is difficult to determine under which regulator they fall as companies try to exploit the existing loopholes in the law. While each regulator has powers to deal with unauthorised schemes coming under their purview, not much visible action is seen. In many CIS orders, SEBI has requested the Ministry of Corporate Affairs to initiate winding up of unregistered CIS companies.

CIS schemes

SEBI has been given the mandate to regulate CIS schemes under the SEBI Act in the late 1990s. Since then SEBI had launched prosecutions in more than 550 cases, out of which courts have convicted the guilty in more than 130 cases. While investment schemes of Nidhi funds, chit funds and NBFCs were exempted from the definition of CIS, this has been exploited by some unscrupulous companies which have been raising money from the public in different names, but schemes similar to CIS. The Saradha Group financial scandal is a case in point where SEBI has passed an order asking the company to wind up its schemes. However, this is not enough. While SEBI continues its crackdown, perhaps there is a need for a concerted effort by all financial sector regulators so that gullible investors are not duped. The state governments also need to be more vigilant in tackling such schemes. Non-passage of the Bill will now curtail the effectiveness of SEBI’s actions while unscrupulous promoters will continue to dupe gullible investors.

Source : The Hindu

Rupee up 10 paise against dollar in early trade : 11-02-2014


The rupee gained 10 paise to 62.33 against the dollar in early trade today at the Interbank Foreign Exchange market on selling of the US currency by exporters and banks amid a higher opening in the domestic equity market.

Easing of the dollar against the euro and yen as investors cautiously await US Federal Reserve chief Janet Yellen’s inaugural testimony to Congress also supported the local currency, forex dealers said.

The rupee had lost 15 paise to end at 62.43 yesterday on fag-end demand for the US currency.

Meanwhile, the benchmark BSE Sensex rose 63.95 points, or 0.31 per cent, to 20,398.22 in early trade today.

Source : The Economic Times

P. Chidambaram may extend excise relief, but won’t cut rates : 10-02-2014


The interim budget for 2014-15 is likely to extend some state and sector-specific indirect tax breaks although tax rate changes are unlikely to happen. Finance minister P Chidambaram is also likely to present his perspective on the future course of reforms in both direct and indirect taxes if the UPA voted is back to power, in an answer to BJP’s promise of a simpler tax regime.

Persons privy to government’s budget discussions said most of the indirect tax changes recommended by the Parthasarathi Shome panel has already been announced in the last three months without waiting for the interim budget and hence major tax changes are unlikely in the budget.

However, certain end-use specific exemptions in service tax could be expected. While the tax rate presently at 12% is unlikely to be changed, services rendered to certain infrastructure businesses could get relief.

The government is also considering an extension of the excise duty exemption in hill states such as Himachal Pradesh and Jammu and Kashmir by either five years or until the GST comes into force.

The excise duty exemption available to hill states expires in May 2014. Excise duty is now levied at 12%. In the vote-on-account to be presented in Parliament on February 17, rate changes on the direct tax front (personal income-tax and corporation tax) are virtually ruled out.

These changes require Parliament approval and with elections around the corner, it is a matter of propriety that such matters are left to be decided by next Lok Sabha.

While excise or service tax rate change at this juncture may not be in keeping with the GST plan, the minister might also refrain from introducing any fresh exemptions as such a move would not be in conformity with the principle of uniform rates and harmonised structure embraced by the policymakers.

Indicating his disapproval of major cuts in tax rates, Chidambaram had recently attributed the tough fiscal deficit situation to the fiscal stimulus given during the crisis years of 2008-09 and 2009-10, which brought down country’s tax GDP ratio to 9.7% in 2009-10 from 11.9%

In 2007-08.

With the curbing of the country’s current account deficit, likely at less than $50 billion or 2.5% of GDP, down from $ 88.2 billion or 4.8% last fiscal, the jewellery industry could expect removal of the non-tariff restrictions on gold imports and a partial rollback of the import duty on gold bars from the current 10%.

With total revenue receipts just about 60% of the budgeted Rs 10.5 lakh crore and expenditure at 70% of the budgeted Rs 16.6 lakh crore up to December, the government is relying on savings in various schemes, telecom spectrum auction eceipts and the mandatory fiscal discipline in the last quarter to limit the fiscal deficit to a level a tad lower than the budgeted 4.8% of the GDP.

The finance ministry had last week said it has lowered its planned borrowings for the current fiscal by Rs 15,000 crore in view of the better liquidity position. As per Chidambaram’s planned mid-course correction, fiscal deficit would be brought down to 4.2% of GDP for fiscal 2015, and then to 3.6% and eventually to 3% by fiscal 2017.

Chidambaram said last week that the ministry would continue to take steps until the end of the term of the government as has been done in the last few weeks. He had imposed a 5% export duty on iron ore pellets earlier this month to help the domestic steel industry.

Observers also anticipate a couplet or two from Chidambaram’s favourite poet Saint Tiruvalluvar, possibly on work half done, in his budget speech on February 17.

Source : The Financial Express

Rupee gains 18 paise against dollar in early trade : 10-02-2014


The rupee strengthened by 18 paise to 62.10 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee.

The rupee had gained 9 paise to close at 62.28 against the dollar on Friday.

Meanwhile, the benchmark BSE Sensex rose 42.66 points, or 0.21 per cent, to 20,419.22 in early trade today.

Source : PTI

How to set off the service tax : 10-02-2014


 If you use the services of vendors and service providers, you may find that the money you pay them includes service tax. When they invoice you for their services, they recover from you the service tax that they have to pay. The tax laws allow a setting off so that credit is available for payments already made to ensure that costs do not rise due to the tax component.


Tax credit: Whenever you prepare invoices in which service tax has been included, you get a service tax credit. This amount is deemed to be the service tax that you have already paid.

Setting off: When you file your service tax, you compute the due tax and deduct the total amount you have already paid your vendors as service tax. Then, pay only the balance.

Documentation: To claim a set-off and pay a lower service tax, you should have records of all the invoices. Ensure that those who have billed you are registered and have invoices. Ensure that those who have billed you are registered and have invoiced you specifically for service tax.

Verification: The proof of payments, which include service tax, should be maintained for audit and reconciliation with invoices. Your invoices to clients represent your service tax dues, while your vendors’ invoices represent your service tax credits.

Points to note

* Service tax and education cess are treated as separate items and the setting off applies separately for each of these heads.

* If any part of the service is not subject to service tax, it should be invoiced separately, both by you and your vendors.

(Content courtesy: Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre and Arti Bhargava.)

Source : The Economic Times

Rupee strengthens to 62.29 in early trade : 07-02-2014


The rupee was trading marginally weak by 3 paise at 62.40 against the dollar at 2.57 p.m. local time on mild dollar buying by importers.

The rupee appreciated by 8 paise to 62.29 in early trade at the Interbank Foreign Exchange today on increased dollar selling by exporters and some banks amid sustained capital inflows.

A higher opening in the domestic equity market also supported the rupee, but the dollar’s strength against other currencies overseas ahead of US jobs data, capped the gains, forex dealers said.

The rupee had gained 20 paise to close at a two-week high of 62.37 yesterday on firm domestic equity market.

Source : PTI

You face legal action for not filing returns even after I-T notice : 07-02-2014


If you haven’t filed your income-tax returns within the statutory deadline or within the time period available after the I-T department issues a notice, it could result in prosecution. In case of a firm or a company, it is the persons responsible for the day-to-day conduct of the business—such as partners or directors—who could face prosecution.

This was upheld by the Supreme Court in its order last week. The SC has also held that in case prosecution proceedings are initiated, taxpayer have to prove the circumstances which prevented them from filing the I-T returns. Which means that the burden is on the taxpayer to prove that the failure to furnish the I-T returns was not wilful.

 In addition to penal interest, the I-T Act also provides for prosecution—rigorous imprisonment of three months to seven years and a fine.

Prosecution proceedings can be initiated when the I-T return is not filed by the statutory due date or within the time permitted by the tax authority in the notice sent requiring filing of such returns.

Section 276CC of the I-T Act enables such prosecution proceedings to be carried out. However, provisos to this section provide for some relief in certain instances.

A taxpayer can file the I-T returns by the end of the fiscal year in which the return is required to be filed and still not attract prosecution proceedings. For instance, the due date of filing returns for a salaried employee is July 31. In respect of income earned during fiscal 2012-13 (April 1, 2012 up to March 31, 2013) salaried employees had to file their I-T returns by July 31, 2013. However, even if the returns are filed by March 31, 2014, prosecution proceedings will not be attracted.
Similarly, no prosecution proceedings are initiated if the tax payable after prepaid taxes (advance tax and tax deducted at source) does not exceed Rs 3,000.

“However, such relief from prosecution is not available in case of a failure to file I-T returns in response to a notice sent by the tax authorities,” explains Tarun Gulati, partner, PDS legal, law firm specializing in tax litigation.

“As there is no protection available against prosecution, even if substantial taxes have been paid either as advance taxes or tax deducted at source, notices from the tax department calling for filing of I-T returns must be attended to promptly. Partners and directors of business entities who are in charge of day-to-day operations must also ensure due diligence in this regard, else they too could be prosecuted,” he adds.

In this case, a Chennai-based partnership firm, Sasi Enterprises, failed to file I-T returns for two years—for fiscal years 1990-91 and 1991-92. The firm also did not act upon the notices sent by the tax department. Consequently, the tax department, in the absence of a tax return or financial information, carried out a ‘best judgment’ assessment and raised tax demands.

The firm appealed against the demand and the matter was pending. In parallel, partners filed belated individual I-T returns and dismissed the contention that a declaration made in the individual returns of the partners stating reasons for not filing the firm’s return would ensure protection against criminal proceeding.

The SC directed the criminal court to complete trial against the firm and its partners within four months.

Source : The Economic Times

Doubtful if Parliament will pass any legislation this session: Chidambaram : 06-02-2014


Finance Minister P Chidambaram today said it was doubtful whether any key legislation, except for the vote-on-account, will be passed in the current session of Parliament which began today.

“If Parliament does not meet to pass laws, and beginning today you will see Parliament will meet, but I doubt whether it will pass any law.

“We have to go through the ritual of attending Parliament everyday and come back empty handed,” he said.

Chidambaram was addressing the students of Shri Ram College of Commerce (SRCC) at its business conclave.

Later talking to reporters, he said the Finance Bill, Vote-on-Account and Appropriation Bill will be passed.

“…but if it is passed without debate or discussion, I won’t be happy. I want it to pass with discussion and debate,” the Finance Minister said.

The Government has listed several Bills which it seeks to pass during the session which will ends on February 21.

Besides the interim budget, the Government wants to pass the Telangana Bill as well as some anti-corruption legislations.

Meanwhile, terming the possible disruptions of Parliamentary proceedings over the Telangana issue as “hiccups”, Prime Minister Manmohan Singh told reporters outside Parliament House that he hoped all sections will have the wisdom to set aside “prejudices” to ensure harmonious working of the session.

Cut in CNG, PNG prices

Responding to a query on cut in prices of CNG and PNG ahead of the general elections, Chidambaram said that the Government has not given any sops, but has only rationalised some prices.

“Government has not given any sops. Just because you guys call it a sop, it does not become a sop. Government has rationalised some prices, that is a decision taken by oil market companies,” he said.

The Government has decided to cut CNG prices by about ₹15 per kg and cooking gas piped to kitchens by about ₹5 per cubic meter.

The Finance Miniser also assured that the red line for fiscal deficit drawn by him 18 months ago will not be breached.

“… have no doubt in your mind… The fiscal deficit will be contained at 4.8 per or below (of the GDP in 2013-14),” he said.

Chidambaram also said that when he lays down office, he will leave a more stable economy than what it was two years ago.

Stressing that India has the potential to grow at 8-9 per cent for next 20-30 years owing to its demographic advantages and resources, he said anything that comes in the way of growth must be opposed.

India’s economic growth estimate for the fiscal 2012-13 has been revised downward to 4.5 per cent, a decade low, from an earlier projection of 5 per cent. In the current fiscal too, the Reserve Bank expects the GDP growth to be below 5 per cent.

Source : Business Line

Rupee up 14 paise against dollar in early trade : 06-02-2014


The rupee today appreciated by 14 paise to 62.43 against the US dollar in early trade at the Interbank Foreign Exchange market on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee.

The domestic currency had lost 4 paise to close at 62.57 against the dollar in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex rose by 54.07 points, or 0.27 per cent, to 20,315.10  in early trade today.

Source : The Economic Times

Rupee up 16 paise vs dollar in early trade : 05-02-2014


The rupee today gained 16 paise to 62.37 against the dollar in early trade at the Interbank Foreign Exchange on increased selling of the US currency by exporters and banks.

Forex dealers said strengthening of other currencies against the dollar overseas and a higher opening in the domestic equity market also supported the local currency.

The rupee had gained three paise to end at 62.53 yesterday on late dollar selling by exporters and some banks.

Meanwhile, the benchmark BSE Sensex rose by 42.89 points, or 0.21 per cent, to 20,254.82 in early trade today .

Source : The Economic Times

‘Service tax, excise duty may change’ : 04-02-2014


Union Finance Minister P. Chidambaram said here on Monday that he could propose changes to the rates for service tax and excise duties in the interim budget, which will be tabled in Parliament on February 17.

A Vote-on-Account allows a government to seek Parliament’s approval for withdrawals from the Consolidated Fund of India to pay for expenditures in the run-up to the general election.

He said he would prefer a debate on it, but ruled out the possibility of key reforms legislation getting passed. The pending Bills that Mr. Chidambaram said now seem unlikely to be taken up are the Direct Tax Code, the Constitutional Amendment Bill for the Goods and Services Tax, and the Insurance Bill.

 Source : The Hindu

101 dated 04-02-2014


Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS) – Circular – Dated 4-2-2014 – FEMA

 

RBI/2013-14/481

A.P. (DIR Series) Circular No. 101

February 4, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Services: Export Data Processing and Monitoring System (EDPMS)

Attention of Authorised Dealers is invited to A. P. (DIR Series) Circular No. 12 dated September 9, 2000 in terms of which AD Category – I banks are required to furnish the various returns/statements relating to export of Goods/Services as given under Part C- Authorised Dealer obligation in the annexure of the said circular. The mode/manner of submission of return has been amended from time to time.

2. As of now, AD banks are submitting the various returns like XOS (export outstanding statements), ENC (Export Bills Negotiated / sent for collection) for acknowledgement of receipt of Export documents, Sch.3 to 6 (realization of export proceeds), EBW (write-off of export bills), ETX (extension of realization of export bills) relating to Export transaction under FEMA to RBI. These various returns are being managed on a different solo application or manually.

3. With a view to simplify the procedure for filling various returns and for better monitoring, a comprehensive IT- based system called EDPMS has been developed which will facilitate the banks to report all the above mentioned returns through a single platform. In the new system, the primary data on exports transactions including offsite software exports from all the sources viz. Customs/SEZ/STPI will flow to RBI secured server and then the same will be shared with the respective banks for follow up with the exporters. Subsequently, the document submission and realization data will be reported back by the AD banks to RBI through the same secured RBI server so as to update the RBI database on real time basis to facilitate quicker follow up/ data generation. The AD banks are required to download and upload the data on daily basis.

4. The system will also facilitate the Authorised Dealer to raise the Authorised Dealer (AD) transfer request in case of Export document submitted to the Authorised Dealers other than declared in the export document which will discontinue the paper based NOC issued by the AD banks. AD banks have to approve/disapprove the AD transfer request within 7 days from date of request.

5. The date of inception of the system along with user credentials and web link for accessing the system would be communicated to the AD banks shortly through e-mail. For user name and password, AD banks are advised to submit a fill-in form (format annexed) through E-mail on or before February 10, 2014. Clarification required, if any, may also be sent to the aforesaid email-id of Reserve Bank of India.

6. A cut-off date for shipping documents to be reported in the new system will be notified shortly which will be the commencement date of the new system. The entire shipping document should be reported in the new system after cut-off date and old shipping documents would continue to be reported in the old system till completion of the cycle. Both the old and new systems will run parallel to each other for some time before the old system is discontinued.

7. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

8. The directions contained in this circular have been issued under Section 10(4) andSection 11(1) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C.D Srinivasan)

Chief General Manager

 

P. Chidambaram seeks all-party support to resolve issues facing economy : 03-02-2014


A head of the last session of the current Parliament and planning to clear as many key reformbills as possible, Finance Minister P. Chidambaram today sought cooperation from all political parties and urged them to adopta bi-partisan approach to resolve the challenges facing the economy.

The last session of the current Lok Sahba begins on February 5 and the Finance Minister will present a vote-on-account on the 17th of the month, ahead of the general elections.

Though no full session is being held, he is planning to introduce several reform bills like the SEBI Amendment Bill in the two-week session as the past two sessions were near washout.

“It is my sincere hope that as we enter a period of bitter political rivalry (ahead of the hustings), we will remember that there must be a bi-partisan approach to the challenges the economy faces and to the steps that are to be taken to stabilise the economy,” P. Chidambaram said at the Golden Jubilee celebrations of UTI here this evening.

Citing the restructuring of UTI as one of the best examples of such a bipartisan approach, Chidambaram said, “While the first tentative steps (towards UTI recast) were taken by Yashwant Sinha, the then finance minister, the restructuring was midwifed by Jaswant Singh, the finance minister at that time. And when I took over as finance minister, I took it forward and completed the restructuring process.”

“It is a good example of despite changes in the government, the main actors and political rivalry, there is a deeper bipartisan consensus when it comes to taking crucial decisions affecting the economy,” he said.

About the implementation of FSLRC report, he said the non-legislative part of the recommendations should be implemented at the earliest.

“While it’s not possible to initiate and complete the legislative action that is required within the term of this government, we will begin work and then we hope that the legislative actions will be completed in calendar 2014,” Chidambaram said.

He, however, said that all the steps that have been recommended under the head of non-legislative actions, have been initiated by the finance ministry and will be rolled out

In the weeks and months ahead.

“It is my sincere appeal to all political parties, to all members of Parliament now and those who will be elected to next Parliament that we must complete legislative actions based on FSLRC recommendations in calendar year 2014 and we must have the major part of the Indian Financial Code in place in 2014,” he said.

He added that if the Congress retains power after the forthcoming polls, then the FSLRC suggestions will be implemented by the end of 2014.

“On behalf of my party I can assure the financial community that if we find the place in the government, we will complete major legislative actions to put in place an Indian Financial Code by the end of calendar 2014,” he said.

To celebrate 50 years of UTI, the minister dedicated 101 new UTI financial centres to serve the investors, post which UTI will have 251 financial centres across the country.

UTI AMC managing director Leo Puri said, “On this golden jubilee year, the thrust of UTI will be to devise appropriate strategies that will improve all aspects of its functioning. UTI will work with a genuine concern to create a favourable environment that will benefit investors, intermediaries and the industry.”

Addressing the session, Sebi chairman and the ex-UTI boss U K Sinha said, there is a need to revisit the ownership of UTI.

 Source : The Hindu

Rupee up nine paise against dollar in early trade : 03-02-2014


The rupee strengthened by 9 paise to 62.59 against the US dollar in early trade today at the Interbank Foreign Exchange market today on increased selling of the American currency by exporters.

Forex dealers said increased selling of the dollar by exporters supported the rupee but a lower opening in the domestic equity market and weakness in other currencies against the American currency overseas capped the gains.

The rupee had lost 12 paise to close at 62.68 on Friday weighed down by demand for the American currency from importers.

Meanwhile, the benchmark BSE Sensex fell by 90.36 points, or 0.44 per cent, to 20,423.49 in early trade today.

Source : The Economic Times

Diesel price hike expected, LPG cylinder rate cut a surprise in wake of quota being raised by gov : 01-02-2014


Diesel price was hiked by 50 paise per litre today, but there will be no change in petrol rates. The hike, effective midnight tonight, is excluding local sales tax or VAT. The actual increase will be higher and will vary from city to city.

However, the price of non-subsidised cooking gas (LPG) cylinder, which customers buy after consuming their quota of 12 subsidised cylinders, was cut by Rs 107 on easing international rates.

The price of diesel in Delhi will be hiked by 57 paise, including tax, to Rs 54.91 per litre, while it will cost Rs 63.23 a litre in Mumbai as against Rs 62.60 at present.

The diesel price hike is in line with the January 2013 decision of the government to raise rates by up to 50 paise per month till such time that the entire losses on the fuel are wiped out, and prices made market determined.

Announcing the price hike, Indian Oil Corp, the nation’s largest fuel retailer, said that even after the 13th price hike since last January, oil companies are incurring Rs 9.24 per litre loss on sale of the fuel.

Officials said there will be no change in petrol rates as current price of Rs 72.43 a litre in Delhi was almost in line with the cost.

The 14.2-kg cooking gas cylinder that consumers buy beyond their entitled 12 bottles at subsidised rates, will now cost Rs 1,134, down from Rs 1,241, in Delhi.

Non-domestic LPG rates were at the beginning of the year hiked by a steep Rs 220 per cylinder but have now been cut in line with softening of international oil rates.

IOC said losses on LPG have come down to Rs 656 per 14.2-kg cylinder from Rs 762.50.

Diesel price was last hiked by 50 paise on January 4. Since January 2013, diesel rates have risen by a cumulative Rs 7.76. “Even after the current increase, under recovery (loss) on retail diesel shall stand at Rs 7.40 per litre,” IOC said

in a statement.

Besides diesel, IOC was losing Rs 35.76 a litre on sale of kerosene through Public Distribution System (PDS) and Rs 656 on sale of 14.2-kg subsidised domestic LPG cylinder. “For the year 2013-14, the Corporation is expected to incur under-recovery (revenue loss) of around Rs 73,700 crore on sale of three sensitive products and industry (IOC plus Bharat Petroleum Corp and Hindustan Petroleum Corp) would incur around Rs 1,42,000 crore,” the statement added.

On diesel, it said, the government had on January 17, 2013 authorised oil marketing companies to increase the retail selling price within a small range every month.

“Accordingly, since then, retail diesel prices are being revised every month,” it said.

Source : PTI

Fiscal deficit in India creates mammoth challenge for FM P. Chidambaram in poll year : 01-02-2014


Fiscal deficit in India in the first three quarters inched closer to the budgeted target for the whole year, suggesting P. Chidambaram, Finance Minister of Asia’s third-largest economy, faces a challenge to meet the target.

The government is facing a shortfall in tax collections and revenue receipts from the sale of government shares in state-run companies as economic growth slows to less than 5 percent this fiscal year, from near double digits before the 2008 global crisis.

However, the subsidy bill – mainly for selling oil, fertiliser and food at cheaper rates – is likely to touch near 3 trillion rupees ($48 billion), against a budgeted target of 2.21 trillion rupees.

The fiscal deficit reached 5.16 trillion Indian rupees ($82 billion) during April-December, or 95.2 percent of the full-year target, compared with 78.8 percent a year earlier, government data showed on Friday.

Net tax receipts were at 5.18 trillion rupees in the first nine months of the current fiscal year to March 2014, while total expenditure was 11.64 trillion rupees.

Factory gate duties were down 6.9 percent at 1.02 trillion rupees during April-December from the year-earlier period, while customs tax receipts rose 4.3 percent to 1.24 trillion rupees – much lower than the 13.6 percent annual growth target.

Analysts and the central bank remain concerned about widening oil subsidies as the government has only partially increased diesel and cooking gas prices.

“(The government) needs to strive for a deft balance between fiscal consolidation and economic growth by focusing on quality of government spending,” the Reserve Bank of India said in its quarterly report earlier this week.

Finance Minister P. Chidambaram, who has committed not to cross the deficit target, finds it hard to either raise diesel and cooking fuel prices or cut the fertiliser subsidy, as the government faces a national election by May.

“The budget deficit had almost hit its full-year target by November and is unlikely to hold below the government’s target shortfall of 4.8 percent of GDP,” Moody’s Analytics said in a research note last week.

Officials say India’s deficit would be met by cutting funds for ministries like rural, urban development, defence and education as India

 Source : The Financial Express

Rupee strengthens to 62.37 in early trade : 31-01-2014


The rupee recovered by 19 paise to 62.37 against the US dollar in early trade at the Interbank Foreign Exchange market today on increased selling of the American currency by exporters.

Forex dealers said a higher opening in the domestic equity market also supported the rupee but the dollar’s strength against other currencies overseas, following better-than-forecast US growth figures, capped the gains.

The rupee had lost 15 paise against the dollar to end at 62.56 in the previous session in line with a sell-off in emerging markets, after the US Federal Reserve scaled back its stimulus programme.

The benchmark BSE Sensex rose 54.65 points or 0.26 per cent to 20,552.90 in early trade today.

Source : PTI

Indian rupee against US dollar: Will it test 68 levels again? : 31-01-2014


cording to Bank of America Merrill Lynch, investors favour the Indian rupee among the so-called ‘fragile five’ (Brazil, India, Indonesia, S Africa, Turkey) currencies. The rupee has depreciated relatively less than most BRICs and TIMS (Turkey, Indonesia, Mexico and South Africa) in this round of FX volatility. However, investors are worried that India remains vulnerable to a protracted emerging markets (EM) sell off. The rupee can test Rs 68/$ levels again in case the US Dollar appreciates to 1.20/euro levels.

rupee

The Indian rupee is staring at three headwinds:

* Maturity of forex swaps with oil firms of $7 billion in February-April. OMCs have already covered up to 50% of the oil swaps that come due in Feb-March

* Bank/corporate forex repayments of $4.8 billion in March.

* Withdrawal of gold import curbs after March with inventories running down.

Key events to determine rupee’s sway

According to Bank of America Merrill Lynch, investors favour the Indian rupee among the so-called ‘fragile five’ (Brazil, India, Indonesia, S Africa, Turkey) currencies. The rupee has depreciated relatively less than most BRICs and TIMS (Turkey, Indonesia, Mexico and South Africa) in this round of FX volatility. However, investors are worried that India remains vulnerable to a protracted emerging markets (EM) sell off. The rupee can test R 68/$ levels again in case the US Dollar appreciates to 1.20/euro levels.

Source : Financial Express

Uniform tax rate for foreign portfolio investors : 30-01-2014


The new system will especially be beneficial for QFIs

In a major boost for overseas entities, the government has said that foreign portfolio investors (FPIs) will attract uniform tax rate across categories.

FPIs bring together all the three investment categories — foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs).

Besides, the tax rate for FPIs would be the same as that extended to FIIs. The new system would be especially beneficial for QFIs, who were subjected to higher tax rate earlier.

The Central Board of Direct Taxes has notified that the new class of investors, FPIs, would be treated as FIIs under the Income Tax Act, 1961.

With the notification, issued on January 22, FPIs would now be subject to the same tax treatment as is applicable to FIIs under the current tax regime. The move clears the air over taxation regime for FPIs, created with the aim of rationalising overseas investments in the domestic capital market.

Global consultancy EY said that QFIs would also become eligible to concessional tax rates in respect of, inter-alia, capital gains earned on off-market transactions in securities (such as buyback and open offers in equity shares).

The Securities and Exchange Board of India notified the FPI norms on January 7, replacing the regulations for FIIs.

Under the new norms, FPIs have been divided into three categories as per their risk profile and the KYC (Know Your Client) requirements, and other registration procedures would be much simpler for FPIs compared to the current practices.

Besides, the new class would be given a permanent registration, as against the current practice of granting approvals for one year or five years to the overseas entities seeking to invest in Indian markets.

Such registration would be permanent unless suspended or cancelled by SEBI or surrendered by the FPI.

Category I FPIs, classified as entities with lowest risk, would include foreign governments and government related foreign investors.

Category II would cover appropriately regulated broad based funds, appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds and pension funds, among others. Those who are not eligible to be in the first and second set of classifications would be considered under Category III.

Source :

Rupee weakens to 62.90 in early trade : 30-01-2014


The rupee shed 49 paise to 62.90 per dollar in the opening trade against the previous close of 62.41 on the US Federal Reserve’s announcement of a further $10-billion reduction in its quantitative easing programme to $65 billion.

The further $10-billion stimulus reduction is in addition to the $10-billion cut announced earlier in December.

Abhishek Goenka, Founder and CEO of India Forex Advisors, said that the stimulus taper by the US Federal Reserve has affected all emerging market currencies.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened flat at 8.30 per cent. Yield on the benchmark 8.83 per cent government bond maturing in 2023 hardened to 8.79 per cent from the previous close of 8.77 per cent.

Source : Business Line

Rupee trading strong at 62.16 : 29-01-2014


The rupee was trading strong by 34 paise at 62.16 against the dollar at 11.38 a.m. local time.

The rupee strengthened by 23 paise to 62.27 per dollar in the opening trade against the previous close of 62.50 to a dollar after the Reserve Bank of India unexpectedly raised the interest rates to bring down consumer inflation.

The RBI hiked its repo rate, the interest rate at which it lends short-term funds to banks, by 0.25 per cent to 8 per cent.

According to a dealer with a public sector bank, the repo rate hike by RBI was a measure to keep the rupee volatility under check as higher rates can make the currency more attractive for foreign investors.

However, Abhishek Goenka, Founder and Chief Executive Officer of India Forex Advisors, said that the rupee is likely to turn weak amid the Federal Open Market Committee meet where the Federal Reserve is expected to taper the QE by $10 billion.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened flat at 8.30 per cent. Yield on the benchmark 8.83 per cent government bond maturing in 2023 softened to 8.73 per cent from the previous close of 8.74 per cent. Prices rose to ₹100.58 from ₹100.50.

Source : Business Line

Rupee trading weak at 63.12 : 28-01-2014


The rupee was trading slightly weak at 63.12 against the dollar at 11.18 a.m. local time.

The rupee opened flat at 63.09 per dollar against the previous close of 63.10 due to weakness in the dollar index.

On Monday, succumbing to a rout in emerging markets, the rupee had slipped past the 63-mark for the first time in ten weeks and closed 44 paise weaker at 63.10 versus the dollar amid fears that further stimulus tapering by the US central bank will hit the capital inflows.

The rupee has slumped by 129 paise or 2.09 per cent in three straight sessions. “The emerging markets currency sell-off is causing a contagion effect as investors pulled money from emerging markets and other assets viewed as risky, thereby pushing the rupee down,” Sugandha Sachdeva of Religare Securities said.

In addition to this, fears that the Federal Reserve might go ahead with withdrawing its monetary stimulus by another $10 billion added to the pressure, said Abhishek Goenka, CEO, India Forex Advisors.

In the bond market, yield on the benchmark 8.83 per cent government security, maturing in 2023, hardened to 8.76 per cent from the previous close of 8.74 per cent.

Source : Business Line

Rupee weakens to 62.84 in early trade : 27-01-2014


The rupee was trading weak by 6 paise at 62.74 against the dollar at 12.06 p.m. local time.

The rupee opened weak at 62.84 per dollar against Friday’s close of 62.68, hurt by strong month-end demand for the American currency from oil importers amid weakness in the domestic equity market.

However, according to dealers, dollar selling by state-run banks has limited the further weakening of the domestic unit.

In the bond market, yield on the benchmark 8.83 per cent government security, maturing in 2023, opened flat at 8.74 per cent from the previous close.

 Source : PTI

Now, identity proof needed to get PAN : 25-01-2014


Getting an income tax Permanent Account Number (PAN) is going to get more cumbersome from next month with the government mandating the submission of more documents besides, insisting on producing documents in original for verification.

Starting February 3, anyone applying for allotment of PAN will now have to submit a proof of identity, in addition to the earlier requirements of documents, showing your address and date of birth. The requirement for an identity proof has been included as PAN is used for other crucial documents such as a passport. Documents like voter ID card, driving licence can be used as identity proof.

In a statement, the finance ministry asked applicants to submit self-attested copies of the documents at the facilitation centres and also bring along the original documents, just as you do for your passport, which will be returned immediately after verification.

 Tax consultants said that the new process will put pressure on applicants. “I-T (income tax) department is asking for self-attested documents as well as original documents (for verification only), to be 100% sure about their veracity. But, this will make it more difficult to obtain PAN, particularly for foreigners. People may not be comfortable sharing original documents with consultants. There are practical challenges, which may unfold in the coming days and we hope for some more clarity on the same,” Amarpal Chadha, tax partner at consulting firm Ernst & Young, said.


Tax department officials, however, countered this by saying that for several other documents, similar requirements were in place and the system was working without hiccups.

The new norms will also extend to those seeking a change of address too. Several taxpayers were issued PAN cards over a decade ago and have since changed residence. The law also requires them to update their address, which will entail submitting fresh papers, while getting a new card with same number. Although the tax department uses the address in your return to issue refund orders, tax consultants said in some cases, such high-value purchases, notices were sent based on the address given in the PAN. “So, it helps to get your address updated,” said a tax consultant.

Source : The Economic Times

Customs, Excise & Service Tax Appellate Tribunal says it has no money to pay for postage : 25-01-2014


A tribunal that decides on revenues worth crores of rupees doesn’t have the money to pay for postage. The Mumbai office of the Customs, Excise and Service Tax Appellate Tribunal (Cestat) warned the Bombay Bar Association in a January 1 circular that “due to paucity of funds (the) postal department has stopped giving services to this office.”

This would be amusing if it weren’t for the annoyance that may be caused. “This office is not in a position to dispatch/deliver hearing, notice orders, letters, appeal memo etc. to the concerned parties/advocate/consultants,” Cestat said.

That will add to the burden of anyone fighting tax cases, said Pritam Mahure of Pune-based tax advisory firm Lawgical Consultants. “(For) assessees who are already caught in the web of litigation, this is another challenge which they have to face,” he said. “Now, assessees whose case is pending in Mumbai Tribunal have to either depute a person who will regularly visit the tribunal office to collect letters or orders every day or week.”

However, a department official said Cestat was still able to send letters by speed post, but not parcels. In any case, information will be available on the website. “We have just issued a precautionary notice so that the concerned departments and parties can keep track of their cases and cause list through the website,” the spokesperson said.

The reason for unpaid bills, while not a huge amount, is that funds haven’t been sent from headquarters. Many government departments face a similar challenge.

“Our monthly postal expenses are around 50,000 and it’s not paid since last three months. As and when we get the funds, the issue will be sorted out,” said the official cited above.

It’s not just postal expenses the tribunal is finding difficult to pay. “Most miscellaneous expenses such as office stationery and utility bills (electricity bills) are pending,” said the official.

A lawyer who regularly appears at Cestat said this could mean litigants may miss hearings or not get copies of orders. This could lead to deadlines being missed for filing appeals against ruling.

A senior official in the postal department said: “Even though both are central government departments, both work independently. The query is related to an individual client of the department and we are not allowed to reveal specifics.”

Source : PTI

Exchanging currency notes will be hassle-free, says RBI : 25-01-2014


The members of the public can exchange notes which were printed prior to 2005 at bank branches at their convenience, according to a Reserve Bank of India advisory issued on Friday.

The central bank said the rationale behind its move to withdraw banknotes printed prior to 2005 is to remove them from the market as they have fewer security features compared to banknotes printed after 2005.

The public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have the year of printing on the reverse side.

The recall of banknotes comes in the backdrop of rising cases of counterfeit currency and the role of black money in stoking inflation in the economy.

Global practice

The RBI pointed out that it is standard international practice to withdraw old series notes.

Further, from July 1, 2014, members of public can exchange any number of these old series notes from the bank branches where they have their accounts.

However, to exchange more than 10 pieces of Rs 500 and Rs1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.

The RBI reiterated that the notes printed prior to 2005 will continue to be legal tender.

RBI assurance

“The RBI assures that it will continue to monitor and review the process of withdrawal of old series notes so that the public is not inconvenienced in any manner,” said a RBI statement.

Complete withdrawal

A couple of days ago, the RBI said that after March 31, 2014, it will completely withdraw from circulation all banknotes issued prior to 2005.

From April 1, 2014, the public will be required to approach banks for exchanging these notes.

The RBI statement said, “Banks will provide exchange facility for these notes until further communication.”

 Source : Business Line

Rupee trading weak at 62.19 : 24-01-2014


The rupee was trading weak by 26 paise at 62.19 against the dollar at 11.52 a.m. local time.

The rupee fell 20 paise to 62.13 against the US dollar in early trade at the Interbank Foreign Exchange market today on increased demand for the American currency from importers.

Forex dealers said a weak opening in the domestic equity market and dollar’s gains against other currencies overseas put pressure on the rupee.

The domestic unit had lost 12 paise to close at a two-week low of 61.93 against the dollar yesterday.

Meanwhile, the benchmark BSE Sensex fell 82.20 points or 0.38 per cent to 21,291.46 in early trade today.

Source : PTI

Continued VAT uptick suggests states likely to benefit from GST : 24-01-2014


 As in the previous three years of high economic growth, states’ value-added tax revenue has continued to grow faster than their other major sources of “own tax revenue” (OTR) like stamp duty and excise on alcohol in the post-economic-crisis period, the Reserve Bank of India’s latest report on state finances reveals. This confirms that there is little rationale for many of the country’s largest states to be sceptical of the proposed goods and services tax (GST), the logical extension of the VAT system.

The BJP-ruled Gujarat and Madhya Pradesh along with Tamil Nadu and Uttar Pradesh have remained chary of GST. These states’ reluctance to embrace the proposed superior comprehensive indirect tax system, coupled with a lack of Centre-state consensus on the structure and ambit of GST, has stymied its introduction for long. It now looks certain that new system won’t be ushered in during the UPA-II government’s regime.

The RBI report on state finances (with the 2013-14 state budgets in focus) shows that VAT revenue has grown faster than the states’ overall tax revenue (including central transfers) in the three years to 2013-14. While VAT revenue grew 23.7% in 2011-12 and 19% in 2012-13, the overall tax revenue rose 19.5% and 17.8%, respectively.

The estimated growth for the current fiscal is also higher for VAT (17.2%) compared with 15.7% overall tax revenue growth.

Pertinently, this trend is particularly evident in the case of some of the states that remain indifferent to GST. Gujarat’s VAT revenue surged 39.4% in 2011-12 and 19% in 2012-13, while its overall tax revenue rose 20.9% and 18.7% in the same periods. Gujarat projects its VAT revenue to grow by 23% this fiscal and growth in all taxes including transfers from the Centre is estimated at just 13.9%. The growth so far this fiscal has been around 4% only.

Despite this, in general and surely in the aggregate, states’ VAT/sales tax revenue has grown much faster than the Centre’s indirect tax receipts also between 2009-13. Thanks to the 13th Finance Commission award (which hiked the states’ share in the Centre’s gross tax revenue to 32%

om 30.5% previously) and a comparatively better show by direct taxes, however, states have bolstered their tax revenue from central transfers also almost as much as they have from VAT. The Centre’s indirect tax receipts, comparable to states’ VAT proceeds, saw a deceleration in growth in recent years. The collections of excise, customs duty and service tax by the Centre grew just 13.7% in 2011-12 and 21% in 2012-13.

Clearly, states are reporting higher tax revenue growth than the Centre, the primary reason why their fiscal consolidation has been better while the Centre’s has slipped considerably. To increase their own tax revenue, many states have raised taxes on tobacco and liquor products and some have benefited from simplifying procures that enhanced tax compliance. Analysts, however, point out that even though VAT was meant to lead to harmonisation of rates, this hasn’t actually happened, with the tax being levied at rates ranging from 1% to 15%.

States that embraced VAT in 2005-06 had seen higher-than-historical growth in their sales tax/VAT revenue in the 2005-08 high-growth period also, establishing that the VAT system generates incremental revenue.

In states’ revenue kitty, tax revenue accounts for the bulk, of which their OTR forms the major chunk, completed by the states’ share in the central taxes. Within tax revenue, the largest item is VAT/sales tax followed by taxes on property (stamp duty and registration fee), state excise on alcohol and the taxes levied on vehicles. (To illustrate, 80% of Uttar Pradesh’s estimated revenue of Rs 1.77 lakh crore this fiscal comes from taxes and within this tax revenue, over half will come from the states’ OTR, of which 60% will be from sales tax/VAT/CST).

RBI deputy governor Urjit Patel says in a foreword to the report released on Wednesday: “State budgets for 2013-14 indicate a further move towards fiscal consolidation… During 2013-14, the revenue surplus-GDP ratio is budgeted to increase to 0.4% (from) 0.2% in 2012-13, contributing to a reduction in the gross fiscal deficit-GDP ratio to 2.1% (from) 2.3% in 2012-13. Revenue surplus is budgeted in 22 out of the 28 states in 2013-14.”

own revenue and transfers from the Centre as a proportion to GDP increased in 2012-13 (RE) over 2011-12. A higher own revenue-GDP ratio was due to increase in both OTR and own non-tax revenue as ratios to GDP in 2012-13. “While states’ OTR-GDP ratios recorded an increase primarily due to increased collections under ‘stamp and registration fee’, VAT and state excise, the increase in states’ ONTR-GDP ratio was due to higher receipts from general services, education, sports and art and culture. Current transfers from the Centre as a ratio to GDP also improved following an increase in the share of central taxes and an increase in grants to finance state plan schemes,” the RBI report said. Sales tax collections from petroleum products that account for around 30% of the total VAT/sales tax collections also boosted states’ OTRs in 2012-13.

Source : The Financial Express

Rupee falls 17 paise against dollar in early trade : 23-01-2014


MUMBAI: The rupee fell by 17 paise to 61.98 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased demand for the American currency from oil importers.

Forex dealers said a weak opening at the domestic equity market also weighed on the rupee.

The rupee had gained 7 paise at 61.81 against the US dollar on increased selling of the American currency by exporters in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex fell by 65.76 points, or 0.31 per cent, to 21,271.91 in early trade today.

Source : PTI

Rupee down 10 paise against dollar in early trade : 22-01-2014


Continuing its falling streak for the fourth straight day, the rupee fell by 10 paise to 61.98 against the US dollar in early trade today at the Interbank Foreign Exchange market on sustained demand for the American currency from importers.

Forex dealers said apart from demand from importers, a lower opening in the domestic equity market also put pressure on the rupee but the strength of other currencies against the US dollar in global markets, capped the fall.

The rupee had lost 26 paise to close at a one-week low of 61.88 against the dollar in yesterday’s trade.

Meanwhile, the benchmark BSE Sensex fell 74.56 points, or 0.35 per cent, to 21,176.56 in early trade today

Source : The Economic Times

RBI panel wants retail inflation as new policy benchmark : 22-01-2014


The Urjit Patel committee on monetary policy framework has proposed setting up of a monetary policy committee (MPC) that will be headed by the Reserve Bank of India (RBI) governor and accountable for achieving inflation target set by it.

The report of the Patel committee, set up by RBI in September last year, has recommended that retail inflation, measured by the Consumer Price Index (CPI), replace wholesale inflation as the price anchor. The responsibility of the central bank, the panel has suggested, should be to bring the retail inflation rate down at four per cent, with a variation of 200 bps on either side, in three years. “The nominal anchor should be defined in terms of headline CPI (-based) inflation, which closely reflects the cost of living and influences inflation expectations relative to other available metrics,” the report has said.

If the MPC fails to achieve its target for three quarters in a row, it has to issue a public statement, mentioning reasons for failure and remedial measures, with signatures of all the five members.

Observers said if this practice was followed, the central bank would have valid reasons not to pay attention to any advisory from the government on its monetary policy stance. In recent times, finance ministers have repeatedly pressured the central bank to cut interest rates, even if the situation does not warrant such an action.

The observers also said the lines between the government and RBI were set to be re-drawn if the recommendations of the committee were accepted.

EASING POLICY FRAMEWORK
Highlights of Patel panel report

  • Nominal anchor: A shift to headline retail inflation
  • Road map: Cut inflation from 10% to 8% in one year; and to 6% in two years
  • Target: Retail inflation rate of 4% (+/- 200 bps)
  • Rule-based framework: To make conduct of monetary policy more predictable and transparent
  • Fiscal consolidation: Firm govt commitment  to cut fiscal deficit to 3% of GDP by FY17
  • Composition of monetary policy committee (MPC): RBI governor, a deputy governor, an executive director and two external members
  • Tenure of MPC: Three years (to meet once every two months)
  • Accountability: MPC to be responsible for meeting inflation target; to issue public statement with members’ signatures if it fails to achieve the target for 3 quarters
  • Phased refinement of operating framework: LAF, repo rate to continue as single policy rate in Phase-I; 14-day term repo will emerge as policy rate in Phase-II

Indicating a shift from a discretionary policy to a rule-based one, the panel has advocated adoption of a policy rate that is easily communicated and understood; it will be positive when inflation is above the nominal anchor.

Since bringing down inflation from the current level is essential to move to this proposed framework, the panel has also laid out a road map for this. It has suggested that the current level of retail inflation — at 10 per cent — be brought down to eight per cent within 12 months and then to six per cent over the next 24 months, before the recommended target of four per cent is formally accepted.

Barclays Chief India Economist Siddhartha Sanyal said the committee had taken a very aggressive stance. “This could boost the credibility of RBI if, indeed, the targets are achieved. However, it will be a challenging task and will depend a lot on coordination with fiscal authorities,” he added.

The committee has also recommended that the government should ensure it brings down its fiscal deficit below three per cent of gross domestic product (GDP) by 2016-17 and does away with administered prices, wages and interest rates.

In what could be construed as paying more if the government’s market borrowing is high, the panel has said that RBI’s open-market operations should be only for liquidity management and not for managing yields — a practice widely followed now, though not formally admitted to.

The panel has proposed a two-phased transition to the new operating framework. In the first phase, the weighted average call rate will remain the operating target and repo will continue as the single policy rate. It has emphasised the need for a spectrum of term repos of varying maturities, with 14-day as the anchor rate. In the second phase, the 14-day term repo will emerge as the policy rate.

To support the operating framework, the committee has recommended some new instruments in the monetary policy toolkit, such as a standing deposit facility. It has also called for market stabilisation and cash management bills to be phased out, since the government debt and cash management is being taken over by the government’s debt management office. The report has also elaborated on the impediments for transmission of the monetary policy. It has said, “the government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions.”

Among other impediments, the panel has proposed reduction in statutory liquidity ratio of banks, more frequent intra-year resets for small savings schemes and revisiting the issue of interest-rate subvention to the farm sector. The panel has also said all fixed-income financial products be treated on a par with bank deposits for the purpose of taxation and TDS (tax deducted at source).

Detailing the MPC framework, the Patel panel has said the RBI governor will be the chairman, while the deputy governor in charge of monetary policy will be the vice-chairman and the executive director will be a member. Besides, there will be two external members who will work full time and have access to information/analyses generated within RBI. They cannot hold any office of profit or undertake any activity seen as amounting to conflict of interest with the working of the MPC. The term of office of the MPC will ordinarily be three years, without a prospect of renewal.

Each MPC member will have one vote and the outcome of any issue will be determined by a majority in voting — which will have to be exercised, without abstaining. Minutes of the proceedings of the MPC will be released with a lag of two weeks from the date of the meeting.

The MPC will ordinarily meet once every two months and RBI will also place a bi-annual inflation report in the public domain. The MPC chairman will have a casting vote during exigencies. The committee will be asked to put out the bi-annual inflation report in the public domain on the basis of macroeconomic and monetary policy reviews.

The committee has also deliberated on the issue of volatile capital flows and suggested building up an adequate level of foreign exchange reserves. The adequacy should also to be determined by intervention requirement based on past experience.

Source : Business Standard

Rupee up 17 paise against dollar in early trade : 21-01-2014


The rupee snapped its two-day losing streak against the American currency by gaining 14 paise to 61.48 per dollar on selling of green currency by banks and exporters on the back of persistent foreign capital inflows into equity market.

The rupee resumed higher at 61.52 per dollar as against the last closing level of 61.62 per dollar at the Interbank Foreign Exchange (Forex) Market and hovered in a range of 61.46-61.57 per dollar before quoting at 61.48 per dollar at 1045 hrs.

Banks and exporters preferred to reduce their dollar position in view of sustained foreign capital inflows into stock market.

The Indian benchmark Sensex firmed up further by 58.73 points or 0.28 per cent to 21,263.78 at 1045 hrs.

Source : The Hindu

176/2/2014 – ST dated 20-01-2014


Clarification regarding issue of Discharge Certificate under VCES and availment of CENVAT credit – regarding. – Dated 20-1-2014 – Service Tax

Circular No. 176/2/2014 – ST

F. No. B1/19/2013-TRU (Pt)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Tax Research Unit

New Delhi, dated the 20th January, 2014

To,

Chief Commissioners of Central Excise and Customs (All),

Director General (Service Tax), Director General (Systems),

Director General (Central Excise Intelligence), Director General (Audit),

Commissioners of Service Tax (All),

Commissioners of Central Excise (All),

Commissioners of Central Excise and Customs (All)

Madam/Sir,

Subject: Clarification regarding issue of Discharge Certificate under VCES and availment of CENVAT credit – regarding.

Trade and Industry has sought clarification as to whether the first installment of tax dues paid under Voluntary Compliance Encouragement Scheme (VCES), 2013 would be available as Cenvat Credit immediately after payment or Cenvat credit can be availed only after payment of tax dues in full and receipt of Acknowledgement of Discharge inform VCES-3.

2. The issue has been examined. As per VCES, under Section 108 (2) of the Finance Act, 2013, a declaration made under Section 107 (1) shall become conclusive only upon issuance of acknowledgement of discharge under Section 107 (7). Further, in terms of Rule 7 of the Service Tax VCES Rules 2013, the acknowledgement of discharge in form VCES-3 shall be issued within a period of 7 working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.

3. It would be in the interest of VCES declarants to make payment of the entire service tax dues at the earliest and obtain the discharge certificate within 7 days of furnishing the details of payment. As already clarified in the answer to question No.22 of FAQ issued by CBEC dated 08.08.2013, eligibility of CENVAT credit would be governed by the CENVAT Credit Rules, 2004.

4. Chief Commissioners are also advised that upon payment of the tax dues in full, along with interest, if any, they should ensure that discharge certificate is issued promptly and not later than the stipulated period of seven days.

Yours sincerely,

(S. Jayaprahasam)

Technical Officer, TRU

Tel: 011-2309 2037

Notification No.02/2014 dated 20-01-2014


CENVAT Credit (Second Amendment) Rules, 2014 – 02/2014 – Dated 20-1-2014 – Central Excise – Non Tariff

[TO BE PUBLISHED IN THE GAZETTE OF INDIA,

EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 02/2014-CX (N.T.),

Dated: January 20, 2014

G.S.R. (E).- In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the CENVAT Credit Rules, 2004, namely:-

1. (1) These rules may be called the CENVAT Credit (Second Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In rule 12 of the CENVAT Credit Rules, 2004, after the brackets, letters, figures and words, “[GSR 307(E), dated the 25thApril, 2007]” the words, figures, letters and brackets, “or No.1/2010-Central Excise, dated the 6th February, 2010 [G.S.R. 62(E), dated the 6th February, 2010]“ shall be inserted.

[F.No.332/09/2013-TRU]

(Raj Kumar Digvijay)

Under Secretary to the Government of India

Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), dated the 10th September, 2004, vide notification No. 23/2004-Central Excise (N.T.) dated the 10th September, 2004, vide number G.S.R. 600(E), dated the 10thSeptember, 2004 and last amended vide notification No.1/2014-Central Excise (N.T.) dated the 8th January, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 6 (E), dated the 8th January, 2014.

 

97 dated 20-01-2014


Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards / Combating the Financing of Terrorism (CFT) Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 Money changing activities – Circular – Dated 20-1-2014 – FEMA

RBI/2013-14/455

A.P. (DIR Series) Circular No. 97

January 20, 2014

To,

All Authorised Persons

Madam/ Sir,

Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards / Combating the Financing of Terrorism (CFT) Obligation of Authorised Persons under Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 Money changing activities

Attention of Authorised Persons is invited to F-Part-II of the Annex to the A.P. (Dir Series) Circular No. 17 [A.P. (FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time.

2. Based on several representations received from Authorised Money Changers (AMCs), regarding difficulties in submitting Resolution of the Board of Directors for undertaking foreign exchange transactions with an AMC and also Power of Attorney granted to its officials to conduct forex transactions on behalf of the company, it has been decided to rationalise the same. Accordingly, the requirement of Resolution of the Board of Directors is being done away with and a corporate may now submit to the AMC a list of officials with names and signatures authorized by the Managing Director / Chief Financial Officer of the company toconduct forex transactions on its behalf. The amended instructions are given in the Annex.

3. All the other instructions contained in the A.P. (DIR Series) Circular No. 17 [A.P. (FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time shall remain unchanged.

4. Authorised Persons may bring the contents of this circular to the notice of their constituents concerned.

5. These guidelines are also applicable mutatis mutandis to all agents/ franchisees of Authorised Persons and it will be the sole responsibility of the franchisers to ensure that their agents / franchisees also adhere to these guidelines.

6. Please advise your Principal Officer to acknowledge receipt of this circular letter.

7. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999)and also under the, Prevention of Money Laundering Act, (PMLA), 2002, as amended by Prevention of Money Laundering (Amendment) Act, 2009 and Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005 as amended from time to time and are without prejudice to permission /approvals, if any, required under any other law.

Yours faithfully,

Rudra Narayan Kar

Chief General Manager-in-Charge


Annex
[Annex to A.P. (DIR Series) Circular No.97 dated January 20, 2014]

Extant Guidelines

Revised Guidelines

Features

Documents

Features

Documents

Establishment of Business Relationship – Corporate Certified copy each of the following documents.
(i) Certificate of incorporation
(ii) Memorandum & Articles of Association
(iii) Resolution of the Board of Directors for undertaking forex transactions with the AP
(iv) Power of attorney granted to its managers, officers or employees to conduct forex transactions on behalf of the corporate and their identification.
(v) PAN Card
(vi) Telephone Bill
Establishment of Business Relationship – Corporate Certified copy each of the following documents.
(i) Certificate of incorporation
(ii) Memorandum & Articles of Association
(iii) List of officials with names, designation and signatures authorized by the Managing Director / Chief Financial Officer of the company to conduct forex transactions on behalf of the company
(iv) PAN Card
(v) Telephone Bill
Note: Corporate should invariably pay to AMCs towards rupee leg of forex transactions through a cheque/bank account of corporate irrespective of the amount of forex transaction

 

 

96 dated 20-01-2014


Facilities for Persons Resident outside India – Clarification – Circular – Dated 20-1-2014 – FEMA

 

RBI/2013-14/454

A.P. (DIR Series) Circular No. 96

January 20, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Facilities for Persons Resident outside India – Clarification

Attention of Authorized Dealers Category – I (AD Category- I) banks is invited to theForeign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 dated May 3, 2000 [Notification No. FEMA/25/RB-2000] and A.P. (DIR Series) Circular No.45 dated October 22, 2012 in terms of which Foreign Institutional Investors (FIIs) are allowed to approach any AD Category I bank for hedging their currency risk on the market value of entire investment in equity and/or debt in India as on a particular date subject to conditions specified therein.

2. We have been receiving references from market participants as to whether, along similar lines, it is possible for FIIs and other foreign investors to effect remittances on cash /TOM /spot basis to a bank other than the designated AD Category -I custodian bank. In this connection it is clarified that a foreign investor is free to remit funds through any bank of its choice for any transaction permitted under FEMA, 1999 or the Regulations / Directions framed thereunder. The funds thus remitted can be transferred to the designated AD Category -I custodian bank through the banking channel. Note should, however, be taken that KYC in respect of the remitter, wherever required, is a joint responsibility of the bank that has received the remittance as well as the bank that ultimately receives the proceeds of the remittance. While the first bank will be privy to the details of the remitter and the purpose of the remittance, the second bank, will have access to complete information from the recipient’s perspective. Besides, the remittance receiving bank is required to issue FIRC to the bank receiving the proceeds to establish the fact the funds had been remitted in foreign currency.

3. All other conditions in our A.P. (DIR Series) circular No.45 dated October 22, 2012apply mutatis mutandis.

4. AD Category – I bank may bring the contents of this circular to the notice of their constituents and customers.

5. The directions contained in this circular have been issued under sections 10(4) and11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager in Charge

 

95 dated 17-01-2014


Merchanting Trade Transactions – Circular – Dated 17-1-2014 – FEMA

 

RBI/2013-14/452

A.P. (DIR Series) Circular No. 95

January 17, 2014

To

All Category – I Authorised Dealer Banks

Merchanting Trade Transactions

Madam / Sir,

Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular Nos.106 & 4 dated June 19, 2003 and July 19, 2003 respectively, containing directions relating to merchanting or intermediary trade transactions. In the light of the recommendations of the Technical Committee on Services/Facilities to Exporters (Chairman: Shri G. Padmanabhan) to further liberalise and simplify the procedure, the existing guidelines for merchanting or intermediary trade transactions have been reviewed. Accordingly in supersession of the existing guidelines, the revised guidelines will come into effect immediately.

2. While handling merchant trade transactions or intermediary trade transactions, AD Category – I bank may keep the following guidelines in view:

I. Goods involved in the merchanting or intermediary trade transactions would be the ones that are permitted for exports / imports under the prevailing Foreign Trade Policy (FTP) of India, at the time of entering into the contract and all the rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) are complied with for the export leg and import leg respectively;

II. Both the legs of a merchanting or intermediary trade transaction are routed through the same AD bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents and satisfy itself about the genuiness of the trade.

III. The entire merchanting or intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months.

IV. The commencement of merchanting or intermediary trade would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last;

V.  Short-term credit either by way of suppliers’ credit or buyers’ credit will be available for merchanting or intermediary trade transactions including the discounting of export leg LC by an AD bank, as in the case of import transactions ;

VI. AD bank should ensure one-to-one matching in case of each merchanting or intermediary trade transaction and report defaults in any leg by the traders to the concerned Regional Office of RBI on half yearly basis in the format as annexed. The deadline for submission of the report would be 15 calendar days after the close of each half year. In case of repeated defaults i.e. three cases or more in a year, ADs should restrain the traders from entering into any further transaction in merchanting or intermediary trade and consider recommending caution listing of the trader, to the Reserve Bank of India;

3. The merchanting traders have to be genuine traders of goods and not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers. Authorised Dealer should satisfy itself about the capabilities of the merchanting trader to perform the obligations under the order. The transactions should result in reasonable profits to the merchanting trader.

4. The inward remittance from the overseas buyer should preferably be received first and the outward remittance to the overseas supplier will be made subsequently. Alternatively, an irrevocable Letter of Credit (LC) should be opened by the buyer in favour of the merchant. On the strength of such LC the merchant in turn may open a LC in favour of the overseas supplier. The terms of payment under both the LCs should be such that payment for import LC is required to be made after receipt of payment under export LC. The export LC should be issued in the name of original merchanting trader in India and import LC should be favouring the original supplier. In case export leg payment is received in advance, AD banks need not insist on opening of export LC.

5. In case advance against the export leg is received by the merchanting trader, the advance payment may be held in a separate deposit / current account in foreign currency or Indian Rupees. The amount required for import leg should be earmarked till the payment of import and should not be made available to the merchanting trader for use, other than for import payment or short-term deployment of fund limited to the import payable, with the same AD for the intervening period. If advance for the import leg is demanded by the overseas seller, the same should be paid against bank guarantee from an international bank of repute;

6. Reporting for merchanting or intermediary trade for compilation of R-return should be done on gross basis, against the undernoted codes :

Trade

Purpose Code under FETERS

Description

Export P0108 Goods sold under merchanting /receipt against export leg of merchanting trade
Import S0108 Goods acquired under merchanting /payment against import leg of merchanting trade

7. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned and note the guidelines for strict compliance.

8. The directions contained in this circular have been issued under sections 10(4) and11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C. D. Srinivasan)

Chief General Manager

Rupee down 12 paise vs dollar in early trade : 20-01-2014


The rupee fell by 12 paise to 61.66 against the dollar in early trade today at the Interbank Foreign Exchange market due to demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas and a lower opening of the domestic equity market also put pressure on the rupee.

The rupee had shed 1 paise to 61.54 against the dollar in Friday’s trade.

Meanwhile, the benchmark BSE Sensex fell by 45.15 points, or 0.21 per cent, to 21,018.47 in early trade today.

Source : The Economic Times

UBS: Impact of Aadhaar, GST, dedicated freight corridor to be significant : 17-01-2014


Upcoming general elections will remain a key driver for Indian markets during the first half of 2014, but some ongoing reform measures would bear fruit irrespective of the party coming to power, UBS has said.

“The biggest ‘known unknown’ is politics/elections, which will likely remain the key driver of the market in first half of this year,” global financial services major UBS said in a report, while urging the investors not to ignore the ‘unknown knowns’ beyond the election noise.

Listing three such ‘unknown knowns’, UBS said that these initiatives – Aadhaar unique identity programme, GST tax reforms and a Dedicated Freight Corridor (DFC) rail infrastructure project – are real and their effects will be felt in the foreseeable future irrespective of which political party is in power after the elections.

“We believe India’s ‘three arrows’ are real and that the effects will be felt in the foreseeable future irrespective of what political party is in power after the elections,” UBS said adding that their positive macro impact is likely to be significant and lasting.

“The positive macro impact is likely to be significant and lasting. This is especially so if we look at the arrows together rather than in isolation,” UBS said.

Each of the three reform measures — Aadhaar, GST and rail DFC — address the country’s twin deficits, the impaired investment cycle and promises to enhance productivity driven growth.

Aadhaar could help address the expenditure side of the fiscal problem, and drive financial inclusion with its own substantial benefits.

GST may materially aid the revenue side of the fiscal problem and the rail DFC could revive the investment cycle and potentially manufacturing/exports, apart from attracting foreign investments, it added.

“Three years from now, we believe India will look very different with the arrows in place,” UBS said adding that “the impact of each arrow could be over 1 per cent of GDP.”

Source : The Financial Express

Rupee up 14 paise against dollar in early trade : 17-01-2014


The rupee strengthened by 14 paise to 61.39 against the dollar in early trade at the Interbank Foreign Exchange market on increased selling of the US currency by exporters.

Forex dealers said dollar’s weakness against other currencies overseas on weak inflation figures and disappointing US corporate results supported the rupee but a lower opening in the domestic equity market capped the gains.

The rupee had gained 1 paise to close at 61.53 against the dollar in yes yesterday’s trade.

Meanwhile, the BSE benchmark index Sensex fell by 37.60 points, or 0.18 per cent, to 21,227.58 in early trade today.

Source : The Economic Times

P. Chidambaram: Indian economy will get back to high growth path in three years : 16-01-2014


Attributing the decline in growth to global factors, Finance Minister P. Chidambaram today exuded confidence that the Indian economy will get gradually get back to high growth path in the next three years.

“It is true that there has been a slowdown in 2012-13 and in current year. The slowdown reflects the world wide trend. As global economy recovers and as new measures take effect, I am confident that Indian economy will also get back step by step to the high growth path in three years”, he said while delivering the valedictory address at Petrotech 2014.

India’s economic growth slipped to decade low of 5 per cent in 2012-13 and in the current fiscal it estimated to be around the same level. It grew by over nine per cent before it was hit by the global crisis of 2008.

P. Chidambaram expressed hope that the revised growth estimates for 2012-13 were likely to be better than the earlier projections.

The government is scheduled to come out with revised growth estimates for 2012-13 on January 31 and the advance estimates for the current fiscal on February 7.

Referring to the Current Account Deficit (CAD), the difference between inflow and outflow of foreign exchange, P. Chidambaram said it would be contained at USD 50 billion in the current fiscal.

The CAD soared to the all-time high of USD 88.2 billion or 4.8 per cent of the GDP in 2012-13. The government had taken several measures, including curbs on gold imports, to contain the CAD.

As regards the oil import bill, the Finance Minister said of the total imports of USD 491 billion in 2012-13, oil imports accounted for USD 164 billion.

“A developing country like India can not afford such a huge import bill or such a high level of CAD. Therefore, we were constrained to take some hard measures, including conservation measures and these measures have helped us contain the CAD,” he added.

Source : PTI

Rupee trading a tad weak at 61.57 : 16-01-2014


The rupee was trading a tad weak at 61.57 against the dollar at 11.28 a.m. local time.

The rupee opened weak by 10 paise at 61.65 per dollar against the previous close of 61.55 on the back of robust demand for dollars from oil importers.

According to government data released on Wednesday, wholesale inflation declined to a five-month low of 6.16 per cent in December.

“After witnessing gains in the last few sessions, the rupee was seen weakening slightly as the US dollar index strengthened taking cues from the better-than-expected retail sales data,” said Abhishek Goenka, Founder and CEO, India Forex Advisors.

The inter-bank call money rate, the rate at which banks borrow short-term money from each other, opened higher at 8.75 per cent against the previous close of 8.55 per cent.

Yield on the benchmark 8.83 per cent government bond, maturing in 2023, softened to 8.63 per cent from the previous close of 8.64 per cent. Prices ended sharply higher at Rs 101.29 from Rs 101.23.

Source : The Economic Times

CBDT may do away with submission of ITRV forms : 13-01-2014


In what could be good news for lakhs of taxpayers filing their I-T returns online, CBDT is mulling doing away with the mandatory submission of paper verification printout to its processing centre in Bangalore.

Central Board of Direct Taxes (CBDT), the apex office to formulate policies for the Income Tax department, was prompted to take this “customer-friendly” step after it was recently informed that lakhs of such paper statements — ITRV — have not reached its Central Processing Centre (CPC) despite people filing their e-returns online.

CBDT is now considering either bringing a notification to make a change in the rules or an amendment in the I-T Act stipulating that taxpayers filing their returns online will no longer need to send ITRV through post to the Bangalore office.

The new measure, deliberated upon by the Finance Ministry and CBDT, will mean that the taxpayer will not even have to procure a digital signature as the department feels it has enough technology at its disposal to check cases of fake returns or under-reported I-T returns.

“There have been regular letters by taxpayers and other bodies to the board in this regard. Recently, it was noticed that lakhs of statements did not reach the CPC. The board may now totally do away with the procedure of sending by post the paper statement of an e-return.

“The decision could happen soon as this concerns a lot of taxpayers and will be seen as customer-friendly,” a source privy to the development told PTI.

The thinking at the highest level is that e-filing should be “hassle free and sans any glitches”, which will prompt more number of people to file their tax returns this way.

The I—T department is also bolstered by the fact that more and more number of people are opting to file their returns online.

According to current procedures, when a taxpayer files his or her returns online, the person is required to mandatorily send the ‘ITRV’ by post to the I—T department’s CPC based in Bangalore within 120 days.

The CPC, in return, sends an electronic acknowledgement to the tax return filer. The problem arises when the document sent by post does not reach the CPC because of lapses on the part of the taxpayer or some other reason.

In case of digital signatures (used by corporate entities), a bonafide statement that verifies the identity of the sender is required to be created by paying a fee and this requires regular renewal, which is why this is seen as a burden on salaried class and categories of small taxpayers.

Source : Business line

Centre yet to decide on retrospective taxation : 13-01-2014


The Central Government is yet to decide on the retrospective taxation issue, Parthasarathi Shome, adviser to the Finance Minister, said here on Saturday.

“The government has accepted most of the recommendations on General Anti-Avoidance Rules (GAAR) suggested by the panel chaired by me. But the government is yet to accept the issue on retrospective taxation,” Dr. Shome told an interactive session organised by the Calcutta Chamber of Commerce. He said that since India followed the source-based taxation rule, it was imperative that transfer of shares of a company abroad with assets in India be taxed, like what happened in the Vodafone and IBM cases. “But giving a retrospective effect will send wrong signals to investors and cause uncertainty. It should be in the rarest of rare cases,” Dr. Shome said.

Dr. Shome said that the government was working on a resolution which would be applicable to all companies facing this problem. He said that the government was also planning to include Controlled Foreign Companies (CFCs) within the Direct Taxes Code (DTC) where Indian subsidiaries were operating abroad in low-tax jurisdictions. Also, thinly capitalised companies, having more debt than equity, would be brought under GAAR.

Dr. Shome said GAAR would not be used as a tax generation tool, but to prevent erosion of the tax base by avoidance. He also said that the DTC and the GST were likely to be introduced in 2014-15 fiscal.

 Source : The Hindu

Tax breaks for fracking firms as UK goes ‘all out for shale’ : 13-01-2014


LONDON, JAN 13:  British Prime Minister David Cameron today promised tax breaks worth millions of pounds to local councils who encourage shale gas development, declaring the country was going “all out for shale”.

Cameron announced that local authorities in England will collect all of the tax collected from shale gas sites — double the current 50 per cent figure.

The Government calculates that this could be worth up to $2.8 million a year for a typical site.

“We’re going all out for shale,” Cameron said in a statement released by his Downing Street office.

“It will mean more jobs and opportunities for people, and economic security for our country.”

The Government hopes the move will ensure that local communities benefit more from the exploitation of shale gas resources in their area.

The industry last year announced plans for local communities to receive 100,000 British Pound when a test well is “fracked” — and a further 1 per cent of revenues if shale gas is discovered.

Fracking involves the blasting open of deep fissures using high pressure water jets in order to collect previously unreachable sources of gas.

Business Minister Michael Fallon earlier said Britain had to “embrace the extraordinary opportunities offered by shale gas”, despite protests from environmentalists about the possible contamination of groundwater.

“In the Seventies, North Sea oil helped salvage our economy from crippling stagnation,” he wrote in the Sun yesterday.

“We have a similar chance to create tens of thousands of jobs and energy security.

“A mile and more beneath us lies deposits of gas-bearing shale rock with the potential to guarantee energy supplies in an increasingly uncertain and competitive world,” he added.

French energy giant Total is later today set to reveal plans for fracking exploration in Britain when it takes a share in a licence in the Midlands, the Financial Times reported.

Friends of the Earth senior campaigner Jane Thomas said it was “ironic that a French-owned company is seeking to drill the UK for shale gas when it’s banned from fracking in France due to environmental concerns”.

Source : PTI

Rupee at 1-month high after factory data; broad dollar fall helps : 13-01-2014


The rupee was at 61.55/56 after hitting 61.52 at open, its highest since December 12 and below its close of 61.89/90 on Friday.

Country’s economic woes worsened on Friday with a surprise contraction in industrial production and a wider trade deficit, adding to troubles of the ruling alliance as it heads into a tough national election seeking a third term.

The US dollar nursed broad losses early on Monday after surprisingly soft employment data raised doubts about how quickly  the Federal Reserve can scale back stimulus.

The consumer price inflation data due to be released at 5:30 p.m. (1200 GMT) will be crucial for further near-term direction.

Gains in the domestic share market also aiding sentiment for the rupee. The main share index up 0.4 percent in pre-open trade, raising hopes for continued foreign fund inflows.

Source : The Economic Times

Import duty on refined oil raised to 10 per cent : 10-01-2014


‘Convenient accounting’ of subsidies to hit new Govt

The government, on Thursday, increased the import duty on refined edible oil to 10 per cent from 7.5 per cent at present to protect the domestic processing industry and farmers.

The increased duty was approved by the Cabinet Committee on Economic Affairs (CCEA).

The move is expected to fetch the government Rs.600 crore in revenue, while retail prices of refined oil may increase marginally.

“The CCEA has approved increasing import duty on refined edible oil to 10 per cent,” Food Minister K. V. Thomas told PTI after the meeting.

The agriculture, finance and commerce ministries supported the decision to maintain a 7.5 per cent import duty difference between refined and crude edible oils, he added.

The import duty on crude edible oil is now 2.5 per cent. India imports more than 10 million tonnes of vegetable oils every year, which is almost 50 per cent of the domestic need.

Local refiners are now operating below capacity, which affects farmers as well, because importing refined edible oil has become more viable than buying crude edible oil from overseas.

Source : PTI

‘Convenient accounting’ of subsidies to hit new Govt : 10-01-2014


The Finance Minister of the next government post-elections will have to pay the price for the United Progressive Alliance’s (UPA) subsidy and social spend. The Finance Ministry plans to book in next financial year, 2014-15, the expenditure that will be incurred on subsidies during the remaining months of the current fiscal (January-March).

Pushing this year’s expenditure to the next fiscal’s accounts will keep the fiscal deficit for 2013-14 within the target of 4.8 per cent of gross domestic product (GDP) — at least on paper.

Highly-placed sources told The Hindu that this ‘convenient accounting’ will ‘artificially’ limit the fiscal deficit this year but make it a headache for the next Finance Minister who will have to raise the resources needed to foot the bill for the fuel, food and fertilizer subsidies for January-March, 2013. The Budget Estimates (BE) for 2013-14 for these subsidies is Rs.2.21 lakh crore. The Finance Ministry has not so far raised before Parliament a demand for additional grants for these subsidies. However, as per latest official data, at the end of November, 2013, the fiscal deficit was already 94 per cent of the BE for 2013-14. With four months still to go in the current fiscal year, the Finance Ministry has limited space to manage the fiscal deficit, the excess of the government’s expenditure over its income. The UPA Government has not been able to garner through disinvestments the Rs.40,000 crore projected in the Union Budget. Moreover, tax collections are growing at a rate less than the target of 19 per cent. Union Finance Minister P. Chidambaram has pressed in budget cuts in social schemes in an election year to keep the fiscal deficit below 4.8 per cent but they are not going to be enough.

To make up for these cuts, the Finance Ministry has also sought from the big-spend ministries, including those for rural development, roads and health, estimates of expenditures that could be booked in the month of April.

Mr. Chidambaram has said that the UPA Government will not let the India’s fiscal deficit for 2013-14 breach the 4.8-per cent target. International rating agencies have warned that a slip-up will trigger a rating downgrade for India.

Senior Finance Ministry officials confirmed to The Hindu: “The subsidy bill of the last quarter of 2013-14 will be accounted for in the month of April so it will reflect in the expenditure for the next financial year or 2014-15.” They added that it was not unusual for the Finance Ministry to roll over expenditure from one financial year to the next.

Source : The Hindu

Rupee up 13 paise against dollar in early trade : 10-01-2014


The rupee appreciated 13 paise to 61.94 against the dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the US currency by exporters and higher capital inflows.

Forex dealers said besides selling of the American currency by exporters, gains in other currencies against the dollar and a higher opening in the domestic stock market also buoyed the sentiment.

The rupee had ended flat at 62.07 against dollar yesterday.

Meanwhile, the BSE benchmark Sensex today rose 67.68 points, or 0.32 per cent, to trade at 20,781.05 in early trade.

Source : The Economic Times

G20: Finance Ministry asks ORF for stance on BRICS bank : 09-01-2014


The Finance Ministry has caused ripples in economic diplomacy circles by asking Reliance-supported think-tank Observer Research Foundation (ORF) to draft strategy papers for India’s position in the G20 on the BRICS (Brazil, Russia, India China, South Africa) Development Bank.

The structure, location of its headquarters, membership, authorised capital stock and distribution of voting rights across member countries of the BRICS Development Bank will be taken up at the next BRICS Ministerial summit due to take place in Brazil. The date for the summit will be finalised after the India’s general election dates become known. Later this month, Economic Affairs Secretary Arvind Mayaram will attend a meeting of the BRICS Common Functionaries where the proposal on the Development Bank will be readied for putting up to the Ministerial.

At the Durban Summit in March 2013, the BRICS countries had decided to set up a Development Bank for funding infrastructure projects. The BRICS Development Bank will also create a Contingency Reserve Arrangement worth $100 billion that member countries will be able to tap should they have to counteract financial shocks in future such as the one caused by the Lehman Brothers collapse.

“It is rare for the Finance Ministry to seek inputs into policy issues pertaining to economic diplomacy from a think tank so closely associated with a private company,” highly-placed sources told The Hindu.

The ORF strategy paper with the Finance Ministry proposes four options for India’s position on the structure and ownership model for the BRICS Development Banks. Two of these include allowing private sector companies to own part of it alongside owner countries. “Private sector companies owning a part of a multilateral international body alongside sovereign countries would be odd though not completely unheard of,” the sources said.

 The option will open avenues for investing in real development projects for private companies, the ORF input says. It also adds that the downside of “allowing private entities or individual investors and giving them voting rights raises the risk of these players voting for personal or private gain”.

Source : The Hindu

Rupee down 17 paise against dollar in early trade : 09-01-2014


The rupee today weakened by 17 paise to 62.24 against the dollar in early trade at the Interbank Foreign Exchange market due to demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas, increased demand from importers for the greenback also put pressure on the rupee.

They said, however, a higher opening of the domestic equity market capped the fall.

The domestic unit had gained 23 paise to one-week high of 62.07 against the dollar yesterday, amid a modest recovery in local stocks.

Meanwhile, the benchmark BSE Sensex rose by 42.10 points, or 0.20 per cent, to 20,771.48 in early trade today.

Source : PTI

‘Immigration Bill is no threat’ : 08-01-2014


The new Nasscom President, R. Chandrashekhar, is optimistic that whatever comes out of the Immigration Bill will be practical and meaningful for Indian IT companies.

“The US is not a country which regulates businesses,” he said, adding that the demand for outsourcing services is positive in the coming year.

According to Chandrashekhar, while in conversations, the concerned lawmakers said they have been receptive to the concerns of IT exporters.

Adding that there is a shortage of high skilled tech workers in the US, he said the lawmakers need to look at this issue rationally and not emotionally.

IT firms and Nasscom are concerned that the high visa rejection rates — estimated at 40 per cent — is causing a lot of headache.

The US is still looking at high unemployment, and data from the US Bureau of Labor Statistics pegs this at 7 per cent in November (this does not include people who do not search for jobs, which would increase the number of unemployed people).

The new approach of Nasscom would be more on the lines of growth that would keep in mind the economic dynamics of the region.

Source : PTI

Rupee up 14 paise vs dollar in early trade : 08-01-2014


MUMBAI: The rupee gained 14 paise to 62.16 against the dollar in early trade today at the Interbank Foreign Exchange market on selling of the US currency by exporters and banks.

Besides, strengthening of the euro against the dollar overseas also supported the rupee, dealers said.

The rupee had closed one paisa higher at 62.30 against the dollar yesterday as exporters sold the US currency.

Meanwhile, the benchmark BSE index Sensex opened higher by 79.79 points, or 0 . 38 per cent, to 20,773,03 in early trade today.

Source : The Economic Times

No proposal to raise quota of subsidised LPG cylinders: Oil Secretary : 07-01-2014


The Government has no proposal before it to raise the quota of subsidised LPG cylinders to 12 per household in a year from the current limit of nine, Oil Secretary Vivek Rae has said.

“There is no proposal in my ministry,” he told reporters here today on the sidelines of an industry event.

Finance Minister P. Chidambaram had last week stated that there were demands from “several chief ministers” for raising the quota of subsidised cylinders and the government “will look into” them.

Rae said his ministry, as of now, is not processing or proposing any change in the subsidised quota.

“I am not aware if there is any decision (on raising the limit) at political level,” he said.

With a view to cutting its subsidy bill, the Government had capped the supply of subsidised domestic LPG cylinders to six per household in a year in September 2012. The quota was raised to nine bottles per household a year in January 2013.

Officials said state-owned oil firms currently lose Rs 762.70 per cylinder on the sale of subsidised LPG and the Government will have to pay higher subsidy if the quota is raised.

Source : PTI

Rupee trading slightly weak at 62.36 : 07-01-2014


The rupee was trading slightly weak at 62.36 against the dollar at 11.40 a.m. local time on thin volumes as investors await crucial data on inflation next week.

The domestic unit had ended weak by 17 paise at 62.33 on Monday due to strong American currency and weak domestic equity market.

After opening weak by 7 paise at 62.40 day at the Interbank Foreign Exchange market, the rupee largely remained range-bound in the morning session, trading in a narrow range of 62.41 to 61.34 per dollar.

The American currency was also trading strong against overseas currencies on continued sentiments of positive outlook given by the US central bank last week.

Asian currencies were trading mixed compared to the dollar.

Further, the BSE-benchmark Sensex was trading down by 113.46 points (0.55 per cent) at 20,673.84 points in the morning trade.

Call rates and bonds

In the morning trade, the interbank call money rate, the rate at which banks borrow short-term money from each other, was trading marginally down at 8 per cent from Monday’s close of 8.75 per cent.

Amid less movement during the day, the yield on benchmark government security 8.83 per cent, maturing in 2023, was trading flat from the previous close of 8.78 per cent. Prices were trading a tad softer at Rs100.27 from Monday’s close of Rs 100.29.

“With the extent of liquidity support likely to be lower through open market operations (OMOs), we now expect the 10-year yield to settle around 8.5 per cent by March 2014,’’ a YES Bank report had said on Monday.

Source : Business Line

Rupee trading weak at 62.29 on strong dollar : 06-01-2014


The rupee was trading weak by 13 paise at 62.29 against the dollar at 11.38 a.m. local time.

The rupee opened weak by 17 paise at 62.33 due to strong dollar and lower domestic and Asian equity market. The domestic unit had ended strong at 62.16 on Friday.

The rupee hovered in the range of 62.26-62.46 per dollar during the morning session.

The American currency has strengthened against overseas currencies on upbeat outlook by the US central bank.

Outgoing Federal Reserve Chairman Ben Bernanke has fuelled the expectations of more stimulus reduction highlighting the positive outlook on the US economy.

Further, the BSE-benchmark Sensex was trading down by 70 points (0.33 per cent) at 20,782 points in the morning trade at about 10 a.m. local time.

Till such time, the Indian rupee moved in the 62.32 to 62.46 per dollar range at the Interbank Foreign Exchange market.

Call rates and bonds

In the morning trade, the interbank call money rate, the rate at which banks borrow short-term money from each other, was trading higher at 7.85 per cent from the previous close of 7.65 per cent on Friday.

Amid less movement during the day, the yield on benchmark government security 8.83 per cent (maturing in 2023) was trading softer at 8.81 per cent from Friday’s close of 8.83 per cent. Prices were trading higher at Rs 100.10 from Rs 99.95 on Friday.

 Source : The Economic Times

Narendra Modi promises to reform taxation system : 06-01-2014


Narendra Modi today promised to reform the taxation system in the country, saying it has become a burden on the common man and the need of the hour is to change it.

“The present taxation system is a burden on common man. It leads to bureaucratic control. The need of the hour is to look into it afresh and bring reforms. Our party is already working on it.

“…My party leaders and experts have recently met and considered the issue for over three hours. Some problems may appear in the first sight but we will have a look at it and find new solutions,” Modi said at an event organised by yoga guru Ramdev, who had demanded abolition of all kinds of taxes and pitched for a single ‘Banking Transaction Tax’ if the BJP leader becomes Prime Minister.

The BJP Prime Ministerial candidate’s remarks assume significance as the party has been talking about abolition of taxes in its internal meetings in the past as well. Former BJP President Nitin Gadkari had last month said that he was contemplating incorporating a proposal to abolish income, sales and excise taxes in the vision document of his party.

Gadkari is heading the team that is preparing the vision document for the general elections.

Ramdev had also said that once Modi succeeds in coming to power, he should declare the black money being held by Indians in foreign banks to be national wealth and bring it back and also set up a National Farmer Income Commission.

Modi as well as BJP President Rajnath Singh and Leader of Opposition in Rajya Sabha Arun Jaitley expressed support for the proposals saying the party would examine them in all seriousness.

“The expectation and hope, which Baba Ramdev has put in the BJP and me personally, we will try our best to live up ton it,” Modi said, adding, “If intentions are right, solutions can be found for all problems.”

Excessive taxes, Jaitley said, also cause a rise in black money as people stash away money illegally to evade levies.

He said the life of the common man had become all about paying taxes since his birth

to death, listing out numerous taxes levied on using road to house, service, electricity, water besides income tax.

“Whatever a man earns through his hard work, he can finally keep only a small fraction of it and the rest goes out… There is a dire need to simplify the tax regime, to rationalise it,” he said, adding he had come to appreciate points made by Ramdev and his aides following his long interactions with them over the years.

The BJP President also seconded the yoga guru’s demand, saying there is a need for reform. This alternative of transaction tax is very good. We will consider it and do the best we can”.

Modi blamed the “wrong” policies of the UPA government for economic woes, saying it had resulted in the decline of manufacturing industry, which required an immediate boost if economy was to recover.

He said “policy paralysis” had resulted in lack of coal for power industry despite India having vast reserves of it. Power projects have stalled, forcing us to import steel as industrialists cannot manufacture it here in the absence of electricity even though we have plenty of iron ore, he said.

that the word ‘disappointment’ was not in his dictionary.

Rajnath Singh contrasted the achievements of Atal Bihari Vajpayee-led NDA government and UPA regime, saying the former enjoyed “current account surplus” while the latter suffered from current account deficit.

Only 27 lakh news jobs were added to the economy during the UPA rule while NDA created employment for over six crore youths, he said.

Ramdev also used the occasion to hit out at Delhi Chief Minister Arvind Kejriwal and his party AAP for forming government with the support of Congress.

“There will be two poles in the elections. One will have Congress and all those who either give it or take from it support. Voting for them will be like voting for Congress. You will have to remember it,” he said.

He also spoke about recent cases of gold smuggling, invoking decades of 60s and 70s when it was rampant and caused the rise of underworld.

“Even sand is being smuggled these days. We are talking about corruption. State needs progressive policy drive and its execution with transparency. It will remove corruption,” he said.

BJP leaders also underlined their long commitment to fight against black money, recalling L K Advani’s yatra across the country on the issue.

Modi said despite having over 65 per cent of its population under 35 years of age, Indian had failed to capitalise on the strength of its young population, blaming UPA.

“This demographic dividend could have been an asset but the country’s leadership has converted it into demographic disaster,” he said, recalling how a high-powered body set up by Prime Minister for skill-development never met for three years while it was supposed to meet every three month.

He said things can be turned around with strong will and intention, stating

Source : PTI

I would still lose sleep on US Immigration Bill: Nasscom chief Som Mittal : 03-01-2014


The US Immigration Bill, which proposes higher visa fees and enhanced audit by US agencies, is still giving “sleepless nights” and the Indian IT industry needs to keep a watch, Nasscom chief Som Mittal said.

The Bill – Border Security Economic Opportunity and Immigration Modernisation Act 2013 – was passed by the Senate and is yet to be passed by the US House of Representatives.

“We are well-positioned on the Immigration Bill … I think it has some very good provisions like increasing visas … But this is something I will not sleep with. We still need to work and keep a watch on it,” outgoing Nasscom President Som Mittal said.

He added that Indian government and businesses have been engaging with their US counterparts at all possible forums to convey their concerns.

“Our Prime Minister (Manmohan Singh) took up this issue with Barack Obama. This issue has also been taken up with the US Secretary of State and Vice President Joe Biden and has been discussed at various Congressional levels. The businesses in the US are separating us… But I would still lose sleep,” Mittal said.

Last year, Nasscom hired influential lobbyist, public relation and law firms to plead the case of Indian firms with Congressmen.

Indian software-export giants like Tata Consultancy Services (TCS)Infosys and Wipro rely on visas to send employees overseas to service clients in the US, its biggest market. US contributes 65 per cent of the revenue of these firms.

The proposed legislation also requires firms to dilute their visa dependent workforce over the next few years, a move that will force Indian companies to hire local talent, thus affecting their revenues. If passed in its current form, the Bill could hurt the margins of the Indian IT sector.

Source : PTI

Rupee down 15 paise against dollar in morning trade : 03-01-2014


MUMBAI: Extending its losses for the third straight day, the rupee fell by another 15 paise to 62.41 a dollar in early trade today on the Interbank Foreign Exchange market as the US currency strengthened overseas.

Forex dealers said besides dollar’s gains against other currencies overseas, a weak opening in the domestic stock market put pressure on the rupee.

The domestic unit had lost 36 paise to close at one-month low of 62.26 against the US dollar in yesterday’s trade on  demand from importers, amid weak local equities.

Meanwhile, the benchmark BSE Sensex declined by 109.65 points, or 0.52 per cent, to 20,778.68.

Source : The Economic Times

Rupee up 5 paise against US dollar in early trade : 02-01-2014


The rupee recovered marginally by five paise to 61.85 against the US dollar in early trade today at the Interbank Foreign Exchange market on increased selling of the American currency by exporters amid sustained foreign capital inflows.

A higher opening in the domestic equity market supported the rupee but dollar’s strength against other currencies overseas on strong US economic data capped the gains, dealers said.

The rupee had lost 10 paise to close at 61.90 against the US currency in yesterday’s trade.

Meanwhile, the benchmark BSE index Sensex recovered by 48.46 points, or 0.22 per cent, to 21,188.94 in early trade today.

Source : The Economic Times

Fiscal deficit till November end hits 94% of 2013-14 target : 01-01-2014


The Centre’s fiscal deficit touched Rs 5.1 lakh crore or 93.9% of the target for the full financial year in April-November against 80.4% in the same period a year ago, increasing the chances of a much fiercer crackdown than last year on expenditure in the remaining months of the year, besides an aggressive bid to milk public sector units by way of higher/special dividends.

Terming the FY14 fiscal deficit target of 4.8% of GDP as a red line, the government has asserted that it would not be breached under any circumstances.

Official data on Monday showed April-November revenue receipts stood at the same level as the year-ago period in relation to the respective budget targets at 47.6%. As for expenditure, 61.3% of the amount budgeted for FY14 was spent by November, about 4 percentage points higher than the corresponding figure for the year-ago period.

Between October and March last year, the Centre forced a R1-lakh-crore contraction in expenditure to rein in the FY13 fiscal deficit to a creditable 4.9% of the GDP.

This was against a 6.4% many had predicted even by the middle of that year. Budget FY14 estimated nominal GDP growth at 13.4% and, based on that, projected a total expenditure of Rs 16.65 lakh crore and revenue of Rs 10.56 lakh crore, aided by a strong growth in net tax receipts to Rs 8.84 lakh crore.

According to the latest Controller General Accounts (CGA) data, the Centre’s net tax revenue stood at Rs 3.96 lakh crore in April-November, which is 44.8% of the full-year target of Rs 8.84 lakh crore. While this was worse than last year, non-tax revenue receipts in the period stood at 61.8% of the FY14 budget target at Rs 1.07 lakh crore, helped by higher PSU dividends and receipts of user charges and licence fees from telecom companies. The dismal PSU disinvestment scenario has kept “non-debt capital receipts” in April-November at just Rs 8,947crore (13.5%), against the full-year target of Rs 66,468 crore.

To give a fillip to the economy, expenditure was significantly front-loaded this fiscal (which explains both Plan and non-Plan expenditure

in April-November being much higher than last year in relation to the Budget targets at 52.4% and 65.8%, respectively) . Revenue shortfall could be as high as Rs 90,000 crore (Rs 70,000 crore in tax receipts and Rs 20,000 crore in disinvestment). So the finance ministry will have no option but to be extremely stingy when it comes to releasing funds in the final months of the year, which could also hit some of the UPA government’s flagship schemes in an election year. The ministry needs to aim for savings of Rs 1.3 lakh crore (about 25%) on Plan expenditure and Rs 25,000-27,000 crore (22%) on non-Plan capital expenditure. It would also likely roll over subsidy payments of Rs 1.1-1.2 lakh crore.

While data from the CGA captured tax receipts only up to November, the finance ministry has stated that net direct tax receipts up to December 20 this financial year, including advance tax payments, rose 13.7% from a year ago to Rs 4.12 lakh crore. Net corporate tax receipts up to December 20 grew 10.2% to Rs 2.6 lakh crore from last year, while net personal income tax receipts grew 20.5% to Rs 1.4 lakh crore in the period.

To meet its budgeted revenue target for FY14, the government needs to ensure that more than 57% of its budgeted gross tax revenue of Rs 12.36 lakh crore comes in the last five months of the year (November-March). This is an uphill — if not impossible — task as the economic downturn has had a considerable adverse effect on the growth in tax collections.

The telecom spectrum charges (from re-auction of 2G spectrum) estimated to be raked in by March is Rs 40,000 crore but the option of deferred payment given to telcos could be a dampener.

Source : PTI

Rupee begins new year trade range bound : 01-01-2014


The rupee began new year trade in a largely rangebound fashion in the absence of major cues as most global markets remain shut.

The pair was at 61.84/85 versus Tuesday’s close at 61.80/81. Foreign fund flows into equities crossed $20 bn in 2013.

Provisional exchange figures show $50.12 mn of FII buying in stocks on Tuesday. The rupee closed 2013 as Asia’s third worst performer, down 11 per cent. Dealer tips 61.70-62.10 band for session.

Source : The Economic Times

Rupee strengthens to 61.86 in early trade : 31-12-2013


The rupee gained 5 paise to 61.86 against the dollar in early trade at the Interbank Foreign Exchange market today on increased selling of the US currency by exporters.

Forex dealers said strengthening of other currencies against the dollar overseas and a higher opening in the equity market also supported the rupee.

The domestic unit had closed 6 paise weaker at 61.91 yesterday on month-end demand for the US currency from importers amid a sluggish equity market.

Meanwhile, the benchmark BSE Sensex rose 73.78 points or 0.35 per cent to 21,216.79 in the opening trade today.

Source : PTI

‘When inflation comes down, so will interest rates’ : 30-12-2013


It is not often that a top official from Reserve Bank visits Coimbatore. So, when RBI Deputy Governor K. C. Chakrabarty did, industry representatives prepared a memorandum, highlighting the importance of their respective sectors, and appealed for a reduction in interest rates.

Little did they expect Chakrabarty to ask them, albeit mildly: “Instead of blaming banks for high rates, why don’t you apply for a bank licence?”

Stating thus, he pointed out that interest rate is a function of inflation. “The rates are high not because the RBI has increased them, but because inflation is high. When inflation comes down, so will the rates,” he added.

On noticing that the audience were not convinced with his reply, he asked them what rate will they consider ‘reasonable’ on their deposits.

Pat came the reply: “Ten per cent.”

“So, when you expect 10 per cent on deposits, how can you expect the bank to lend at a much lower rate than that?” he asked, and silenced them on their demand for a lower rate.

Chakrabarty also emphasised that the ones that got bank finance were a privileged lot as the cost of funds from alternative channels was far higher.

Subsidy issue

He further advised the group of industrialists, who sought sops, against doing business on the strength of Government support or subsidy.

“Subsidy does not serve any useful purpose. On the other hand, it kills innovation and interest of people. It makes the system uncompetitive.”

On non-performing assets, he said “both the borrower and the lender should discuss the issues in advance, identify the account and treat properly (to tackle NPAs). The economy has not done well and banks have also done some wrong. Banks, the RBI and borrowers should collectively take efforts to address this issue.”

Source : Business Line

Rupee down 17 paise against dollar in early trade : 30-12-2013


The rupee today lost 17 paise to 62.02 against the dollar in early trade on the Interbank Foreign Exchange market due to month-end demand of the US currency from importers.

Forex dealers said dollar strengthening against other currencies in the global market also put pressure on the rupee but sustained rise in domestic equities capped the fall.

The domestic currency had closed higher by 31 paise at 61.85 on Friday after a rally in local equities and fresh sales of the US currency by exporters.

Meanwhile, the BSE benchmark Sensex rose by 100.86 points, or 0.48 per cent, at 21,294.44 in early trade today.

Source : The Economic Times

MSMEs: Easy credit flow continues to be a hurdle : 28-12-2013


Medium, small and micro enterprises (MSMEs) continue to support the spine of the economy by generating about 8 crore jobs, accounting for 45 per cent of the manufacturing sector and contributing 8 per cent to GDP. Yet, limited access to credit continues to dog the sector.

This trend, by and large, continued through 2013. Independent studies claimed that three-fourth of the 3.6 crore MSMEs in India do not have access to banks or institutional finance, making their businesses more vulnerable in times of economic slowdown.

Recommendations

In fact, an inter-Ministerial panel, in its report in September, made over 60 recommendations covering issues of regulation, finance, infrastructure, technology and labour law reforms, among others, suggesting various measures to accelerate manufacturing in the sector. It also urged the Reserve Bank of India to consider directing banks to reduce lending rates for this sector from about 17-18 per cent to 13 per cent, among various other measures. To ease credit flow, Minister of State for MSMEs K.H. Muniyappa, held talks with banks recently, seeking their help to meet the target of setting up additional five lakh enterprises under the Prime Minister’s Employment Generation Programme and create 40 lakh jobs during the 12th Plan.

The number of sick MSMEs in March 2013 increased to 2,48,890 in March 2013, from 88,635 in March 2012, the Muniyappa informed the Lok Sabha recently.

The increase has been largely due to RBI revising the definition of sickness. The revised RBI guidelines for rehabilitation of sick MSMEs issued on November 1, 2012, provides for early detection of sickness; a viability study to form the basis of rehabilitation package to potentially viable sick units and a non-discretionary one-time settlement scheme for the sector.  However, among the positives, 32 Central public sector undertakings made more that 20 per cent purchases from MSMEs, in keeping with the procurement policy of 2012 that made a minimum of 20 per cent such purchases mandatory for all Central Ministries, departments and other Government bodies.

Industry chambers, too, flagged their concerns over credit flow hurdles. But when it comes to concrete steps, it was only after 86 years of its existence that FICCI set up a Confederation of MSMEs recently.

Source : PTI

Rupee second worst performing emerging markets currency; down 14 per cent against dollar : 28-12-2013


The Indian rupee was the second worst performer among the currencies of emerging markets in 2013, falling almost 14% against the dollar.

The US Federal Reserve’s hint at tapering of bond purchases in May resulted in significant capital outflows from most Asian and BRIC countries, leading to a sharp fall in their currencies. The fall was mainly in those economies running a current account deficit (CAD), which is excess of spending overseas than earnings, as Chinese yuan and South Korean won bucked the trend due to surplus

Although the rupee gained almost 10% in the first few months of the year, it lost nearly 14% in the following months touching a low of 68.85 to a dollar in late August as the government struggled to contain its high current account deficit.

After widening to 4.9% of GDP in the quarter to June, the CAD narrowed to 1.2% in the following quarter as duty and restrictions on gold imports led to a fall in the import of precious metal. The CAD in 2012-13 was 4.3%.

Capital flows worsened during the year with foreign investors pulling out $6.6 billion from Indian debt. There was also redemption pressure of short-term borrowings.

Both capital and trade flows, however, improved after the quarter to June. The trade deficit narrowed as gold imports slowed and there was a modest pick up in exports as well.

Experts say the rupee may emerge stronger in 2014 on account of higher capital flows, which will help in bridging the CAD.

“Overall, we maintain our FY14/FY15 CAD estimates at 2.7% of GDP,” said Rohini Malkani, chief India economist at Citigroup.

Besides, the capital account and the overall balance of payments position are going to be better next year as there will be a cushion of $34 billion of reserves on account of RBI’s special swap window for banks and NRI deposits. “There will be pressure on emerging markets’ currency as the Fed continues taper in 2014,” said SK Ghosh, chief economic advisor at State Bank of India. “However, India’s advantage will be a cushion of the additional $34 billion, which will help us handle the impact of the taper.”

Source : The Economic Times

Obama signs bipartisan budget deal, defence bill : 27-12-2013


US President Barack Obama today signed a bipartisan budget deal easing spending cuts and a defence authorisation bill that takes a step towards ultimate closure of Guantanamo.

Obama put his signature on the legislation and praised the National Defense Authorization Act that allows accelerated repatriation of detainees from the US naval facility at Guantanamo Bay in Cuba, in addition to a crackdown on sexual assault in military.

He signed the bills while vacationing in Hawaii, where the President has been keeping since Saturday as he regroups for the mid-term election year ahead.

Obama said since taking office, he has repeatedly called upon the Congress to work with his Administration to close the detention facility at Guantanamo.

“I am encouraged that this act provides the executive greater flexibility to transfer Guantanamo detainees abroad, and look forward to working with the Congress to take the additional steps needed to close the facility,” Obama said in a statement.

“The continued operation of the facility weakens our national security by draining resources, damaging our relationships with key allies and partners, and emboldening violent extremists,” he said.

The sweeping defence bill among others, authorises $527 billion in base defence spending and $80 billion for the war in Afghanistan, in addition to a crackdown on sexual assault in military and eases restrictions on transferring detainees from the federal prison at Guantanamo Bay.

In possibly his last official act of the year, the bipartisan bill crafted by Congressman Paul Ryan and Senator Patty Murray authorises more than $1 trillion in spending for fiscal 2014 and 2015, and creates a detente between the parties by avoiding both entitlement cuts and tax increases.

It replaces $63 billion in sequester cuts over two years, in part by cutting benefits for new federal workers and military retirees and by raising fees on airlines tickets.

“This law is proof that both parties can work together,” Ryan said in a statement.

Noting that the detention facility at Guantanamo continues to impose significant costs on the American people, Obama said he is encouraged that this Act provides the Executive greater flexibility to transfer Guantanamo detainees abroad, and look forward to working with the Congress to take the additional steps needed to close the facility.

Congressman Howard P “Buck” McKeon, Chairman of House Armed Services Committee, welcomed the signing of the 52nd National Defense Authorization Act into law.

“The law makes important reforms to the Uniform Code of Military Justice, taking steps to heal the scar of sexual assault within the ranks.

“Though we still have much work to do, the law also takes steps to restore readiness to our forces worn down by a decade at war and repeated budget cuts,” he said.

Source : PTI

Rupee up 13 paise against dollar in early trade : 27-12-2013


MUMBAI: The rupee today recovered 13 paise to 62.03 against the dollar in early trade at the Interbank Foreign Exchange market on increased selling of the US currency by exporters and banks.

Forex dealers said strengthening of the euro against the dollar overseas and a higher opening in the domestic equity market also supported the local currency.

The rupee had lost 37 paise to end at a more than three-week low of 62.16 against the dollar yesterday on month-end demand for the US currency from importers and banks.

Meanwhile, the BSE benchmark Sensex moved up 97.40 points, or 0.46 per cent, to 21,171.99 in early trade today.

Source : The Economic Times

Taxman ‘surprised’ by SEBI’s tax treatment plan for FPIs: 26-12-2013


Clarity needed on tax treatment of QFIs, say officials

NEW DELHI, DEC. 25:

The Tax Department is stumped by SEBI’s tax treatment plan for foreign portfolio investors (FPIs).

According to a senior Revenue Department official, a notification on the tax treatment is yet to be finalised. FPI is a new investor category that will merge Foreign Institutional Investors (FIIs), Sub Accounts, and Qualified Foreign Investors (QFIs).

While there is no issue over the tax treatment of FIIs and Sub-Accounts, there are some vis-à-vis QFIs, the official told Business Line. Clarity on tax issues will help SEBI bring out the final circular operationalising the FPI regime.

On Tuesday. SEBI cited a communication from the Department of Economic Affairs to the Central Board of Direct Taxes, conveying that all three categories of FPIs will be given the same tax treatment as FIIs.

But there is a question mark over who will take responsibility for QFIs’ tax compliance.

QFIs are supposed to pay short-term capital gains tax on listed securities and short- and long-term capital gains tax on unlisted securities. Form 15 CB is to be submitted before remitting the money. Technically, it is the responsibility of Depository Participants to ensure tax compliance by QFIs. But, considering the size of the individual QFI accounts, Depository Participants do not find providing this service viable, another Finance Ministry official said.

This has left the issue open-ended, the official said adding that the jurisdiction of “responsibility for QFI has to be fixed.”

Also, another issue requiring attention is if QFIs have to follow the TDS (Tax Deducted at Source) or the Advance Tax Payment system.

All these issues have to be addressed in the notification.

The problem does not arise in the case of FIIs as, normally, Custodians take the responsibility of tax compliance by their FII clients.

Notification enough

However, officials said that the issue need not wait till the next Budget or the Finance Bill as the proposals do not require any amendment to the Income Tax Act or the Income Tax Rules. A notification will suffice. On October 5, SEBI announced FPI as a new category of foreign investors. The decision was taken on the basis of the recommendations of the K.M. Chandrasekhar Committee, which suggested that the Government could consider bringing in more clarity and certainty while prescribing tax provisions for FPIs.

The QFI scheme was launched last year but the response has been muted so far.

Source : Business Line

Rupee down 12 paise vs dollar in early trade : 26-12-2013


The rupee today weakened by 12 paise to 61.91 against the dollar in early trade at the Interbank Foreign Exchange market due to demand for the US currency from importers.

Forex dealers said besides dollar’s gains against other currencies overseas, increased demand from importers for the American currency also put pressure on the rupee.

They said, however, a higher opening of the domestic equity market, capped the fall.

The rupee had gained 16 paise to close at over one-week high of 61.79 against the US dollar on Tuesday after exporters sold the American currency as the forex and money markets remained closed yesterday for “Christmas” holiday.

Meanwhile, the BSE benchmark Sensex recovered by 54.38 points, or 0.25 per cent, to 21,087.09 in early trade today.

Source : PTI

We do not have a business-friendly environment, says FICCI chief : 24-12-2013


Holding poor implementation of policies responsible for the current state of economy, new President of Federation of Indian Chambers of Commerce and Industry (FICCI) Sidharth Birla, on Monday, said a business-friendly environment was absent in the country.

“We do not have a business-friendly environment. We have so many regulations,” Mr. Birla, who took over as the head of the industry body last week, told PTI.

He said there was no problem with the policy, but there had been ‘paralysis after policy’, resulting in poor implementation of the policies.

“What actually happened is that the policy is followed by paralysis. Policy ke badd kuch nai hua (nothing happened after announcement of several policies),” he said.

The business urgently needed decision and implementation, he said, adding that “80 per cent of the concerns of business can be addressed by good implementation and decision.’’

Citing the example of the FDI policy in multi-brand retail, the President said that its implementation “is left on States and the policy started getting confused.”

“I am not saying that it (30 per cent mandatory local sourcing by global retailers) is a bad intention, but it gets confused. So when it gets confused, it is paralysis after policy,” he added.

Source : PTI

Rupee jumps to 61.83 in early trade : 24-12-2013


The rupee gained 13 paise to 61.83 per dollar in the opening trade against the previous close of 61.96 dollar on the back of a strong opening in the domestic equity market.

“Exporters are hedging their positions with some dollar selling towards the end of the quarter. Also, RBI is ensuring that the volatility remains under control. RBI is said to have bought about $7 billion around 61 levels. The effort to get inflows to match the outflows has stabilised the rupee,” said a dealer with a public sector bank.

Further, the central bank has maintained that it would take care not to overtighten the monetary policy though a higher inflation could result in some action on tightening the policy going forward. A tighter policy is likely to have a downward bias on the markets.

Call rates and G-secs

The inter-bank call money rate, the rate at which banks borrow short-term funds from each other, opened higher at 8.85 per cent against the previous close of 8.75 per cent.

The widely traded 8.83 per cent government security, which matures in 2023, opened higher at Rs 100.10 from the previous close of Rs 100.07.

Yields on the security remained flat at 8.81 per cent. Bond prices and yields move in the opposite direction.

Source : Business Line

Govt won’t tell companies how to spend CSR funds: Pilot : 21-12-2013


The Corporate Affairs Ministry will not be the “judge or jury” on CSR spending, and companies can take a call on how they want to use the funds, said Corporate Affairs Minister Sachin Pilot.

This should come as music to India Inc, given that the new company law prescribes a regime for corporate social responsibility (CSR) spending.

But the key issue now is how will the Corporate Affairs Ministry provide this relaxation in the CSR regime as it may require changes to the law.

“I am very clear that it cannot be the Ministry or the Secretary or the State Government that can tell you where you should spend the CSR money,” Pilot said at a CII-ITC sustainability awards 2013 event here. India Inc can spend the CSR money on environment, ecology or even wildlife if it so desires, he said.

CSR FRAMEWORK

The CSR provisions in the new company law are yet to come into effect. The Corporate Affairs Ministry will by this month end come up with the final rules on CSR provisions, Pilot told Business Lineon the sidelines of the event. The seven phases of draft rules on the new company law have seen tremendous response from stakeholders. The Corporate Affairs Ministry has apparently received more than 25,000 responses to the draft rules. The proposed final rules are expected to clear the air on CSR spends.

LEGAL POINT

The Corporate Affairs Ministry has several options to change the prescriptive regime of CSR spending.

With the new company law in place, some legal experts feel that Schedule VII has to be amended if company boards are to get the power to decide on the areas of CSR spending.

According to the new company law, the CSR committee of a company will have to formulate and recommend to the board a policy. This policy will have to indicate what the company proposes to do from the Schedule VII list of 10 activities, including “such other matters as may be prescribed”. Indications are this phrase will be replaced with “such other activities that a company may deem fit”.

EXPERT VIEW

Dolphy D’Souza, Senior Partner, S. R. Batliboi & Co, says it is possible to add to the list of CSR activities either by prescribing in the rules or by amending Schedule VII or using Section 470 of the Companies Act, 2013 to remove the difficulty. “I guess the rules will be an easy option,” he told Business Line.

Lalit Kumar, Partner with law firm J. Sagar Associates, said the Centre has under Schedule VII the powers to prescribe additional matters for CSR activities other than those already listed in the Schedule. But it has no powers to delete or amend the subjects already listed unless the Centre invokes its power under Section 467 of the Companies Act, 2013. This will, however, require approval of both Houses of Parliament.

Source : Business Line

GST will benefit food processing industry: Pawar : 20-12-2013


Agriculture Minister Sharad Pawar on Thursday said the processed food industry is facing problems due to the existing tax regime and hoped the implementation of the proposed goods and services tax (GST) would benefit the sector.

On growth potential of non-alcoholic beverages sector, he said major players are planning to invest around $ 10 billion by 2020 in this segment and advocated reforms at state level to make the sector globally competitive.

“The processed food industry has some issues with existing tax structure. …I am hopeful that the implementation of the proposed single goods and GST will be beneficial for this sector,” Mr. Pawar said at an event here.

Mr. Pawar also released an ICRIER report that suggested major reforms including GST for improving global competitiveness of Indian non-alcoholic beverages sector.

On the GST issue, think-tank ICRIER countered some of the popular beliefs and said: “For instance, all survey participants pointed out that allowing foreign direct investment (FDI) in multi-brand retail alone cannot bring down inflation or help to streamline the supply chain, as has been envisaged by the government.”

“It will depend on whether a GST is implemented and how the food processing sector in general and the non-alcoholic beverage sector in particular is treated under the GST. The treatment of the sector has to be such that it faces uniform low tax and other fiscal and regulatory barriers to the inter-state movement of goods are addressed,” it said.

The report also suggested that India should learn from the experiences of countries such as the UK, Canada and Australia that have used low taxes to streamline the agro-supply chain.

ICRIER strongly recommended that bottled water should be taxed at par with juices to increase affordability as access to safe and hygienic potable water is limited in India.

“There should be uniform low taxes for all non-alcoholic beverages across different states for consumer health and safety reasons,” the report said.

Last week, Food Processing Secretary Siraj Hussain had said there was still not much clarity on how food products would be treated under the proposed indirect tax regime GST.

“The industry may wish to have all food products exempted from GST, but that is unlikely. In my sense, it is better (that) food products are covered under GST and let the prices of mass consuming goods be kept lower or else the purpose of GST will be defeated,” he had said.

Goods and Services Tax (GST), touted as India’s most far-reaching indirect tax reform, aims to remove barriers to movement of goods and services across states.

The Empowered Committee of State Finance Ministers is deliberating on the revised draft of the Constitutional Amendment Bill for introduction of the Bill.

Source : The Hindu

Rupee trading weak at 62.20/dollar : 20-12-2013


The rupee was trading weak by 8 paise at 62.20 against the dollar at 12.20 p.m. local time.

The rupee weakened by 28 paise to 62.40 per dollar against the previous close of 62.12 per dollar amid confirmation that the US Federal Reserve will finally reduce its fiscal stimulus programme.

The US Federal Reserve had announced a partial wind-down of its monthly $85 billion bond-buying programme. The US Fed had announced that it will cut its bond purchases by $10 billion to $75 billion from January.

The Fed had further reiterated its commitment to keep the interest rates close to zero per cent and said that the pace of further tapering will depend on the unemployment rate falling below 6.5 per cent.

“The markets were expecting a tapering of $15 billion. So, what we got was better-than-expected,” said Srinivasaraghavan, Head-Treasury, Dhanlaxmi Bank.

Another dealer from a public sector bank said not much volatility is expected going forward. The rupee should trade in the 61.50-62.50 range for the rest of this month.

Call rates, bond yields

The interbank call money rates, the rates at which banks borrow short-term funds from each other, opened higher at 8.9 per dollar against the previous close of 8.75 per cent.

The widely traded 8.83 per cent government security, which matures in 2023, opened lower at Rs 100.5 from the previous close of Rs 100.55. Yield on the security hardened to 8.75 per cent from the previous close of 8.74 per cent.

Source : PTI

Last-minute Obamacare exemption for those with canceled plans : 20-12-2013


WASHINGTON: The Obama administration made a major last-minute policy shift on Thursday, saying the change would help Americans meet a looming deadline to replace insurance plans canceled because of new standards under Obamacare reforms.

Health and Human Services Secretary Kathleen Sebelius said that this group of people – estimated by the administration to be fewer than 500,000 in number – will be allowed to claim a “hardship exemption” from the requirement in the 2010 Affordable Care Act to buy insurance.

Armed with the exemption, they then have the option to buy “catastrophic” insurance plans – cheaper insurance with a minimal coverage level that, under the law, is normally available only to people under the age of 30.

“This is a common-sense clarification of the law,” said Joanne Peters, a spokeswoman for Sebelius. “For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option.”

In the law, there are 14 categories of “hardships” that can be used to get an exemption from the mandate to buy insurance, such as a recent eviction or bankruptcy.

But this is the first exemption prompted by the administration’s botched rollout of the law, and comes after months of insistence that there would be no delays in implementing the individual mandate.

The rocky rollout of President Barack Obama’s signature policy achievement has been embarrassing and politically damaging, helping  push Obama’s approval ratings to the lowest point of his presidency.

Part of the backlash came when millions of people received policy cancellation notices, forcing Obama to apologize for a promise he made that people who liked their insurance policies could keep them under the Affordable Care Act reforms.

The latest twist comes just days before a Dec. 23 deadline for arranging insurance coverage to begin on Jan. 1. In effect, it will provide the administration and  Democrats in Congress some political cover, because people won’t be able to claim they don’t have insurance purely because their policy was canceled and alternatives are too expensive.

The change was suggested by a group of Democratic senators, some of whom face difficult reelection campaigns in 2014.

But the exemption comes after a series of other delays in enforcing or implementing various parts of Obamacare, and instantly sparked more political criticism that the government is unevenly and unfairly applying the law.

Marsha Blackburn, a Tennessee Republican who is vice-chairman of the House Energy and Commerce Committee, said in a statement that the change was a “holiday surprise” that showed the White House was “in full panic mode” ahead of the deadline.

“Rather than more White House delays, waivers and exemptions, the administration should provide all Americans relief from its failed law,” Blackburn said.

The head of the lobby group for insurance companies also panned the change.

“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of America’s Health Insurance Plans.

MORE ‘BUMPS IN THE ROAD’ AHEAD

Millions of Americans don’t have health insurance, a gap Obamacare aimed to fix. But enrollment got off to a painfully slow start because of the poorly designed HealthCare.gov website used to shop for plans.

Only 365,000 people had signed up by the end of November, when the site finally began to work well for most people.

Officials said there has been a surge in enrollments in December. They said more than 70 percent are people who were stymied by the technical problems earlier on, but they declined to release new enrollment data.

“Folks have come back, and they’re coming back in droves,” one of the officials told reporters.

The administration is also girding for the next phase of the rollout, when they anticipate newly insured Americans could encounter problems with coverage as they seek care at pharmacies and doctors’ offices.

The insurance, required by law, is sold by private companies. To prepare for gaps, officials said they have trained call center staff to connect consumers with their providers.

“This is a big transition that we are going through,” one of the officials said. ” There will be bumps in the road.”

COUNTER-NARRATIVE

The White House also concluded on Thursday a three-week barrage of events designed to trumpet good news it feels has been lost amid stories about the botched rollout.

It released a state-by-state report showing how many Americans have already gained new protections from reforms, such as the numbers now prevented from being denied coverage because of pre-existing medical conditions.

The information provides a “counter-narrative” for congressional Democrats, who are anxious a backlash against the law could hurt them in 2014 elections, said Tevi Troy, a White House aide and former Deputy Health and Human Services Secretary in the George W. Bush administration.

But the White House also is trying to burnish Obama’s legacy achievement, he said. “I think it’s about changing the damaging story about Obamacare,” Troy said.

Republicans have repeatedly voted to repeal the law, shutting down the government for 16 days in October over the issue. They have said they will continue to push for changes.

“The fact is, premiums are going up, millions of people are losing the plans they had, and access to doctors and hospitals is being restricted as a result of Obamacare,” said Don Stewart, deputy chief of staff to Mitch McConnell, the top Republican in the Senate.

But on a conference call organized by the White House on Thursday, Democratic congressman Joaquin Castro from Texas told reporters he is not worried the law will hurt him in 2014.

“I believe that by November 2014, the reality will overtake the propaganda,” Castro said, explaining he thinks consumers will appreciate the “tangible benefits” of the law and will forgive the “glitches” in the rollout.

Source : The Economic Times

Indian rupee falls to 62.09 vs US dollar, shuns RBI, waits on Fed : 19-12-2013


The Indian rupee surrendered initial gains and fell for the second day, losing eight paise to 62.09 against the US dollar today as concerns about the US Federal Reserve tapering its stimulus programme outweighed RBI Governor Raghuram Rajan’s surprise status quo decision on interest rates.

Demand from importers for the dollar, which strengthened overseas, also put pressure on the Indian rupee, while sustained capital inflows restricted the fall.

The Indian rupee opened strong at 61.90 a US dollar from the previous close of 62.01 at the interbank foreign exchange market. It climbed to 61.77 on a smart rebound in domestic stocks after the central bank unexpectedly kept all key policy rates unchanged in its Mid-Quarter Monetary Policy Review.

The RBI left the key repo rate at 7.75 per cent and the cash reserve ratio at 4 per cent. Analysts had expected a 25 bps increase in the repo rate after both retail and wholesale inflation remained high in November.

However, the Indian rupee fell on dollar demand from importers to a low of 62.18 before ending at 62.09, a loss of eight paise or 0.13 per cent.

“Rupee was immediately seen appreciating (after RBI policy) but it was a short-lived impact. Later in the session, rupee was seen weakening ahead of the next important event of the day – the Fed’s decision on quantitative easing, which will decide the further direction of the market,” said Abhishek Goenka, CEO of India Forex Advisors.

The 30-share benchmark Sensex rose 247.72 points, or 1.2 per cent, after six straight days of losses. Foreign institutional investors bought shares worth a net Rs 249.93 crore yesterday, according to provisional data.

The US dollar index was up 0.07 per cent ahead of the outcome of the US Federal Reserve meeting later today on the future of stimulus measures.

Forward dollar premiums declined on fresh receipts by exporters. The benchmark six-month forward dollar premium payable in May moved down to 243-245 paise from 245-247 paise previously and far-forward contracts maturing in November also closed lower at 486-1/2 to 488-1/2 paise from 490 to 492-1/2 paise.

The RBI fixed the reference rate for the dollar at 61.9176 and for the euro at 85.2692.

The rupee dropped to 101.52 against the pound from the overnight close of 101.06 and remained weak at 85.40 against the euro from 85.34. It softened to 60.32 per 100 Japanese yen from 60.26.

Source : PTI

FinMin pitches for cap on gas prices : 17-12-2013


Fearing that the subsidy burden could go out of control in case of upswing in future gas prices, the Finance Ministry has strongly pitched for putting some kind of cap on the prices of natural gas likely to come into effect from April 1, 2014 under the new pricing policy to protect the interests of the consumers.

In its comments on the draft Cabinet note floated by the Petroleum Ministry seeking to notify the new gas pricing regime and also getting nod for the proposal to allow Reliance Industries Limited (RIL) to charge higher prices and furnish bank guarantee for the shortfall in the KG-D6 gas production till it is verified by independent experts, the Finance Ministry said it was important to put a ceiling on the gas price to protect the interests of both the government and the consumers in case there is an unreasonable upswing in the gas prices. The comments are learnt to have the approval of the Finance Minister P. Chidambaram.

Reiterating its official position, which it had conveyed twice to the Petroleum Ministry in July and September this year, Finance Ministry is of the firm view that gas producers cannot be allowed to reap unlimited gains in the case of an upswing in global prices. Any such upside has to be capped, it added. The Fertilizer and Power Ministries have already warned that unprecedented hike in natural gas prices from April 2014 could lead to a much higher outgo of subsidy and the situation could well go out of control.

“In fact, the current price of $4.2 per mbtu was subject to a cap as the cap would come in force once the crude price exceeded $60 per barrel and therefore, there is no ambiguity as to whether the price ceiling is permissible under the production sharing contract (PSC),’’ it said in its comments. The Cabinet had in June 2012, approved the Rangarajan formula for gas pricing to be made effective for five years from April 2014, with a provision for a quarterly provision.

The new formula has yet not been notified as the Finance Ministry had wanted that RIL should be denied the higher gas prices from its existing fields because output had fallen far below what was committed in the approved development plan. Initially, the Petroleum Ministry agreed with the Finance Ministry’s opinion but then last month it moved a revised note, suggesting that RIL be asked to give bank guarantee which can be encashed if it was proven that the company had hoarded gas by deliberately keeping output low.

The Finance Ministry was of the view that since gas is used as feedstock in fertiliser industries and was a raw material for power sector for which the government is bearing subsidy, any upswing buoyed by international volatility in the gas price will add to the subsidy burden of the government.

Similarly, the Finance Ministry is also of the view that a ceiling would also take care of the interest of the gas producers as a downswing in international market may adversely impact their financial fortunes and a ceiling would provide them a much desired stability, officials added.

Source : PTI

Rupee down 15 paise against dollar in early trade : 17-12-2013


MUMBAI: The rupee today lost 15 paise to 61.88 against the US dollar in early trade on the Interbank Foreign Exchange market due to appreciation of the American unit against other currencies overseas.

The rupee had gained 39 paise to close at 61.73 against the dollar in yesterday’s trade.

Dealers attributed the rupee’s fall to dollar gains against yen as expectations grow that the Fed will announce a cut in its stimulus programme after its two-day meeting, but a higher openin ..

Source : The Economic Times

19/2013 dated 10-12-2013


Clarification with regard to applicability of section 182(3) of the Companies Act, 2013. – Dated 10-12-2013 – Companies Law

Circular No. 19/2013

No. 17/27/2013-CL-V

Government of India

Ministry of Corporate Affairs

Shastri Bhawan, 5th Floor, ‘A’ Wing,

Dr. Rajendra Prasad Road,

New Delhi 110001

Dated 10.12.2013

To

All Registrar of Companies

All Regional Director

Sub:- Clarification with regard to applicability of section 182(3) of the Companies Act, 2013.

Sir,

Ministry has received representations seeking clarification on disclosures to be made under section 182 of the companies Act, 2013. The same have been examined. with the coming into force of the scheme relating to ‘Electoral Trust companies’ in terms of section (24AA) of the Income Tax Act, 1961 read with Ministry of Finance Notification No. S. O. 309(E) dated 31st January, 2013 it will be expedient to explain the requirements of disclosure on part of a company of any amount or amounts contributed by it to any political parties under section 182(3) of the companies Act, 2013.

It is hereby clarified as under;

(i) Companies contributing any amount or amounts to an Electoral Trust Company’ for contributing to a political party or parties are not required to make disclosures required under section 182(3) of companies Act, 2013. It will suffice if the Accounts of the company disclose the amount released to an Electoral Trust Company.

(ii) Companies contributing any amount or amounts directly to a political party or parties will be required to make the disclosures laid down in section 192(3) of thecompanies Act, 2013.

(iii) Electoral Trust companies will be required to disclose all amounts received by them from other companies/sources in their Books of Accounts and also disclose the amount or amounts contributed by them to a political party or parties as required by section 182(3) of companies Act, 2013.

This issues with the approval of competent authority.

Yours Faithfully,

(Vinod Sharma)

Deputy Director

 

Liquidity to tighten as advance tax deadline nears : 10-12-2013


Situation will result in banks borrowing more from RBI’s Liquidity Adjustment Facility and Marginal Standing Facility.

Liquidity in the system is set to again get tighter, with the deadline approaching for payment of the third instalment of corporateadvance tax.

The tightness will result in banks borrowing more from the Reserve Bank of India’s Liquidity Adjustment Facility (LAF) and the Marginal Standing Facility (MSF).

Banks borrowed Rs 20,009 crore under the repo auction on Monday. Last week’s daily average borrowing from the LAF was about Rs 2,000 crore.

In the recent past, liquidity had got a boost because banks converted the funds raised from RBI‘s special dollar swap window  and foreign borrowings into rupees. RBI stated last week that the swap windows for Foreign Currency Non-Resident (Banks) or FCNR(B) funds and banks’ foreign borrowings had mobilised $34 billion. The two facilities were closed on November 30. Due to the comfortable liquidity, overnight rates had also dropped.

“The advance tax outflow will be Rs 60,000-70,000 crore. Due to this, borrowing under the LAF and MSF will rise. Overnight rates will also go up but will be in the range of 7.75-8.75 per cent,” said S Srinivasaraghavan, head of treasury at Dhanlaxmi Bank.

Some experts say liquidity will also tighten due to the government’s Rs 50,000-crore debt switch programme. Under this, the government will buy short-dated debt maturing in financial years 2014-15, 2015-16 and 2016-17, selling longer-dated bonds to the markets.

“The debt switch programme will put additional pressure on liquidity, due to which even government bond yields will rise. This debt switch will happen most likely in the near future. The new 10-year benchmark government yields might soon trade towards nine per cent. The outlook for the bond market is murky,” said Anoop Verma, vice- president (treasury), Development Credit Bank.

The yield on the 10-year benchmark government bond 8.83 per cent 2023 ended at 8.90 per cent on Monday, compared with 8.85 per cent on Friday.

According to traders, foreign banks and private sector banks will be affected more due to this debt switch programme, as they mostly deal in short-term securities. The weighted average rate of call money was 7.77 per cent on Monday, compared with Friday’s 7.57 per cent. The weighted average Collateralised Borrowing and Lending Obligation was at 7.75 per cent, compared with 7.67 per cent on Friday.

Source : The Hindu

Rupee down 12 paise : 10-12-2013


The rupee surrendered its initial gains against the American currency on fresh dollar demand from banks and importers on the back of firming of the Greenback in overseas markets.

The rupee resumed higher at 60.98 per dollar as against the last closing level of 61.13 per dollar at the Interbank Foreign Exchange (Forex) Market on initial selling of dollars by banks and exporters in view of heavy capital inflows from foreign funds into equity market.

However, it washed out opening gains due to fresh dollar demand from importers to quote at 61.25 per dollar at 1045 hrs.

It moved in a range of 60.98 and 61.27 per dollar during the morning deals.

In the New York market, the dollar held above 103 Japanese yen yesterday after US jobs data and Federal Reserve president suggested the Fed may scale back its bond—buying programme as early as next week.

Source : PTI

Govt to bring bill to provide UIDAI legal status next week : 09-12-2013


The government intends to bring in Parliament next week a bill to provide statutory status to the Unique Identification Authority of India (UIDAI), which issues Aadhaar numbers to residents.

“The government has planned to bring the National Identification Authority of India Bill, 2013, in Parliament next week,” an official said.

According to the official, all steps for discussion and passage of the bill in Parliament have been taken.

The Union Cabinet had approved the proposal of the Ministry of Planning to move official amendments to the bill in October.

The government had introduced the National Identification Authority of India Bill, 2010, in December that year.

The Lok Sabha Speaker, in consultation with the Chairman of the Rajya Sabha, had referred the bill to the Parliamentary Standing Committee on Finance.

The Committee presented its report to the Lok Sabha and tabled it in the Rajya Sabha on December 13, 2011.

In the meantime, UIDAI has been functioning under an executive order issued by the government in January 2009.

The bill proposes to constitute a statutory authority to be called the National Identification Authority of India and lay down its powers and functions, the framework for issuing Aadhaar numbers and define offences and penalties and incidental matters through an Act of Parliament.

UIDAI has so far issued about 51 crore Aadhaar numbers, which serve as proof of identity and address.

 Source : The Economic Times

Rupee trims initial gains vs dollar, still up 32 paise at 61.09 : 09-12-2013


The rupee trimmed its initial gains but was still quoted higher by 32 paise to 61.09 per US dollar in early trade today on persistent selling of the American currency by banks and exporters on hopes of more foreign capital inflows amidst a strong equity market.

Bankers and exporters preferred to reduce their dollar position as the equity market soared on strong performance of BJP in Assembly polls.

The rupee resumed higher at 60.90 per dollar as against the last weekend’s level of 61.41 at the Interbank Foreign Exchange (Forex) Market. However, it trimmed initial gains and was quoted at 61.09 per US dollar at 1040 hrs.

The domestic unit hovered in a range of 60.90-61.13 per US dollar during the morning deals.

In New York, the US dollar briefly rallied on last Friday after better than expected US jobs data, but it quickly gave back much of its gains on expectations that Federal Reserve bond-buying stimulus would continue into the next year.

Meanwhile, the BSE benchmark Sensex rose by 311.29 points, or 1.48 per cent, to quote at 21,307.82 at 1045 hrs.

Rupee vs dollar: early trade

Extending its rising streak for the fourth straight day, the rupee appreciated by 51 paise to trade at nearly four-month high of 60.90 against the dollar in early trade today on sales of the US currency by banks and exporters and sustained foreign capital inflows.

Besides, a higher opening in the domestic equity market, where the Sensex soared to an all-time high of 21,483.74 points after BJP’s victory in state Assembly elections and strengthening of other currencies against the dollar overseas, also supported the local currency, forex dealers said.

The rupee had gained 34 paise to close at five-week high of 61.41 against the dollar on Friday.

Source : The Financial Express

Rupee up 13 paise against dollar in early trade : 06-12-2013


The rupee had gained 30 paise to close at one-month high of 61.75 in the previous session.

Continuing its rising streak for the third straight day, the rupee today appreciated by 13 paise to 61.62 against the dollar in early trade at the Interbank Foreign Exchange market on sustained selling of the US currency by exporters and banks.

The rupee had gained 30 paise to close at one-month high of 61.75 in the previous session.

Over-subscription of the of Power Grid Corporation follow-on-public offer (FPO), which subscribed 4.77 times also supported the rupee,forex dealers said.

However, dollar’s gain against other currencies overseas ahead of US jobs data and a lower opening in the domestic equity market capped the gains, they said.

The benchmark BSE Sensex fell 26.11 points, or 0.12%, to 20,931.70 in early trade.

Source : Business Standard

State govts will have to pay user charges to access GST returns : 06-12-2013


State governments may have their way with the Centre finally making it clear that petroleum products and liquor would initially be kept out of the proposed goods and services tax (GST).

But there is also some bad news for states as they will have to pay user charges to access tax returns from GST Network (GSTN). GSTN is a private limited company set up to build the IT infrastructure for accepting registrations and tax returns from businesses as well as processing input tax credit for them under the new indirect tax system.

Accessing tax returns is crucial for scrutiny of the information furnished by businesses, particularly because states have been insisting that scrutiny, rather than self assessment, is the way to identify businesses below a specified annual sales that need not pay GST.

States are also likely to find the idea of user charges yet another source of revenue drain for them. GSTN was set up in March this year with an equity capital of R10 crore, in which the Union and state governments have 24.5% each (R2.45 crore), while financial institutions hold the remaining 51%.

“The central government has provided the committed capital to GSTN. There is no more contribution to GSTN, which is incorporated with a self-sustaining business model,” said a source.

The central government, however, separately gave funds to state governments for upgrading their IT infrastructure used for administering value added tax (VAT) under the Mission Mode Project on Commercial Taxes. GSTN would act as an interface between state IT systems, banks that accept payments and remit to various governments, tax payers and the Union government.

State finance ministers, who last month demanded that GST should be defined exclusive of petroleum products and liquor in the Constitution itself, are yet to give their recommendations to the finance ministry on the proposed Constitution (115th Amendment) Bill.

Sources in the central government said that states’ concerns about subsuming petroleum products and liquor into GST from the very beginning were totally misplaced.

“It was never our intention to subsume petroleum and alcohol under GST from the beginning. We only wanted to make an enabling provision for it in the Constitution so that another amendment would not be required when we take a decision in the future to subsume these under GST,” said another official, who asked not to be named.

The Centre acknowledges that state governments have been administering liquor industry for hundreds of years with some of the state Abkari Acts being more than 900 years old and that entering that domain may take time.

Experts, however, are of the view that petroleum should not be left out from GST. “Since petroleum products affect the price of a large number of other products, leaving petroleum from GST is not desirable,” said Ashok Dhingra, partner, J Sagar Associates.

Source : The Hindu

FM meets Sushma, Jaitley on insurance, DTC Bills : 06-12-2013


Keen to get key reform Bills passed, finance minister P Chidambaram has reached out to Opposition BJP to get Parliament approval for the long-awaited Insurance Bill and Direct Taxes Code Bill in the winter session that began on Thursday. “I met Sushma Swaraj to discuss the Insurance Bill. BJP said they will consider it,” Chidambaram said on the sidelines of a function to inaugurate the registered office of Bharatiya Mahila Bank here.

Sources said Chidambaram also met leader of Opposition in Rajya Sabha Arun Jaitley to discuss the two Bills. However, BJP has not given any assurance of support and conveyed to the finance minister that the matter will be discussed within the party and a call will be taken, sources said.

The government is keen on increasing the FDI cap in the insurance sector.

The Manmohan Singh dispensation wants to increase the FDI limit to invite more foreign investment and give a boost to the economy.

There is a broad agreement on the Direct Taxes Code Bill between the government and BJP, but they differ on some aspects. BJP is firm that unless the differences are sorted out the party will not support the Bill.

The Left parties too are opposed to the Insurance Bill and the Direct Taxes Code (DTC) Bill.

The Insurance Bill, which seeks to raise the foreign direct investment ceiling in the insurance sector to 49%, has been with the Rajya Sabha since 2008. The Cabinet had approved it again in October 2012.

The Standing Committee on Finance had, however, suggested that the cap should be kept at 26%.

The government is now understood to be considering a proposal to raise the FDI cap to 49% without an increase in voting rights.

Source : PTI

New excise duty rate on goods sold to related parties : 06-12-2013


We manufacture and sell steel pipes. For the purpose of manufacturing, our parent company transfers us intermediate products and charges excise duty on the value at which they were selling the goods to unrelated buyers. However, we have been informed that going forward, our sister unit would charge excise duty on 110% of their cost of production. Please advise the correct method of valuation.

For payment of excise duty, the value of goods sold to related parties is determined as per Rule 9 and Rule 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (valuation rules).The above rules have been amended vide Notification No. 14/2013 – CE (N.T.) dated November 22, 2013 with effect from December 1. Prior to the above amendment, goods sold to related parties were to be valued per Rule 9 or Rule 10 of the valuation rules only if such goods were exclusively sold to related parties. Vide the amendment, Rule 9 and Rule 10 have been made applicable even in cases where goods are partly sold to related parties and the balance sold to unrelated buyers. The exclusivity for applicability of the method prescribed under Rule 9 and Rule 10 has been withdrawn. In the present case, since the goods are sold to related and non-related persons, value of goods sold to related persons would be determined as per Rule 10 of the valuation rules i.e. excise duty would be payable on 110% of cost of production of such goods. The same is effective for removals made from December 1 onwards.

Services provided under brand name taxable

We are an authorised service centre of a consumer electronics company and we provide maintenance and repair services to their customers. We have no other business operations and work under the guidelines and set by the multinational company. We began operations in FY11 and did not register or pay service tax, since we did not exceed the prescribed threshold. The service tax authorities have issued us a notice demanding service tax on the ground that since we are associated with the brand name of the multinational company, the threshold would not be applicable to us. We did not collect service tax on our services based on the view that we did not exceed the threshold limit. Please advise.

Notification No. 6/2005-ST dated

1 March 2005 (as amended from time to time to change threshold limit) provides an exemption to service providers whose aggregate value of taxable services does not exceed Rs 10 lakh. However, such an exemption is not available for taxable services which are provided under a brand name or trade name (whether registered or not). Brand name or trade name has been defined to mean name, mark etc. which is used in relation to such specified services which indicate a connection between such specified services and some person using such brand name. In the case of CCE, Chennai-II vs. Australian Foods India (P) Ltd. 2013 (287) E.L.T. 385 (S.C.), the Supreme Court held that goods can be said to be branded as long as the environment conveys so viz. invoices, hoarding/display cards of outlets etc. and such other factors, all of which together or individually or in parts may convey that the goods are branded. The judgment would be squarely applicable for services as well.

In the present case, since you are the authorised service centre of the brand owner, the above judgment would be applicable and hence, the benefit of exemption of the threshold limit would not be available to you.

VAT rate on sale of trousers in Delhi

We manufacture and sell men’s trousers. We purchase cloth from a wholesale dealer in Delhi and the same is used to manufacture the trousers which are sold to end users. Please provide the VAT rate applicable on the sale of trousers. Further, please clarify the value on which VAT is required to be paid—on the total value at which the trousers are sold or only on additional value consideration .

VAT would be levied on the sale of trousers in Delhi. As per entry no. 57 of the Third Schedule of the Delhi Value Added Tax Act, 2004, ‘readymade garments costing up to R5,000 but not including those made up of khadi are taxable at 5%. Since trousers sold by you qualify as readymade garments, trousers costing up to R5,000 each would be taxable at 5%. In case the trousers cost more than R5,000, the same would be taxable at a higher rate of 12.5%.

Further, VAT is required to be charged on the total sales proceeds received upon the sale of goods. Since VAT is a tax on value addition, you would be eligible to claim set off of input VAT paid on purchase of cloth in Delhi against the output VAT liability on sale of trousers in Delhi. No VAT is required to be paid if the taxable turnover in a year is less than R10 lakh. Hence, in case your annual sales are less than R10 lakh, no VAT is to be paid.

The replies do not constitute professional advice. Neither EY nor FE is liable for any action taken on the basis of these replies

Source : The Financial Express

Services sector contracts for fifth straight month : 05-12-2013


Wait for significant turnaround in economy might get prolonged

In November, India’s services sector, which accounts for the biggest chunk of its economy, shrank for the fifth consecutive month, according to the widely-tracked HSBC Purchasing Managers’ Index (PMI) released on Wednesday.

Services PMI inched rose to 47.2 points in November from 47.1 in October. A PMI reading of more than 50 points means expansion, while a reading below 50 shows contraction.

“This indicated a solid rate of output contraction across the Indian services economy,” said Markit Economics, which compiled the data. This may dash hopes of a significant recovery in the second half of this financial year, especially in the services sector, which expanded 5.7 per cent in the second quarter of 2013-14, the least in 12 years, according to official data on gross domestic product. For the quarter ended June, the sector expanded 6.2 per cent, while in the year-ago period, it expanded 7.1 per cent. The services sector contributes the most to India’s GDP, which grew at sub-five per cent levels for the fourth consecutive quarter during the second quarter of 2013-14.

In November, five of the six segments in the services sector considered by PMI showed contraction, post and telecommunications being the exception. For the third consecutive month, the sharpest fall was seen in the case of the hotels and restaurants segment, clearly showing consumers were postponing their luxury expenditure due to the high inflation.

Combined with manufacturing PMI, data for which were released on Monday, the composite index (manufacturing and services) rose to 48.5 points in November from 47.5 in October. For November, PMI for manufacturing stood at 51.3, against 49.6 in October.

HSBC chief economist for India Leif Eskesen said, “The continued contraction in services sector activity is a testament to the dampening effects of the heightened macroeconomic uncertainty, which is making businesses and consumers more cautious about spending.”

Output in the services sector fell for the fourth consecutive month. The composite PMI captures not just output, but also other aspects such as the confidence of India Inc.

The low private sector output mirrored a fall in new business flows. Anecdotal evidence indicated falling client confidence, economic instability, competitive pressures and Cyclone Phailin had contributed to the drop in new work. For the second straight month, all the six services sub-sectors recorded a fall in new business volumes. The steepest decline was recorded in the hotels and restaurants segments.

Now, a significant revival in GDP growth looks unlikely, though the government hopes the second half of 2013-14 will see a boost in the economy and GDP growth for the entire financial year will stand at five per cent. Eskesen said, “While activity readings may be stabilising, a notable recovery is not in the cards for a while still.”

However, in the November PMI survey, India Inc’s optimism about output growth in the coming year was sustained. Panellists expect the launch of new services, planned increases in marketing budgets and forecasts of better economic conditions to support demand growth next year.

In November, input costs in the private sector rose the most in 16 months, while charge inflation rose to a seven-month high. These were driven by steep rises in the manufacturing sector; for services companies, input and output price inflation remained unchanged.

Eskesen said the Reserve Bank of India (RBI) was likely to continue to focus on containing inflation at its policy review later this month. “Despite the weak growth backdrop, RBI has to keep its inflation guard up to address the lingering inflation pressures.”

Soure : The Hindu

Rupee advances by 46 paise against dollar : 05-12-2013


Moving in line with equity market, the rupee advanced by 46 paise to 61.59 per dollar on fresh selling of dollars by banks and exporters.

This was on hopes of more foreign capital inflows into equity market amid exit polls predicting a strong showing by the BJP in the recently concluded Assembly elections to four states.

The rupee resumed higher at 61.75 as against the last closing level of 62.05 per dollar at the Interbank Foreign Exchange (Forex) Market and firmed up further to a one-month high of 61.53 before quoting at 61.59 per dollar at 1045hrs.

It hovered in a range of 61.53-61.86 per dollar during the late morning trade.

In New York market, the U.S. dollar surrendered some of the gains scored after a report on private-sector payrolls underlined ideas the Federal Reserve could move sooner than previously thought to cut back on its monthly bond purchases.

The Indian benchmark sensex rose by 369.87 points or 1.79 per cent to 21,078.58 at 1045hrs.

 Source : PTI

Pharma: Strong pill in medium doses : 05-12-2013


While large cap pharma companies have been the star performers thus far, select companies down the pecking order could outperform going ahead.

Large-cap pharma companies have been major outperformers over the last few years, trumping both the broader markets and smaller peers. Even in the calendar year to date, large cap pharma companies have posted returns over 30 per cent while mid cap pharma has given returns under 10 per cent.

The valuation discount between the large caps and mid caps existed given strong product pipelines, high earnings visibility, strong balance sheets and healthy return ratios for large cap pharma companies.

However, given the growth prospects and the yawning valuation gap, analysts believe that select mid caps could give better returns going ahead. Says Kapil Bhatia, Assistant Vice President, Systematix Capital, “While large caps have traditionally grown at a faster pace, as mid caps companies expand global reach and improve their therapeutic mix, they are likely to catch up or exceed the growth rates of their larger peers.”

Large caps currently trade at valuations of 20-25 times their FY15 estimates while mid cap companies are valued between 8-14 times, a discount between 44-60 per cent. This is likely to reduce going ahead. Says Ranjit Kapadia at Centrum Broking, “Improving margins and profits on the back of higher sales volumes and market share gains in the domestic market should help mid caps to bridge the valuation gap.”

In fact given the performance of some midcaps over the last fortnight the Street is already discounting some of the positives. Stocks such as Unichem Lab, Aurobindo, Biocon and Torrent Pharma have touched their 52-week highs. However, given the increased risk associated with midcaps, Hitesh Mahida of Fortune Research says that investors who wish to take exposure to mid cap names should opt for ones with robust business models, differential product pipeline, strong balance sheet and attractive valuations.

Aurobindo Pharma

The stock has been making new 52 week highs, hitting Rs 310.50 on Wednesday. Despite the gains it still remains one of the cheapest stocks in the pharma space. The company is trading at 8.1 times its FY15 earnings estimates and is still at a discount to mid-cap average P/E multiple of 14.2 times and large cap average of 17.8 times as per Bank of America Merrill Lynch Research (BofAML).

The company after resolving FDA related issues sometime back is now on a strong wicket in the US post re-launch of cephalosporin class of drugs from Unit VI (one of the affected facilities) and market share gains by products launches in last 12 months. The ramp-up in injectibles capacity at Unit IV and at least three injectibles launches in next 30 days (all in shortage list of USFDA with market size of $68-80 million bolsters its prospects. Analysts at Edelweiss believe that sustainable operational performance will restore confidence over execution, resulting in valuation rerating. Notably the company has the largest pipeline of products (250 plus filings including approved and pending approval) in the US.

Sarabjit Kour Nangra at Angel Broking estimates net sales to grow at 17.4% CAGR over FY13–15 while BofaML analysts estimate a 21 per cent growth with 580bp margin increase on improving product mix and higher share of formulation. BofAML analysts add that with the investment cycle behind it and increased capacity utilization along with strong free cash flows, expect balance sheet to improve considerably, resulting in a re-rating. Bloomberg consensus by analysts polled in November’13 shows a target price of Rs 355.

Biocon

The Biocon stock has been touching its 52-week highs over the past week post a recent drug approval as well as growth prospects of its biosimilar portfolio. The company got a go-ahead from India’s drug controller to market the breast cancer drug Trastuzumab. The drug, a biosimilar version of Roche’s Herceptin, has been developed jointly with Mylan and is estimated to have a market size in India of $21 million. The innovator product sales for its biosimilar portfolio being co-developed with Mylan are pegged at $34 billon globally.

The company with sales of $414 million in FY13 is looking at more than doubling the same to $1 billion by FY2018. While the domestic pharma business (14 per cent of revenues) is growing at 30 per cent annually and listing of its contract research subsidiary Syngene could unlock value, the bigger trigger is the opening up of the regulated markets to its biosimilars post patent expiries of key drugs in CY15.

The stock which trades at 13 times its FY15 estimates (35 per cent discount to large pharma companies) has not priced in any upside from biosimilar products, according to analysts at IIFL. The research firm estimates that Biocon will grow its earnings at annual rate of 24 per cent over FY13-FY16. Given the longer time frames for biosimilar approvals, investors with a timeframe of 2-3 years should consider investing in the stock.

Torrent Pharma

This mid cap pharma stock too has caught the investors’ fancy touching its highest in over a year on Tuesday. Analysts at IIFL believe that the company which is one of its top midcap picks has a strong business portfolio with the highest growth potential. More than 60 percent revenue comes from the emerging markets and more than 70 percent of domestic revenue comes from higher margin specialty business. Not surprising that the company in domestic markets remains unaffected by traders stir in the country and as per trade body AIOCD data grew 13.3 percent in October’13.

For the US markets, Torrent is focusing on accelerating its filings to 10-15 ANDAs each year. It currently has 23 pending approvals and 31 under development including large generics and niche products. It is also likely to launch one product on exclusivity in the US during December 2013. This strong pipeline is likely to drive Torrent’s US and European growth, observes Perin Ali at Edelweiss.

A low base and high number of product launches will keep growth in the US above 30 per cent for the next three years, say IIFL analysts. They predict that the given the high contribution from growth markets, growing revenue base as well as strong free cash flows, the stock which is trading at a discount of 20-50 per cent discount to large cap pharma could rerate over the medium term.

Source : Business Standard

Rupee trims initial losses, still down by 3 paise : 04-12-2013


The rupee trimmed initial losses against the American currency, but was quoted still lower by 3 paise to 62.39 on mild dollar demand from banks and importers.

The rupee resumed lower at 62.40 per dollar as against the last closing level of 62.36 at the Interbank Foreign Exchange market and dropped further to 62.55 on good dollar demand from banks.

However, it recovered immediately to 62.37 per dollar before quoting at 62.39 at 1040hrs.

It hovered in a range of 62.37-62.55 per dollar during the morning session.

In the global market, Japan’s Nikkei Stock Average fell sharply in early trade as the yen regained some lost ground, while the Australian dollar tumbled after the country’s disappointing third-quarter growth data.

The tone for Asia was cautious as regional markets dropped ahead of the November labour report from the US, due to be out on Friday — a much-watched indicator used to gauge whether the Federal Reserve will start to roll back its bond-buying programme.

Meanwhile, the benchmark Sensex moved down by 22.96 points, or 0.11 pct, to 20,832.76 at 1045hrs

Source : The Hindu

Exports account for 70% of GDP growth in Q2 : 04-12-2013


The quarter ended September saw the first sequential improvement inGDP (gross domestic product) growth in five quarters. This has improved the prospects of an export-led economic recovery in India. According to Central Statistical Office data, financial, real estate and business services, including information technology (IT) services, were the biggest growth contributors, growing 10 per cent during the second quarter. Analysts expect the export momentum to result in rising capacity utilisation and a boost to investment and consumption demand in the coming quarters.

Back-of-the-envelope calculations show export growth (net of imports) accounted for 70 per cent of the incremental growth in GDP during the September quarter. At 2004-05 prices, exports of goods and services rose 16.3 per cent year-on-year basis, the most in eight quarters. Imports were flat, growing 0.4 per cent, the least in 14 quarters.

“The sequential growth in GDP was led by export sectors, which gained from the rupee’s depreciation and the mild economic recovery in North America and Europe. In the near term, it directly raises output and the utilisation rate in export-oriented industries and their vendors and suppliers,” says Dhananjay Sinha, co-head (institutional equity), Emkay Global Financial Services. He expects higher GDP growth in the second half of 2013-14, aided by export buoyancy and better growth in the farm sector. “GDP growth seems to have bottomed out for now, but its sustainability is still doubtful, given the macroeconomic headwinds such as high inflation, the persistently high fiscal deficit and regulatory bottlenecks in many sectors,” he adds.

Now, exports account for 27.8 per cent of India’s GDP (on an expenditure basis), the most in about a decade. The previous high was recorded in the September 2008 quarter, when exports accounted for 26.4 per of GDP. This, coupled with the sluggish import growth, led to a sharp fall in the current account deficit.

Ratings agencies, however, aren’t surprised. “The economic growth in the second quarter has been led by a recovery in the export sector and robust growth in agriculture output. This was largely expected, given the rupee’s depreciation earlier this year and the good monsoon,” says Devendra Kumar Pant, chief economist and head (public finance) at India Ratings and Research.

Farm output (including forestry and fishery) rose 4.6 per cent in the second quarter, against 2.7 per cent growth in the first quarter and 1.7 per cent in the year-ago period. A good monsoon will translate into a bumper rabi harvest (winter crop), which will aid economic growth during the second half, besides raising rural income. It will also result in higher demand for consumer goods such as garments, tractors and two-wheelers.

Economists, however, doubt whether the buoyancy in the export and farm sectors will led to secular investment and consumption demand growth in the economy. “The recent data on the index of industrial production suggests a sporadic recovery in a handful of sectors, but there is still no sign of general growth in manufacturing. Investment demand, meanwhile, remains sluggish and unless it regains previous highs, the economic recovery won’t last long,” says Pant.

Gross fixed capital formation (proxy for investment) increased 2.6 per cent in the second quarter, against -1.2 per cent in the first quarter and 1.1 per cent in the year-ago period, though much below the double-digit growth recorded during the boom period of 2004-08. Investment demand accounted for 33.6 per cent of GDP in the second quarter, 100 basis points higher than in the first quarter, but 100 basis points lower on a year-on-year basis. At its peak, investment accounted for 36 per cent of GDP

Source : PTI

Services PMI contracts for fifth month in a row : 04-12-2013


India’s services sector, which constitutes the biggest chunk of its economy, shrank for the fifth month in a row in November, according to the widely-tracked HSBC purchasing managers’ index released today.

This may dash hopes of any significant recovery in the second half, particularly in the services sector, which grew at 11-year low in the second quarter of 2013-14 in the official GDP data.

Services PMI inched up to 47.2 points in November from 47.1 in October, remaining in the negative zone. PMI above 50 means expansion and below that number it is a decline.

“This indicated a solid rate of output contraction across the Indian service economy,” Markit Economics, which compiles the data, said in a statement.

The gravity of the fall could be gauged by the fact that five of the six areas in services, captured by PMI, showed contraction. The exception was Post and Telecommunication.

For the third month in a row, the sharpest fall was seen in hotel and restaurants, clearly showing that consumers are postponing their luxury expenditure due to high inflation.

Drop in new work triggered the decline in services for the fifth month in a row.

Combined with manufacturing PMI, which was released on Monday, the composite index rose to 48.5 points in November from 47.5 in October. This was pushed by PMI manufacturing, which was up at 51.3 points from 49.6 in October.

HSBC chief economist for India Leif Eskesen said, “Service sector activity remains subdued, but would at least appear to be stabilising.”

Services sector is the largest area in India’s GDP, which grew at sub-5% for the fourth quarter in a row for the Q2 of 2013-14. This was because the tertiary sector rose at an almost 12-year low of 5.7% in July-September against 6.2% growth in the first quarter this year and 7.1% in the same period last year.

Services PMI

Sep, 12 Oct, 12 Nov, 12 Dec, 12 Jan, 13 Feb, 13 Mar, 13 Apr, 13 May, 13 Jun, 13 Jul, 13 Aug, 13 Sept, 13 Oct, 13 Nov, 13
55.8 53.8 52.1 55.6 57.5 54.2 51.4 50.7 53.6 51.7 47.9 47.6 44.6 47.1 47.2

Note: A reading above 50 points means expansion and one below it shows contraction

Indian rupee down 10 paise vs US dollar in morning trade : 03-12-2013


The Indian rupee today weakened by 10 paise to trade at 62.41 against the dollar in early trade at the Interbank Foreign Exchange market due to increased demand for the US currency from oil importers.

Forex dealers said besides dollar’s gains against euro and yen overseas after better-than-expected manufacturing figures, increased demand from oil importers for the American currency and a lower opening in the stock market also put pressure on the Indian rupee.

They said, however, fall in current account deficit which narrowed sharply to USD 5.2 billion, or 1.2 per cent of GDP in the July-September quarter of 2013-14, capped the rupee’s losses.

The Indian rupee ended 13 paise higher at 62.31 against the US dollar in the previous session.

Meanwhile, the BSE Sensex fell by 49.42 points, or 0.24 per cent, to 20,848.59 in early trade today.

 Source : The Hindu

Exports account for 70% of GDP growth in Q2 : 03-12-2013


Exports of goods and services at 2004-05 prices were up 16.3% on year-on-year basis; imports growth was just 0.4%

The first sequential improvement in GDP growth in five quarters during the second quarter has raised the prospects of an export-led economic recovery in India. According to figures by the Central Statistical Organisation, financing, real estate and business services that includes IT services were the biggest growth contributors, growing by 10% in the second quarter. Analysts expect the export momentum to lead to rising capacity utilisation and boosting investment and consumption demand in the forthcoming quarters.

A back of the envelope calculation shows that export growth (net of imports) accounted for 70% of the incremental growth in GDP during the second quarter. Exports of goods and services at 2004-05 prices were up 16.3% on year-on-year basis during the second quarter, growing at its fastest pace in eight quarters. Imports on the other hand were flat growing by 0.4% in the second quarter, expanding at its lowest pace in 14 quarters. (See chart below)

“The sequential growth in GDP was led by export sectors which gained from rupee depreciation and mild economic recovery in North America and Europe. In the near term, it directly raises output and utilisation rate in export-oriented industries and their vendors and suppliers,” says Dhananjay Sinha, co-head institutional equity at Emkay Global Financial Services.

He expects even faster growth in GDP during the second half aided by export buoyancy and faster growth in farm sector.

“GDP growth seems to have bottomed out for now but its sustainability is still doubtful given macro-economic headwinds such as high inflation, persistently high fiscal deficit and regulatory bottlenecks in many sectors,” he says.

Exports now account for 27.8% of India GDP (calculated on expenditure basis) rising to its highest level in nearly a decade. The previous high was in the September 2008 quarter when exports accounted for 26.4% of the GDP. This coupled with the sluggish import growth led to a sharp fall in current account deficit.

Ratings agencies agree, but don’t see too many surprises. “The economic growth in the second quarter has been led by recovery in the export sector and a robust growth in agriculture output. This was largely expected given the rupee depreciation earlier this year and good monsoon,” says Devendra Kumar Pant, chief economist and head public finance at India Ratings and Research.

Farm output (including forestry and fishing) was up 4.6% in the second quarter, against 2.7% growth in the first quarter and 1.7% during the same quarter last fiscal. A good monsoon will translate into bumper Rabi harvest (winter crop), which will aid economic growth during the second half besides pushing up rural income. It will translate into higher demand for consumer goods such as garments, consumer goods, tractors and two-wheelers, among others.

Economists however doubt if the buoyancy in export and farm sectors can led to a secular investment and consumption demand growth in the economy. “The recent data on index of industrial production suggests sporadic recovery in a handful of sectors, but there is still no sign of a general growth in manufacturing. Investment demand meanwhile remains sluggish and unless it recoups the previous highs economic recovery won’t last long,” says Devendra.

Gross fixed capital formation (proxy for investment) grew by 2.6% in the second quarter, better than -1.2% in the first quarter and 1.1% during the same quarter last fiscal but much below double digit growth recorded during FY04-08 boom. Investment demand account for 33.6% of the GDP in the second quarter, up by 100 basis points from the first quarter but down 100 basis points on year-on-year basis. At its peak, investment accounted for over 36% of the GDP.

Source : PTI

It’s a period of stress, but there’s ground for optimism: FM : 03-12-2013


Pinning hopes on a recovery in the second half of 2013-14, Finance Minister P Chidambaram on Monday said the country’s economy, led by an uptick in manufacturing and exports, would grow five per cent this financial year.

“We are going through a period of stress, but there is clearly a ground for optimism. The performance of the economy in the second quarter is broadly on expected lines. We hope things will become better in the second half of the current financial year,” he said.

The economy grew 4.8 per cent in the July-September quarter of this financial year, against 5.2 per cent in the corresponding period of 2012-13. This was better than the first quarter’s 4.4 per cent growth rate but at a sub-five per cent level for a fourth straight quarter. Growth in agriculture and industry, on a year-on-year basis, improved during the quarter, but that in services declined.

Chidambaram said the second-quarter numbers indicated the economy might be recovering and returning to growth trajectory. If the services sector showed brisk growth in the third and fourth quarters, it would aid the overall recovery in the second half, he added. “We expect five per cent economic growth in 2013-14.”

Also on Monday, a report by Singapore-based brokerage firm DBSsaid the modest uptick in the second-quarter GDP readings indicated the worst might be over for the domestic economy, but achieving five per cent growth for the financial year might still be an uphill task.

Chidambaram said: “Our balance of payments position has improved significantly. The current account deficit (CAD) has narrowed. We are on course to contain CAD.”

The finance minister also exuded confidence that the government would contain its fiscal deficit for the year at 4.8 per cent of GDP, despite concerns, as it was on course as far as disinvestment and spectrum sale targets were concerned — and tax collections had started picking up.

“In tax collections, there was some momentum in the beginning of the second half. When revenue collections speed up, we will contain fiscal deficit. Once spectrum is sold, we will get more than the target. On disinvestment, we are on course. I have got the calendar on my table and don’t see any shortfall,” he said, adding fiscal deficit at the end of any month did not give a true picture as expenditure was front-loaded and revenue collections back-loaded.

At the end of October, 84.4 per cent of the Budget estimate for full-year fiscal deficit had been achieved. The disinvestment target for this year is Rs 40,000 crore, but the government has managed to raise only Rs 1,400 crore through stake sale so far. Proceeds from the sale of telecom spectrum are also pegged at over Rs 40,000 crore.

The finance minister also said FCNR flows into the country had exceeded the government’s expectations. The flows have touched $25.9 billion and, with an addition of $8.3 billion under Tier-I borrowing, the total flows stand at $34.3 billion.

Asked about inflation, Chidambaram said the principal responsibility of taming food inflation and all instruments for that lay with state governments. The state governments must take action against hoarding and profiteering and remove barriers to trade.

After a gap of six months, the rate of retail inflation had returned to double digits in October, rising to 10.09 per cent. The wholesale inflation rate in the month increased to an eight-month high of seven per cent. The wholesale food inflation rate had stood at 18.19 per  cent.

Source : Business Standard

India eyes food subsidy reform as WTO Bali talks begin : 02-12-2013


India is all set to tighten its belt in order to hammer out a critical deal on reforming the food subsidy regime of World Trade Organization (WTO) as negotiations begin tomorrow in Bali, Indonesia. New Delhi also seeks to negotiate the agreement on trade facilitation that will result in simplified customs rules for shipment of goods.

The ninth WTO ministerial conference (MC9) that starts tomorrow is going to be closely watched across the globe not only because it will discuss issues of critical importance for all its 159 members, but also because the fate of multilateral trading regime is at stake after 12 years of painstaking negotiations.

The Doha round of global talks started in 2001. Since then member countries have not been able to conclude a single agreement on any topic even as the developed and developing countries continue to spar over issues concerning agriculture and market access.

“India’s engagement with WTO had been positive and sincere. We will see that the outcome is also positive for all countries,” said commerce and industry minister Anand Sharma as he left for Bali. The Cabinet Committee on WTO-related matters also met last week under the chairmanship of Prime Minister Manmohan Singh that finalised the government’s negotiating mandate.

For India, success of the talks in Bali assumes significance as it scrambles to offer subsidies for its poor farmers across the country. While according to WTO rules these subsidies are regarded as ‘trade distorting’, for developing countries like India it has direct relation to the livelihood of its around 600 million farmers.

India recently rolled out the National Food Security Act, 2013 under which the government provides rice, wheat and millet at a subsidised rate. Some member countries have already started pointing fingers at this programme, referring it to be distorting trade.

“Any outcome sans a good development package, including adequate safeguards for developing countries to run their food security programme, will erode the credibility of the WTO with regard to its development objective under the Doha Round,” said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).

The WTO has proposed a four-year interim measure within which time, developing countries like India can offer those food subsidies that are at present considered illegal under the global trading norms.

This is because developing countries are allowed to offer food subsidies to the limit of 10% of the total agriculture produce. This is also referred as the ‘di minis’ level under trade parlance. The limit for developed countries is 5%.

India is also going to negotiate the proposed agreement on trade facilitation that aims to simplify customs rules across all international borders for faster movement of goods. Under this agreement, India mainly has concerns on courier services.

“If Bali fails to deliver, then it will weaken the multilateralism and the credibility of WTO as an institution. Failure in Bali would be very disappointing particularly in view of the mega-FTAs currently under talks, that will imply a huge share of world trade conducted on preferential basis which may not be to the advantage of India,” said FICCI President Naina Lal Kidwai.

This is for the first time that the government is facing a WTO ministerial with general elections just a few months away. Hence, the outcome in Bali will have impact on the ruling coalition’s fate in its domestic constituency as well.

The Bali talks have already come under scathing attack from global civil societies and NGOs that have warned against any trade-offs with the lives of farmers. Over 150 civil society groups consisting of farmers, trade unionists and consumer activists are expected to participate in the talks and stage protest across Bali.

The talks will continue till December 7 at the Bali Nusa Dua Convention Centre.

Source : PTI

PlanCom to reorient itself with the changing needs of the economy : 02-12-2013


Drawing flak for its theoretical functioning, the Planning Commission has re-started a process of reforming its approach to the plan process. The Commission will start discussions with think-tanks and consultations with various stakeholders including businesses and labour unions. Besides, it will redefine its role as a mediator between various sectors, factions and deal with issues that pull down economic development and hamper smooth business operations.

Officials in the know said that the Commission in its last internal meeting sought suggestions from top officials and members to improve the functioning of the Commission in line with the changing needs.

“When the Commission was re-constituted in 2009, there was some activity as per the directives of the Prime Minister to transform it more into systems reform Commission, but it was left mid-way as most members and officials got bogged down with routine work related to preparing the 12th five-year plan,” a senior Commission official, directly involved in the process said.

Now, that this process is over and the mid-term appraisal would start only after a new government takes over, the Commission has re-started the earlier left work, the official said.

Giving examples of the work that Planning Commission wishes to do in the coming days, the official said it will try and facilitate discussions and interactions between stakeholders in the industry and labour unions to formulate just and amicable labour practices in the country.

Also, it will look at issues dogging the country’s pharmaceutical sector and find solutions for that. The best practices adopted by different states could also be shared with others.

However, it does not mean that the Commission would not do its regular work, but the emphasis would be more on process change, both within and outside the Commission.

To start with, the Commission is facilitating a discussion with labour unions in Germany and India to understand best labour laws and practices and formulate them in India.

“We already have too much committees and laws, but they have not served any purpose, the time is now to sort out the issues and work towards making Planning Commission a true reforms Commission,” the official added.

Source : The HIndu

Rupee up 16 paise against dollar in early trade : 02-12-2013


The rupee rose by 16 paise to 62.28 against the dollar in early trade on Monday at the Interbank Foreign Exchange after the economy grew by a higher-than-expected 4.8 per cent in the September quarter.

Forex dealers said increased selling of the U.S. currency by exporters, a higher opening in the domestic equity market and strengthening of euro and yen against the dollar overseas also supported the rupee.

The rupee had lost three paise to close at 62.44 against the dollar on Friday amid demand for the U.S. currency from oil refiners.

Meanwhile, the BSE benchmark index Sensex rose 70.67 points, or 0.34 per cent, to 20,862.60 in early trade on Monday.

Source : The Hindu

Petrol, bulk diesel prices to be cut : 30-11-2013


Move follows fall in global prices which eased after Iran reached an agreement with western countries last Sunday

Oil marketing companies are expected to announce a cut in petrolprice and bulk diesel rates later today. This follows a fall in global product prices which eased after Iran reached an agreement with western powers last Sunday.

Retail diesel price are, however, expected to go up by 50 paise as part of gradual move towards decontrol of diesel price. Unlike retail rates, bulk diesel prices are market linked.

The Iranian deal has seen 2% fall in Brent crude oil price over the last one week. The agreement struck between Iran and the US, the UK, Russia, China, France and Germany will allow inspection of Iranian nuclear sites while giving relief on the sanction front.

Source : The Hindu

No change in pharma FDI policy : 30-11-2013


Currently, the govt allows 100% FDI in both greenfield projects and brownfield drug-manufacturing companies.

The government has decided to continue with the current foreign direct investment (FDI) policy for the pharmaceutical sector, brushing aside the long-drawn proposal of the commerce ministry. The Anand Sharma-led ministry has been advocating a lower FDI cap in brownfield, or existing ,drug making units, along with various safeguards for acquisition of domestic critical care pharma companies by multinational firms.

While there is no change in the FDI cap, the Cabinet decided to bring in a breather for domestic players in the sector by doing away with any non-compete clause in such agreements. This may mean that domestic companies divesting stake in their drug manufacturing business can continue to compete with separate ventures in the sector.

After the Cabinet meeting on Thursday, government representatives indicated a decision on the pharmaceutical FDI policy was deferred, following objections from the finance ministry and the Planning Commission. But in a statement on Friday, the government said the current pharma policy would continue.

“The Cabinet decided that the current policy in brownfield and greenfield projects in the pharmaceutical sector will continue, subject to the additional condition that in all cases of FDI in brownfield pharma, there will not be any non-compete clause in any of the inter-se agreements,” the government said in a statement on Friday.

Currently, the government allows 100 per cent FDI in both greenfield projects and brownfield drug-manufacturing companies. While investments in greenfield are allowed through the automatic route, those in brownfield or existing facilities must be approved by Foreign Investment Promotion Board.

The Department of Industrial Policy and Promotion (DIPP), under the commerce ministry, had proposed a lower cap of 49 per cent for foreign investment in rare or critical pharma verticals.

The contentious policy was stuck for long, primarily between four key entities- the health ministry, the commerce ministry, the finance ministry and the Planning Commission. While the ministries of health and commerce were pushing for stringent rules and a lower cap on FDI in brownfield or existing pharmaceutical companies, their proposal met strong opposition from various other stakeholder ministries, including finance ministry and the Planning Commission.

Earlier this year, various FDI proposals in pharma sector, seeking approval from FIPB were delayed because of inter-ministerial differences. Later, with the intervention of Prime Minister Manmohan Singh, the government, to bring down the its current account deficit, decided to clear the pending proposal which included a whopping $1.8 billion investment proposal by US generic drug maker Mylan Inc to acquire Strides Arcolab’s injectible unit – Agila Specialities.

However, the government had then decided to create safeguards for future foreign investment proposals in the pharma sector in the wake of concerns that acquisition of existing critical drug-manufacturing facilities could lead to a significant hike in prices of medicines, while also creating a shortage of some drugs.

But, the latest decision of the Cabinet appears to have been backed by the government’s immediate financial needs.

Apart from seeking a lower cap of 49 per cent, DIPP had also sought to bar foreign investors from divesting manufacturing, and research and development (R&D) facilities in case of transfer of ownership of an existing pharma firm and sought to impose a three-year lock-in on investment. The proposal also sought to mandate foreign investors direct 25 per cent of their total investments into research. The proposed policy also defined ‘rare and critical’ as those drug segments that had just five or limited Indian manufacturing units. Besides, a company with 40 per cent or more share in the domestic market for any particular drug, would also be classified as rare and critical.

Source : PTI

Cabinet exempts some agriculatural exporters from stockholding limit : 30-11-2013


To facilitate larger export of food and agriculture items, the UnionCabinet has exempted exporters who have IEC Code issued by the Directorate General of Foreign Trade (DGFT) from stockholding limitsimposed under the Essential Commodities Act, 1955.

However, this exemption will be only available for exporters of edible oilseeds, edible oil and rice and will be limited only to the stocks meant for export and not domestic sale.

“This will help exporters benefit from economies of scale and bigger operation for optimally meeting export demands on a long-term basis,” an official statement issued on Friday said.

India’s agriculture exports rose to a record Rs 231,993 crore in 2012-13, up 24 per cent from the previous year due to the lifting of bans on various items. In 2012-13, India has emerged as the world’s biggest rice exporter at 11 million tonnes.

Source : Business Standard

Q2 GDP data due today; sub-5% growth likely : 29-11-2013


According to economists and research houses, GDP is likely to have grown between 4.4-4.8%.

The Gross Domestic Product (GDP) is likely to have grown sub-5% for the fourth straight quarter in the July-September of the current financial year, prolonging the wait for economic recovery.

The Q2 GDP data will be released in the evening today.

The GDP is likely to grow in the range of 4.4-4.8%, according to projections made by various independent economists and research firms.

According to a Reuters poll of 40 economists, the economy grew 4.6% in the July-September period this financial year.

It was on the back of improved manufacturing activity and good monsoon in this quarter that the economy may have grown better than a four-year low of 4.4% in the previous quarter. But, it would be the slowest second quarter growth in four years. The economy grew 5.2% in the second quarter of 2012-13.

It would also raise questions on more than 5% growth in the current financial year, which the finance ministry has claimed.

Moody’s Analytics pegged GDP growth in the second quarter of 2013-14 at 4.5%. The research wing of Moody’s Group said, “GDP growth in the second quarter cooled to its slowest pace in four years, as production slowed across most parts of the economy.”

A Dun & Bradstreet report said that it expects the economy to rise by 4.5% in the September quarter this year.

“The manufacturing sector fails to revive, fiscal deficit continues to rise and the domestic private sector consumption continues to weaken,” the firm said.

ICRA Ratings said that the Indian economy likely expanded 4.6% in the second quarter.

“GDP growth would have improved to 4.6% in Q2 from 4.4% in Q1, with a pick-up in the performance of industry at around 2.3% from 0.2% and agriculture at near 3.5% from 2.7%,” ICRA said.

Siddharth Shankar, Director at Sinia Global said that the quarter saw improvement in the manufacturing and the agricultural sector while not in the services sector. “The services sector may be the spoiler and may pull down the GDP. I expect the GDP numbers for the second quarter to be between 4.25% and 4.75% with higher probability of it being 4.25%”, said Shankar.

Zyfin, a research and analytical firm, pegged the GDP growth at 4.7% with the services sector being the worst performer. According to Zyfin, the sector grew at a five-year low of 5% in the April-September period.

In the previous quarter, according to official estimates, the services sector growth slowed to 6.2% and Zyfin had estimated 5.6% expansion in the sector.

However, all projections are not as pessimistic. Assocham predicted that the rise in GDP was 5.4% for the second quarter of 2013-14 due to improved agricultural output.

“Growth would touch 5.4% in the second quarter owing to a good monsoon and resultant better performance of farm sector, thereby propelling the industry and services performance in the current fiscal,” Assocham said.

It pegged the farm sector sector growth at 4.25% in quarter ended September this year.

Deutsche Bank pegged economic growth at 5.5% for the quarter.

The government expects the economy to steer back in the second half of this year. The Prime Minister’s Economic Advisory Council (PMEAC) has estimated the GDP to grow 5.3% for 2013-14, which experts feel is unlikely to be achieved.

Source : Business Standard

Rupee up 14 paise against dollar in early trade : 29-11-2013


The rupee on Friday gained 14 paise to 62.27 against the dollar in early trade at the Interbank Foreign Exchange market on fresh selling of the U.S. currency by exporters.

Forex dealers said strengthening of the euro against the dollar overseas and a higher opening in the domestic equity market ahead of second quarter economic growth data also supported the rupee.

The local currency had lost 27 paise to close at 62.41 yesterday due to month-end demand from oil importers for the U.S. currency, which strengthened in the overseas market.

Meanwhile, the benchmark BSE Sensex rose by 245.15 points, or 1.19 per cent, to 20,780.06 in early trade on Friday.

Source : PTI

Indian rupee down 26 paise vs US dollar : 28-11-2013


The Indian rupee today weakened by 26 paise to 62.40 against the US dollar in early trade on the Interbank Foreign Exchange market due to appreciation of the greenback against other currencies overseas.

Dealers attributed the Indian rupee fall to dollar gains against other currencies overseas.

The Indian rupee had gained 36 paise to close at 62.14 against the dollar yesterday after banks and exporters sold the US currency as it weakened overseas.

Meanwhile, the BSE Sensex rose by 155.35 points, or 0.76 per cent, at 20,575.61 in early trade today.

Source : PTI

Cabinet Committee meet on WTO today : 28-11-2013


The Cabinet Committee on WTO-related matters would meet today to take a call on India’s stand at the upcoming Bali meeting. The meeting assumes importance since India has finally agreed to a four-year interim measure, or a ‘peace clause’, that will do away with the cap on food subsidies for farm support in developing countries.

The Cabinet committee will take a formal call on this issue today.

Then, a decision on this will be taken next week during the ninth Ministerial Conference (MC9) in Bali, Indonesia.

According to the final draft of the negotiating text circulated by WTO Director-General Roberto Azevêdo among trade ministers of the 159 member countries, a developing country like India can provide subsidies for farm support even if those exceed the permissible 10% cap.

However, the interim measure has become extremely controversial, especially in the wake of the government’s recently-announced National Food Security Act (FSA), 2013. Political parties, farmers and some sections of the civil society are vehemently opposing this and demanding a permanent solution.

To continue to give subsidies within their domestic constituencies in future as well, it is crucial for India and other developing countries to get the subsidy regime changed under the WTO Agreement on Agriculture (AoA).

In the draft text, the members have also agreed to seek a permanent solution, as demanded by India, before 2017, when the 11th Ministerial Conference takes place. But that has been accepted only as a post-Bali agenda.

However, despite WTO agreeing to a permanent solution, making all members agree and deliver on their commitments is going to be difficult. So, the prospects of amending the AoA on subsidies have been delayed further.

Also, the proposed ‘peace clause’ is not completely immune to challenges and can always be disputed under the Agreement on Subsidies and Countervailing Measures (ASCM).

In a letter to Shanta Kumar, chairperson, Standing Committee on Commerce, Pradeep Mehta of CUTS International, who also sits on a high-level panel at WTO, has said the commitments under FSA are enormous, but these cannot be considered ‘trade-distorting’ as defined by WTO.

At present, under AoA, subsidies given for domestic support measures and export of up to 10% of the value of the total agricultural production are exempt from any challenge. However, the base price for calculating subsidies is taken at the 1986-88 level. And, India has not been notifying its subsidies since 2004.

Developing countries like India, China and Brazil are already on the threshold of breaching the permissible level due to a rise in global food prices. As a result, the G-33 coalition of developing countries, which includes these nations, has been pushing WTO to change the AoA. Under FSA, a pet project of the United Progressive Alliance government, rice, wheat and millet are provided at subsidised rates.  The US spent $94 billion on its food aid programmes in 2010; this expenditure reached $100 billion in 2012. The European Union, on the other hand, offers subsidies worth $60 billion as direct farm subsidy annually.

Indian industry has also urged the government to revive the stalled Doha round of global trade talks, which started in the Qatari capital in 2001 to help poorer countries prosper through trade liberalisation. But the talks have failed to reach a consensus, even as the rich and developing countries continue to spar over agricultural subsidies and tariff reduction on industrial goods.

Source : Business Standard

Notification No.91/2013 dated 27-11-2013


NEW RECOGNIZED ASSOCITION FOR THE PURPOSE OF SECTION 43(5), CLAUSE (iii) OF EXPLANATION 2 TO CLAUSE (e) OF PROVISO, OF THE INCOME-TAX ACT, 1961 – 91/2013 – Dated 27-11-2013 – Income Tax

[TO BE PUBLISHED IN THE, GAZETTE OF INDIA, EXTRAORDINARY, PART-II,

SECTTON 3, SUB-SECTTON (ii)]

Government of India

Ministry of Finance

(Department of Revenue)

(Central Board of Direct Taxes)

New Delhi

NOTIFICATION NO. 91/2013

Dated: November 27, 2013

In exercise of the powers conferred by clause (iii) of the Explanation 2 of clause (e) of the proviso to clause (5) of section 43 of the Income-tax Act, 1961 (43 of 1961) read with sub-rule (4) of rule 6DDD of the Income-tax Rules, 1962, the Central Government hereby notifies the Universal Commodity Exchange Limited, Mumbai as a recognised association for the purposes of clause (e) of the proviso to clause (5) of the said section, with effect from the date of publication of this notification in the Official Gazette.

2. The Central Government may withdraw the recognition of Universal Commodity Exchange Limited, Mumbai if any of the conditions specified in rule 6DDC of the Income -tax Rules, 1962, is violated.

3. This notification shall remain in force until the approval granted by the Forward Markets Commission is withdrawn or expires, or the notification is rescinded by the Central Government under sub-rule (5) of rule 6DDD of the Income-tax Rules, 1962.

[F.NO. 142/31/2013-TPL(PT.-II)]

 

Rupee up 18 paise in early trade : 27-11-2013


The rupee appreciated by 18 paise to 62.32 against the dollar in early trade on Wednesday at the Interbank Foreign Exchange market on selling of the U.S. currency by exporters.

Besides, a higher opening in the domestic equity market also supported the rupee. The rupee had close steady at 62.50 against the dollar on Tuesday.

Meanwhile, the BSE benchmark Sensex rose by 33.91 points, or 0.17 per cent, to 20,458.93.

Source : PTI

Credibility of WTO at stake with proliferation of bilateral trade deals: Jagdish Bhagwati : 27-11-2013


Even as trade ministers from 159-member countries are going to meet in order to hammer out a global trade deal in Bali in less than a week, the proliferation of several bilateral and regional trade agreements might weaken the World Trade Organization (WTO) as an institution that monitors multilateralism, according to renowned trade economist and professor of economics and law at Columbia University Jagdish Bhagwati.

Bhagwati has stressed on that fact that while both the developed as well as developing countries have failed to push the Doha round of global trade talks forward, which began in 2001, it is crucial that WTO retains its stature as a credible platform for conducting a rules-based trading system and resolution of trade disputes.

In an article – Dawn of a New System – published in Finance and Development, a quarterly publication of the International Monetary Fund, Bhagwati has underscored the challenges the new chief of WTO, Roberto Azevedo, faces at a time when gigantic trade agreements such as the Trans-Pacific Partnership, or TPP led by the US and the Transatlantic Trade and Investment Partnership or TTIP led by the European Union (EU) is taking shape gradually.

These agreements, though they are at a nascent stage presently, have indicated rewriting global trading norms much beyond what is laid out under the WTO. But these will, nevertheless, result in killing the Doha round of talks. Bhagwati stresses that this will lead in diminishing WTO’s role in rule making and settling trade disputes.

Hence, he suggests in what he refers to as ‘Doha Lite and Decaffeinated’, to agree to a slimmed down version of the proposed global trade deal during the ministerial conference in Bali next week.  According to Bhagwati, this could be the only solution to salvage WTO. This is because declaring Doha dead would mean losing even some of the small benefits that could have been obtained that might be beneficial for some of the least developed countries.

Source : Business Standard

New tax regime soon for foreign portfolio investors : 27-11-2013


Bid to boost dollar inflows; FinMin not to wait till next Budget

To boost dollar inflows, the Finance Ministry plans to address the complicated taxation issues for Foreign Portfolio Investors (FPI) without waiting for the next Budget.

FPIs are a new category of investors created by merging existing Foreign Institutional Investors (FIIs), sub-accounts and qualified foreign investors (QFIs).

Indications are that FPIs will get the tax benefits available to FIIs. “The new taxation regime for FPIs will be prescribed through a notification shortly,” a senior Finance Ministry official told Business Line, adding that this neither requires any amendment to the Income Tax law or any change to the Rules. This means that foreign investors will not have to wait till the next full-fledged Budget and the Finance Bill for the new regime to kick in.

In fact, Finance Minister P. Chidambaram has called for a meeting of the Economic Affairs Secretary, the Revenue Secretary and officials from the Tax Department to discuss the issue. The meeting will take place in a couple of days and, based on the discussion, a notification will be issued after being vetted by the Law Ministry.

NOTIFICATION SOON

The notification will prescribe the mechanism for tax compliance besides rates and other matters.

The key issue is who will ensure compliance. Currently, for the FIIs, it is the Custodian who normally takes responsibility for FII clients. However, this is not so easy with Qualified Foreign Investors.

“Considering the size of individual QFI accounts, Qualified Depository Participants do not find it viable to provide tax compliance services. This creates problems,” the official added.

On October 5, the Securities and Exchange Board of India announced a new category of foreign investors as FPI. The decision was taken on the basis of recommendations by the K. M. Chandrasekhar Committee, which suggested that the Government could consider bringing more clarity and certainty while prescribing tax provisions for FPIs.

TAX TREATMENT

In an interview to Business Line in October, SEBI Chairman U. K. Sinha had said, “We have recommended to the Government that the same (what is available for FII) tax treatment and procedures should be available for FPI category. My impression is that it is going to happen soon. Once that happens, the foreign portfolio investment part will become very smooth and we can expect foreign portfolio investment to be high.”

Commenting on the latest move, Vasudha Sundararaman, MD and CEO, SBISG Global Securities Services, said that it is important to communicate to foreign investors willing to come via the proposed FPI route that “the same taxation will be applicable to them as that of FII/Sub-Accounts. The sooner we communicate this to them, the better our chances to bring them on board.”

Source : The Hindu

Trade throws a volley of questions at FM; CBEC issues detailed clarifications : 26-11-2013


THE Union Finance Minister, Mr P. Chidambaram, recently held interactive sessions at Chennai, Delhi and Mumbai to ascertain and address the concerns of trade on any aspect of the Service Tax Voluntary Compliance Encouragement Scheme (VCES). During these interactive sessions, the trade had raised certain queries and also expressed some apprehensions. Most of these issues have already been clarified in the various circulars/FAQs mentioned hereafter. Certain issues raised in these interactive sessions which have not been specifically clarified hitherto or clarified adequately, are discussed and clarified as below:

S.No.

Issue raised

Clarification

1 An instance was brought to notice wherein a declaration was returned probably on the ground that it was incomplete. As has already been directed by the Board, vide the said letter dated 22.8.2013 ( para 2.4 of the letter), the designated authority shall ensure that no declaration is returned. In all cases, declaration should be promptly received and duly acknowledged. Request for clarification should be dealt with promptly. Defects in the application, if any, should be explained to the declarant and possible assistance be provided in rectifying these defects. The effort must be to accept a declaration, as far as possible, and recover the arrears of tax.
2 An apprehension was raised that declarations are being considered for rejection under section 106 (2) of the Finance Act, 2013, even though the “tax dues” pertain to an issue or a period which is different from the issue or the period for which inquiry /investigation or audit was pending as on 1.3.2013. Section 106(2) prescribes four conditions that would lead to rejection of declaration, namely,

(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of,-

) search of premises under section 82 of the Finance Act,1994 ; or

ii ) issuance of summons under section 14 of the Central Excise Act, 1944; or

(iii) requiring production of accounts, documents or other evidence under the Finance Act, 1994 or the rules made there under; or

) an audit has been initiated,

and such inquiry, investigation or audit was pending as on the 1st day of March, 2013.

These conditions may be construed strictly and narrowly . The concerned Commissioner may ensure that no declaration is rejected on frivolous grounds or by taking a wider interpretation of the conditions enumerated in section 106(2). If the issue or the period of inquiry, investigation or audit is identifiable from summons or any other document, the declaration in respect of such period or issue alone will be liable for rejection under the said provision.

Examples:

(1) If an inquiry, investigation or audit, pending as on 1.3.2013 was being carried out for the period from 2008-2011, benefit of VCES would be eligible in respect of ‘tax dues’ for the year 2012, i.e., period not covered by the inquiry, investigation or audit.

(2) If an inquiry or investigation, pending as on 1.3.2013 was in respect of a specific issue, say renting of immovable property, benefit of VCES would be eligible in respect of ‘tax dues’ concerning any other issue in respect of which no inquiry or investigation was pending as on 1.3.2013.

It is also reiterated that the designated authority, if he has reasons to believe that the declaration is covered by section 106(2), shall give a notice of intention to reject the declaration within 30 days of the date of filing of the declaration stating such reasons to reject the declaration. Commissioners should ensure that this time line is followed scrupulously.

3 Whether benefit of VCES would be available in cases where documents like balance sheet, profit and loss account etc. are called for by department in the inquiries of roving nature, while quoting authority of section 14 of the Central Excise Act in a routine manner. The designated authority/ Commissioner concerned may take a view on merit , taking into account the facts and circumstances of each case as to whether the inquiry is of roving nature or whether the provisions of section 106 (2) are attracted in such cases.
4 Whether the benefit of the Scheme shall be admissible in respect of any amount covered under the definition of ‘taxes dues’, as defined in the Scheme, if paid by an assesses after the date of the Scheme coming into effect, (i.e., 10.5.2013), but before a declaration is filed Yes, benefit of the Scheme would be available if such amount is declared under the Scheme subsequently, along with the remaining tax dues, if any, provided that Cenvat credit has not been utilized for payment of such amount.

Example:

A person has tax dues of Rs 10 lakh. He makes a payment of Rs 2 lakh on 15.5.2013, without making a declaration under VCES. He does not utilize Cenvat credit for paying this amount. Subsequently, he makes declaration under VCES on 1.7.2013. He may declare his tax dues as Rs 10 lakh. Rs 2 lakh paid before making the declaration will be considered as payment under VCES.

5 Whether declaration can be made in such case where service tax pertaining to the period covered by the Scheme along with interest has already been paid by the parties, before the Scheme came into effect, so as to get waiver from penalty and other proceedings? As no “tax dues” is pending in such case, declaration cannot be filed under VCES. However, there may be a case for taking a lenient view on the issue of penalties under the provision of the Finance Act, 1994. In this regard attention is invited to section 73 (3) and section 80 of the Finance Act, 1994.

The Service Tax Voluntary Compliance Encouragement Scheme (VCES) has come into effect from 10.5.2013. Most of the issues raised with reference to the Scheme have been clarified by the Board vide circular Nos. 169/4/2013-ST, dated 13.5.2013 and No. 170/5/2013-ST, dated 8.8.2013. These clarifications have also been released in the form of FAQs. Attention is also invited to letter F. No. 137/50/2013-ST, dated 22.8.2013 as regards the action to be taken by the field formations for effective implementation of the Scheme. Number of interactive sessions have also been held at various places to ascertain and address the concerns of trade on any aspect of the Scheme.

 

Rupee appreciates by 6 paise : 26-11-2013


The rupee on Tuesday appreciated by six paise to 62.44 against the dollar in early trade at the Interbank Foreign Exchange market on selling of the US currency by exporters.

Besides, strength in other currencies against the dollar overseas after fresh figures showed pending US home sales slowed for the fifth straight month in October also supported the rupee, forex dealers said.

They said, however, a lower opening in the domestic equity market capped the gains.

The rupee had gained 37 paise to end at 62.50 on Monday after global crude oil prices dropped following a nuclear deal between Iran and world powers.

Source : PTI

As Electricity is goods chargeable to duty under CX Tariff & also under VAT supply of electricity to tenant amounts to sale of goods and not service : 25-11-2013


As Electricity is goods chargeable to duty under CX Tariff & also under VAT supply of electricity to tenant amounts to sale of goods and not service

Rupee strong on dollar sale by exporters, banks : 25-11-2013


The rupee was trading strong in morning trade due to dollar sale by exporters and banks.

At 10:20 am, the rupee was trading at Rs 62.48 compared with Friday’s close of Rs 62.83 per dollar.

However, currency dealers see month end dollar putting pressure on the rupee later during the day.

Source : PTI

Talking to govt for easier FDI rules in e-commerce: Amazon : 25-11-2013


The company, which launched operations in India in June, currently operates with a marketplace model.

Global retail giant Amazon on Sunday said it was “engaging” with the government for relaxing of foreign direct investment (FDI) norms in e-commerce, following which it would adopt a hybrid model to start product retailing.

“We believe FDI in e-commerce is good for the customers. Not only will they get more choices but it will also improve the level of customer service for the industry,” Director and General Manager(seller services) Amit Deshpande said.

“We are engaging with the government to relax FDI norms in e-commerce space,” he added. Deshpande said once the government relaxes FDI in the e-commerce, Amazon.in would follow a hybrid model where apart from the marketplace model, “we will begin retailing products”.

The company, which launched operations in India in June, currently operates with a marketplace model. Under this model, Amazon.in will not sell products directly to customers but only provide a platform to sellers.

India’s FDI policy restricts e-commerce companies from offering services directly to retail consumers. At present, 100 per cent FDI is allowed in business-to-business (B2B) e-commerce but not in retail trading.

The company, which began operations with just two product categories — books and movies — has now over 15 products categories and has over 1,400 sellers listed on its website.

“India is a huge opportunity for us. We are here for the long term. We believe Indian e-commerce space has got potential. We will continue to add categories such as sports and apparel,” Deshpande said.

Amazon entered the Indian online shopping space with its price aggregator and selection website Junglee.com in February 2012.

Source : Business Standard

RBI to shut down dollar swap window on November 30 : 23-11-2013


Reserve Bank of India (RBI) said that the concessional swap facility will not be extended beyond November 30, putting all speculation to rest, but allowed some breathing space for banks currently busy with negotiating with global lenders for taking overseas loans.

The central bank said it will allow banks to get the benefit if they get firm commitment from global financial institutions on or before November 30, 2013.

RBI had in September allowed banks to borrow up to 100%  .. of their Tier-I capital from overseas markets and swap dollar with it for rupees. The measure was aimed at attracting dollar inflows and arrest the rupee’s depreciation. It offered one percentage point lower swap rate than the market rate till November 30.

As time is running out, RBI observed that banks currently in the process of negotiation may not be in a position to draw the loan even after getting a sanction and deliver it for swapping before the deadline.

In such cases, a bank will be allowed to enter into a forward-forward swap. In its first leg, the bank will sell forward the contracted amount of foreign currency corresponding to the loan amount for delivery up to December 31, 2013.

However, if the bank is not in a position to deliver the contracted amount of foreign currency on the contracted date, it will have to pay the difference between the concessional swap rate contracted and the market swap rate plus one hundred basis points.

The other terms and conditions for the swap will remain unchanged as notified earlier.

Source : PTI

More essential drugs get duty exemption : 23-11-2013


The government has extended a 30-day excise duty exemption for re-packaging of essential medicines to the batches whose prices were revised in July, August and September.

In July, the finance ministry had exempted excise duty only on the first batches of scheduled drugs whose prices were fixed in May and June after the National Pharmaceutical Pricing Authority (NPPA) implemented the new Drugs Price Control Order (DPCO). According to this, prices are capped at the average price of all medicines in a particular segment with a market share of at least one per cent.

The government had initially given companies manufacturing these 348 essential medicines 45 days to comply with the new price order. However, since companies had to recall the existing batches of such medicines from the market and repackage and re-label them, the government exempted excise duty on the batches of medicines whose prices were fixed in the first lot.

“The Department of Pharmaceuticals (DoP), on being satisfied that it is necessary in the public interest to do so, extends the period of validity of exemption for a period not exceeding 30 days from the date when the period of 45 days expires, as granted by Department of Revenue, for the above said purpose in respect of price notifications dated 22.07.2013, 21.08.2013 and 20.09.2013 issued by NPPA,” said a recent notice by the DoP.

The revenue department issued a notification on July 29, giving 30 days additional time to the manufactures of whose prices were revised on May 15 and which were subjected to re-printing, re-labelling, re-packing or stickering.

While companies were demanding more time to comply with new prices and some drug makers also approached various high courts, the latest move comes as a relief for drug makers.

Source : Business Standard

Rupee up 7 paise against dollar in early trade : 22-11-2013


The rupee recovered by seven paise to 62.86 against the dollar in early trade on Friday at the Interbank Foreign Exchange market on selling of the U.S. currency by exporters.

Besides, a higher opening in the domestic equity market supported the rupee but weakening euro and yen against the American currency, capped the gains, Forex dealers said.

The rupee had lost 36 paise to close at 62.93 against the dollar on Thursday as indications of an imminent tapering by the Federal Reserve strengthened the U.S. currency.

Meanwhile, the BSE benchmark Sensex rose by 108.91 points, or 0.54 per cent, to 20,337.96.

Source : The Hindu

Inflation to moderate to 5%: Chidambaram : 22-11-2013


Finance Minister, P. Chidambaram, today expressed the hope that rate of price rise will ease to below 5 per cent following steps taken by the Government and the Reserve Bank of India.

“Several steps, including increase in the policy rate, have been taken and we hope that the WPI-based inflation rate will moderate to a level below 5 per cent,” he said at the second South Asian Diaspora Convention here.

Noting that retail inflation has been more intractable, he said both the Wholesale PriceIndex and the Consumer Price Index are being driven by food inflation.

“The weights of food items in the two indices are 24.3 per cent and 46.2 per cent, respectively. It may surprise you that there is reasonable stability in the prices of major commodities such as wheat and rice,” he said, adding that sugar prices have actually fallen by about Rs 6 per kg.

However, he said, prices of fruit, vegetables, meat, milk and eggs are elevated and are driving the inflation rate.

Chidambaram had earlier said that “both the RBI and the government are trying a number of measures to cool inflation…

“We are looking at various suggestion that we have got. I am open to suggestion but I am afraid that there is no easy answer to cool retail inflation.”

The government has taken several measures including supplying wheat in those location where prices have been high.

So far it has offloaded 500,000 tonne wheat to contain prices.

Meanwhile, the RBI has raised policy rate by 0.25 per cent in the its October monetary policyreview to contain inflation.

The CPI inflation, measured by movement in theretail prices of food items, soared to a seven-month high of 10.09 per cent in October. The wholesale price-based inflation too shot up to 8-month high of 7 per cent in the same month.

Costlier food items, including vegetables, pushed the October wholesale inflation to 7 per cent, highest in the current financial year.

 Source : PTI