Friday, 30 September 2011

Sebi bans 7 GDR issuers for price manipulation

BS REPORTER Mumbai, 21 September THE Securities and Exchange Board of India (Sebi) has banned seven companies from raising fresh capital, after investigations revealed they manipulated share prices after issuing global depository receipts (GDRs). The regulator has also barred 10 entities, including a foreign institutional investor (FII) and sub-accounts, from dealing in securities market.
The firms barred from issuing equity shares or any other instrument convertible into equities are Asahi Infrastructure & Projects, IKF Technologies, Avon Corporation, K Sera Sera, CAT Technologies, Maars Software International and Cals Refineries. All of them made at least one GDR issue during 200709.
According to a44-page order issued by wholetime member Prashant Saran, asimilar method was used by all these entities. The companies made a GDR issue that was subscribed even if the pricing was at a premium. Thereafter, within ashort period of time, a set of common investors converted their GDRs into normal shares, again sold to a constant group of clients.
The order says: “The various aspects of GDR issues, like the large size of the issue vis-àvis existing size of the issuing company, unimpressive financials of the company, common initial investors, high proportion of cancellation of GDRs repeatedly by a set of FII/sub-accounts, sale in Indian exchanges, most of which are with a constant group of clients, and further off-loading by them, point towards an elaborate scheme to manipulate markets.” The findings reveal evidence of a pre-arrangement between parties to transactions at various stages of this complex scheme, it adds. The financial instruments regulator has asked the Enforcement Directorate to further look into the matter. Both the depositories — NSDL and CDSL — have been directed to freeze the beneficial owner accounts of all persons/entities named in the order.
Some of the entities that form part of the common pool of investors indulging in this practice are European American Investment Bank Ag (FII), India Focus Cardinal Fund (sub-account), MAVI Investment (sub-account), KII Limited (sub-account) and Sophia Growth-A share Class of Somerset India Fund (sub-account).
Other entities that have been barred are Basmati Securities Pvt Ltd, Oudh Finance & Investment Private Ltd, Alka India Ltd, SV Enterprises and JMP Securities Pvt Ltd (in capacity of a client to other intermediary or in proprietary account).
According to the regulator, the beneficiaries of this manipulation are the GDR issuing companies that end up with a surge in net worth along with the lead manager who earns commissions for providing services and the sub-accounts that purchase GDRs at discounts in an illiquid foreign market and exit in the domestic market with the active connivance of related counterparties that generate volume and depth to attract domestic investors.
The regulator has also barred (with immediate effect) Pan Asia Advisors Ltd and Arun Panchariya (Investment


Thursday, 29 September 2011

Maira committee favours no change in pharma FDI policy

A high-level committee headed by Planning Commission member Arun Maira today recommended giving more teeth to the Competition Commission of India (CCI) in allowing mergers and acquisitions (M&A) in the pharmaceutical sector and not changing the foreign direct investment (FDI) rules.
The panel is of the view that the present FDI policy governing the pharma sector should not change, even as the necessary gate keeping should be done by CCI that has the provision to check such activities, Maira said. “There is no need to follow the government route when we have more updated and more sophisticated policy instruments under the CCI,” he told
Business Standard .
The report would be presented to the Prime Minister and Deputy Chief of Plan panel Montek Singh Ahluwalia.
The PM is scheduled to meet all stakeholders on the issue on October 10 to take a final view on the matter.
The committee under Maira was created on June 30 by the Cabinet Committee on Economic Affairs to look into the issue of creating an investorfriendly environment for promoting fresh investments in the sector and position India a leading destination for drug research and manufacturing hub.
“FDI policy in pharma should not be changed at all. It should remain the way it is. However, a proper gate-keeping is a must as it is a sensitive sector and the concerns raised by other ministries can be addressed by proper provisioning,” Maira said.
“We will now be presenting the report to the PM and the deputy chairman of the Planning Commission, after which aconfirmed view on this issue is going to be taken.” Currently, the government permits 100 per cent FDI via automatic route. However, the ministry of health had raised serious concerns on the impact of the series of takeovers that have been taking place since 2006 on the domestic drugs industry.
The concerns were also shared by the ministry of commerce and industry which wrote a letter to the PM suggesting imposition of certain restrictions in case of pharma M&As. It wants to allow the M&As through the government route unlike now.
The period from 2006 to 2010 saw some significant M&A deals that changed the face of Indian pharma industry. Some of them were the acquisition of Matrix Lab by USbased Mylan Inc in August 2006, Japan’s Daiichi Sankyo acquired Ranbaxy Laboratories in June 2008, Francebased Sanofi Aventis took over Shanta Biotech in July 2009 and last year, in May, US-based Abbot Laboratories acquired Piramal Healthcare.

Wednesday, 28 September 2011

India heads for ‘worrying’ 11/12 sugar surplus: Industry body

NEW DELHI: India is heading for a “worrying” sugar surplus in 2011/12 and the government should help by allowing four million tons of exports and buying two million tons to trim stocks, the head of a producers’ body said.
Output for the world’s second-biggest producer after Brazil is expected to be 26.5 million tons in 2011/12, Jayantilal B. Patel, president of the National Federation of Cooperative Sugar Factories Ltd. (NFCSF), told an industry meeting.
In 2010/11, India is likely to have produced around 24.2 million tons and with demand of around 22 million tons — making it the world’s biggest consumer — the government has already allowed unrestricted exports of 1.5 million tons.
“This expected surplus production of sugar during 2011/12 is worrying,” Patel said.
The Indian Sugar Mills Association (ISMA), another producers’ body, shares Patel’s 2011/12 output forecast, as does Farm Minister Sharad Pawar.
However, Food Minister K.V. Thomas recently estimated output in 2011/12 at 24.6 million tons.
“The sugar year 2010/11 has been a year of surplus production after two years of deficit. I shudder when I visualize what the situation would have been if the government had not permitted exports of 1.5 million tons in three equi-tranches,” Patel said.
Thomas last week said the government would take a call on permitting overseas shipments only after Diwali, the festival of light, in October. Sugar consumption peaks during the Diwali as sales of confectionery and traditional gifts of sweets soar.
Local sugar prices have fallen 6.5 percent since January while international benchmark London white sugar futures have lost nearly 18 percent.
By REUTERS

Tuesday, 27 September 2011

Take Credit Card Loan Only in Emergency

loans against credit card are like personal loans but without the cumbersome documentation. loan on credit card may not be available to everyone. banks provide this loan to credit card customers with high credit standing. this means that if you have been using a particular bank’s credit card for some time and you have a good payment track record, you are most likely to be eligible for a loan on credit card. some banks limit or block the cash withdrawal on your credit card to the extent of loan you have taken. for the rest, loan on credit card works like a personal loan — with a processing fee, repayment in monthly installments and prepayment facility, but often with a hefty pre-payment charge. this is useful only when there is an urgent need for liquid funds since any other loan will take at least two weeks to process and also because of the documentation involved which is not the case in loan against credit cards. one big issue is the service tax on interest which may be payable on loan against credit card but not on a regular personal loan.

Monday, 26 September 2011

3G roaming pacts under scrutiny

Vodafone, Airtel, Idea provide services without spectrum.

In a development that could make it difficult for third generation (3G) telecom operators to provide pan-India services, a Department of Telecommunications (DoT) division has asked them to refrain from offering services in circles where they do not have 3G spectrum by getting into roaming agreements with competing players which have. The companies will be liable for action if they do not comply.

The move could have an adverse impact on companies like Vodafone, Airtel and Idea Cellular, who have been able to offer 3G services across the country without having spectrum in many circles. This became possible after the three companies recently signed an inter-circle roaming agreement to use each other’s networks.
While Vodafone has spectrum in only nine circles, it offers 3G services to its customers in 20 circles. Airtel has 3G spectrum in 13 circles but offers 3G services in 20 circles. Idea Cellular has 3G spectrum in 11 circles but offers 3G services in 19 circles. The number of circles where 3G spectrum was auctioned is 22.
With the operators challenging the Telecom Enforcement, Resource and Monitoring (TERM) division’s stance and saying the practice is allowed under the UASL (Unified Access Service License)rules, a regulatory battle is expected. According to DoT sources, the department may refer the matter to the Telecom Regulatory Authority of India (Trai). Trai has started scrutiny on its own and asked telecom operators to give details of their 3G roaming agreements. A Trai source said there was a case for questioning such services.
Telecom operators that have refrained from providing 3G services where they do not have spectrum say their competitors’ action means an operator can pay Rs 1,750 crore for a pan-India licence and offer 2G, 3G and 4G services without bidding or having any spectrum. So, many of the new operators who had not bid for 3G spectrum could give 3G services across the county or even 4G, by having a UASL licence, though neither trading of spectrum or allowing MVNO (Mobile Virtual Network Operator) operations is permitted, says a senior executive of a telecom company. This, the companies say, could lead to a major loss in revenue for the government in the coming auctions for 3G and 4G, as operators would prefer to get into roaming arrangements rather than pay for expensive spectrum.
An Airtel spokesperson, confirming the communication, said: “All the desired information required by the TERM cell has been provided to them. Bharti Airtel is in complete compliance of the license conditions and all our agreements are as per the stated government policy.” Idea Cellular also confirmed the communication and said it had responded. Its action was “as per policy guidelines”, the company said.
According to the communication from the TERM cell, set up to ensure adherence to the licence conditions, it had come to their notice that telecom operators without spectrum and licence amended for the provision of 3G services had entered into inter-circle and intra-circle roaming arrangements (with other operators who have 3G spectrum in the circle), not permitted in the licence. It says the 2G operator cannot enter into a roaming agreement with a 3G operator for giving 3G services.

The cell has directed operators to refrain from giving the service, pending a clarification on this issue from the DoT and that anyone offering 3G services in this manner would be liable for action. The operators giving the service would be considered as unlicensed service providers, against whom action can be taken under the law, while action could be taken against the roaming partner, too, for breaching licence conditions.
The affected operators, such as Vodafone, have said in their reply their UASL allows them to offer “all types of access services”, including services like voice, data and triple play. They say under the terms, no additional licence is required for offering something like high-speed services. And, that under the UASL licence, companies can enter into agreements with others to offer national and international roaming services to customers. The Vodafone response also says that in response to an earlier query sent by the industry to DoT, on whether customers of UASL would be allowed to roam on 3G networks of other UASL networks in the same licence area, the reply was affirmative.
A senior executive of one of the operators said it was only after the issue was so clarified that operators were willing to pay such a high price at the auction of 3G spectrum, knowing no one could win pan-India spectrum for the services.

Saturday, 24 September 2011

Pranab rushes to meet PM PAC wants copy of FinMin's 2G note


Finance minister Pranab Mukherjee is cutting short his Washington visit and rushing to New York to meet Prime Minister Manmohan Singh, amid the storm over his ministry’s note on the 2G issue. Sources said the meeting was for “obvious” reasons. Back home, in a move that could further embarrass the United Progressive Alliance government, the public accounts committee (PAC) and the joint parliamentary committee (JPC) have decided to write to the Prime Minister’s Office (PMO), asking for the note written by the finance ministry to the PMO on the spectrum issue.
At the PAC meeting on Friday, parliamentarians of opposition parties said since the report on 2G spectrum allocation scam, prepared by the last PAC, was returned by Lok Sabha Speaker Meira Kumar, the committee must ask for the note written by the finance ministry to the PMO to continue the probe. “It has been decided that PAC chairman Murli Manohar Joshi would write to the PMO and the finance ministry for the note to be sent to the parliamentary committee.

It is a very important note, and it completely contradicts the previous stand of the Union government,” said a senior PAC member.
In the course of the PAC meeting, Congress party members, Sanjay Nirupam and Saifuddin Soz, who were present at the meeting, were quiet and didn’t object to the demand. “Both Sanjay Nirupam and Saifuddin Soz were quiet when PAC members demanded Murli Manohar Joshi write to the PMO and the finance ministry to send a copy of the note,” the PAC member added.
The controversy involving home minister P Chidambaram and finance minister Pranab Mukherjee erupted after a finance ministry note suggested the telecom ministry could have conducted an auction of 2G spectrum licences, had the then-finance minister, P Chidambaram, insisted on it. The finance ministry had sent a detailed 10-page note to the PMO in March.
To add to the woes of the Union government, the JPC, which is also investigating the 2G spectrum allocation scam, is also writing to the PMO, asking for the note so that it could be taken up during the meeting on September 27. Prime Minister Manmohan Singh is also expected to return to India from New York on September 27.
“We don’t have a copy of the note sent by the finance Ministry to the PMO. This is an important piece of document, and we are in the process of writing to the PMO to send the note to the parliamentary committee,” said a senior JPC member.

Friday, 23 September 2011

FEMA – Summary of Recent Amendments in Forex Facilities for Individuals

RBI liberalises Forex Facilities for Individuals:

The Reserve Bank of India has further liberalised foreign exchange facilities for individuals under the Foreign Exchange Management Act, (FEMA) 1999.The facilities are:
1. NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts
Individual residents in India are now permitted to include non-resident close relative(s) as joint holder(s) in their resident bank accounts, namely, savings(SB), Exporter Earners’ Foreign Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘former or survivor’ basis. (A.P. (DIR Series) Circular No. 12, Dated- September 15, 2011)
2. Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/ Person of Indian Origin (PIO) , are now permitted to open Non-Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR) Account (Banks) Scheme with their resident close relative(s) as joint holder(s) on ‘former or survivor’ basis. However, such resident joint account holder shall be eligible to operate the account as a Power of Attorney holder in accordance with extant instructions during the lifetime of the NRI/ PIO account holder. (A.P. (DIR Series) Circular No. 13, Dated- September 15, 2011)
3. Residents can gift Shares/Debentures upto USD 50,000 Value
The Reserve Bank of India  has granted general permission to individual residents in India to gift shares / securities /convertible debentures, etc. to their NRI/PIO close relative (relative as defined in Section 6 of the Companies Act, 1956) subject to certain prescribed conditions. It has raised the limit as given in Regulation 10(a)(e) of Foreign Exchange Management (Transfer or issue of Security by a Person Resident outside India) Regulations, 2000 to US $ 50,000 per financial year from the existing limit of US $ 25,000 during the calendar year . (A.P. (DIR Series) Circular No. 14, Dated- September 15, 2011)
4. Resident Indian can open NRE / FCNR (B) account with their Resident close relative
Resident individuals permitted to include resident close relative(s) as defined in the Companies Act, 1956 as a joint holder(s) in their EEFC/RFC bank accounts on ‘former or survivor’ basis. However, such resident Indian close relative, now being made eligible to become joint account holder, shall not be eligible to operate the account during the life time of the resident account holder. (A.P. (DIR Series) Circular No. 15, Dated- September 15, 2011)
5. Sale Proceeds of FDIs can be credited to NRE/FCNR (B) Account
Sale proceeds of Foreign Direct Investment (FDI) can be credited to Non-Resident (External) Rupee (NRE) Account Scheme/Foreign Currency (Non-Resident) Account FCNR (Banks) Scheme provided the original acquisition was by way of inward remittance or funds held in their NRE/FCNR (B) accounts. (A.P. (DIR Series) Circular No. 16, Dated- September 15, 2011)
6. Gifts to NRIs can be credited to NRO Accounts in Rupees
Resident individuals are now permitted to make rupee gifts within the overall limit of USD 200,000 per financial year as permitted under the Liberalised Remittance Scheme (LRS) to an NRI/PIO who is a close relative by way of crossed cheque/electronic transfer to the Non-Resident (Ordinary) Rupee Account (NRO) of the NRI/PIO.  (A.P. (DIR Series) Circular No. 17, Dated- September 16, 2011)
7. Loans to NRI Close Relatives can be given in Rupees
Similarly, Resident individuals are now permitted to lend in Rupees within the overall limit under the Liberalised Remittance Scheme of USD 200,000 per financial year to a Non Resident Indian (NRI)/ Person of Indian Origin (PIO) close relative by way of crossed cheque/electronic transfer, subject to the following conditions:

1.  The loan should be within the overall limit of USD 200,000 per financial year as per the Liberalized Remittance Scheme (LRS).

2.  The amount should be credited to the NRO Account.

3.  The loan shall not be utilized for the following purposes:

(i) Chit fund business, or
(ii) Nidhi Company, or
(iii) Agricultural/ plantation/ real estate business/ construction of farm houses, or
(iv) Trading in Transferable Development Rights (TDRs).

4. he loan amount shall not be remitted outside India.

5. Repayment of loan shall be made by way of inward remittances through normal banking channels or by debit to the NRO/ NRE/ FCNR account of the borrower or out of sale proceeds of the shares or securities or immovable properties against which such loan was granted.
  (A.P. (DIR Series) Circular No. 18, Dated -September 16, 2011)
8. Residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from banks in India by their NRI close relatives.Earlier, repayment of loans by close relative in respect of Rupee loan availed by NRIs was restricted only to housing loans. (A.P. (DIR Series) Circular No. 19, Dated- September 16, 2011)
9. Residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives. Earlier, residents were allowed to make payment in rupees towards meeting expenses on account of boarding, lodging and services related to it or travel to and from and within India of a person resident outside India and who is on a visit to India. (A.P. (DIR Series) Circular No. 20, Dated – September 16, 2011)
 

Thursday, 22 September 2011

Pranab says Chidambaram didn't press for 2G auction

Mukherjee’s critical note sent to PMO in March placed before Supreme Court.
A finance ministry note on 2G spectrum sent to the Prime Minister’s Office in March has brought the war between UPA heavyweights Pranab Mukherjee and P Chidambaram out in the open.

The finance ministry, under Mukherjee, squarely blamed Chidambaram for not taking any concrete step to prevent the alleged 2G scam of 2007-08. The note was placed before the Supreme Court by Janata Party chief Subramanian Swamy on Wednesday.

The note, vetted by Mukherjee, states the finance ministry, under Chidambaram in 2007-08, did not press for the auction of 2G spectrum. The note is a collection of critical remarks and observations on the finance ministry inaction over 2G spectrum pricing, which may have resulted in the much talked about loss to the exchequer.
“The FM (Chidambaram) did not deal with the need, if any, to revise the entry fee or the rate of revenue share,” says the March 2011 note by the department of economic affairs or DEA (in the finance ministry). At another place in the lengthy note, it has said, “Ministry of finance representatives who attended the telecom commission meeting on January 15, 2008 did not raise the issue of revision of entry fee.”
Also, in a meeting on January 30, 2008, between the minister of telecom and the FM, “it was noted by the then finance minister (Chidambaram) he was for now not seeking to revisit the current regimes for entry fee or revenue share,” according to the communication to the Prime Minister’s Office.
Again, in meetings through 2008 (May 29 and July 4), the telecom minister and the FM agreed to enhance spectrum usage charges and pricing of spectrum beyond 6.2 MHz. The note, however, adds “the issue of revision of entry fee was not discussed in the meeting.”
Reiterating the finance ministry stand, under Chidambaram, the note points out that on November 11, 2008, the telecom commission took up the spectrum charge issue. In this meeting, the finance ministry raised the issue of updating the entry fee but “only for licences allotted after January 1, 2009.”
The note added, “thus, the ministry of finance implicitly agreed to the imposition of the same entry fee as prevailed in 2001 for licences allotted up to December 31, 2008.”
While attacking the then FM several times, the 11-page note has shown the then finance secretary D Subbarao (now the RBI governor) in a positive light. “The secretary finance had suggested to go for auction for initial spectrum of 4.4 MHz in early February 2008. DoT (Department of Telecommunications) was not keen to do the same since it had said it would disturb the level playing field...”
Chidambaram was the FM in the UPA-I government, when crucial decisions related to the allocation of 2G spectrum and its pricing were taken.
Last year, the Comptroller and Auditor General of India (CAG) estimated a 'notional’ loss to the exchequer of Rs 1.76 lakh crore due to the DoT, under telecom minister A Raja, opting for a first-come-first-serve 2G spectrum allocation policy. Raja was forced to resign as the telecom minister after that, and was then taken into judicial custody for letting some companies jump the queue to get 2G licences at “throwaway prices”, allegedly in return for favours.
Swamy, in a recent petition, said Chidambaram as the then FM had as much a role in the 2G scam as Raja. The CBI is opposing Swamy in court on the matter of investigating Chidambaram’s role in 2G allocation.

Wednesday, 21 September 2011

SECTION 65(105)(zzzzm) OF THE FINANCE ACT, 1994 - LEGAL CONSULTANCY SERVICES - EXEMPTION TO SERVICE PROVIDED BY AN ARBITRAL TRIBUNAL IN RESPECT OF ARBITRATION TO ANY BUSINESS ENTITY

NOTIFICATION NO. 45/2011 - SERVICE TAX , DATED 12-9-2011

 
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services referred to under item (iii) of sub-clause (zzzzm) of clause (105) of section 65 of Finance Act, 1994.
2. This notification shall come into force on the date of its publication in the Official Gazette.
To clarify sub-clause (zzzzm) of clause (105) of section 65 of Finance Act, 1994 reads as follows:-
(zzzzm) to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner: 
Provided that any service provided by way of appearance before any court, tribunal or authority shall not amount to taxable service. 
 

Tuesday, 20 September 2011

Govt committee suggests Increase in PPF limit, Saving Interest rate, Withdrawal of KVP

A government committee has suggested raising interest rates on Post Office savings bank deposits to four per cent, a suggestion that could benefit lakhs of small depositors.  The Committee on Small Savings also recommended linking returns on other small savings schemes with interest rates on government securities.  It has also suggested that Kisan Vikas Patra (KVP) be withdrawn and annual investment limit for the popular Public Fund (PPF) be raised to Rs 1 lakh from Rs 70,000 at present. Provident
The committee recommended that interest rates for Post Office savings deposits be raised to four per cent from 3.5 per cent at present, in line with the Reserve Bank’s decision to hike rates on savings bank deposits.
Under the new formula, suggested by the committee headed by RBI Deputy Governor Shyamala Gopinath, small savings schemes would provide better returns to investors.
Interest rate for one-year deposit scheme would go up to 6.8 per cent from 6.25 per cent, while returns for the PPF would improve to 8.2 per cent from 8 per cent.
With regard to taxing returns on the small savings schemes, the committee said the issue should be considered by the government while firming up the Direct Taxes Code ( DTC )), which seeks to replace the Income Tax Act, 1961.
Noting that the small savings schemes are agent-driven, the committee suggested that the commission on them should be gradually reduced from four per cent to one per cent.


Monday, 19 September 2011

DREAM



  • D is for Dare (dare to dream while others don't)
  • R is for Relentless (relentlessly pursue your dream no matter what)
  • E is for Excellence (strive for excellence in all you do)
  • A is for Abandon (abandon any other alternative plans)
  • M is for Measure (constantly measure where you are in your dream journey)
Okay, that's great and motivating, but what about the practical stuff? Well, there is certainly practical stuff. No matter how lofty your dream, no matter how spectacular, you will live most of your life in the mundane. Richard Nixon said of the presidency that you "campaign with poetry, but govern with prose." The vision is beautiful, the actual is mundane (not bad but "everyday" so to speak).

If you are to achieve your dream, you need to plan and work and work and plan. Here are my thoughts on how to go about reaching your dream and securing it as your future:

Decide that you will do it. This may seem elementary but many people never decide and commit fully to their dream. They simply keep "thinking" about it.

Tell others that you are going to do it. This puts you on the record as to what you are dreaming about. It makes you accountable. It will help you do it if for no other reason than to avoid embarrassment!

Develop a step-by-step plan. This is absolutely essential. You must sit down and write out a few things:
  1. A timeline. How long will it take to the end?
  2. Action steps. Point-by-point what you will do and when you will do them.
  3. Resources you will need to draw from. What will it take? Who will need to be involved for help or advice?
  4. An evaluation tool. You need to evaluate from time to time whether you are progressing or not.
  5. A celebration. Yep, when you are done you should already have planned what you will do to celebrate. Make it big!
I have found that there is no better time than now to start making your dream a reality. So, set aside some time today to get started on your dream. Follow the action plan and set your sights for the top of the mountain! You will be glad you did!

Saturday, 17 September 2011

DTC would come into force from April next year


The Finance Minister hoped that the Direct Taxes Code (DTC), which seeks to replace the Income-tax Act of 1961, would come into force from April 1, 2012. The DTC is an ambitious tax reform that will replace the half a century old direct tax laws.

On the Goods and Services Tax (GST), he said, "We are on track . . . there has been some progress".

He said both the Centre and the Empowered Committee of State Finance Ministers were in talks for implementation of the GST regime.

Besides Parliament, the GST Bill needs to be cleared by half of the State Assemblies. Once implemented, GST would subsume most of the indirect taxes, like excise duty.

On economic prospects this fiscal, the Finance Minister said agricultural output is expected to be good. Besides, a better show by the core sector industries would help the country in achieving economic growth in the coming quarters.

While the Reserve Bank has pegged the economic growth for 2011-12 at 8 per cent, the Prime Minister's Economic Advisory Council has estimated it at 8.2 per cent.

The Indian economy expanded at the slowest pace in six quarters by 7.7 per cent. in the first (April-June) quarter of the current fiscal. It was 8.8 per cent. in the corresponding period last fiscal.

The output of eight infrastructure industries rose at its fastest pace in 15 months in July at 7.8 per cent., against 5.7 per cent. in the corresponding period last fiscal. [Source : www.economictimes.com dated September 2, 2011]

Friday, 16 September 2011

DRINK WATER ON EMPTY STOMACH


It is popular in Japan today to drink water immediately after waking up every morning. Furthermore, scientific tests have proven a its value. We publish below a description of use of water for our readers. For old and serious diseases as well as modern illnesses the water treatment had been found successful by a Japanese med ical society as a 100% cure for the following diseases:

Headache, body ache, heart system, arthritis, fast heart beat, epilepsy, excess fatness, bronchitis asthma, TB, meningitis, kidney and urine diseases, vomiting, ga str itis, diarrhea, piles, diabetes, constipation, all eye diseases, womb, cancer and men str ual diso rd ers, ear nose and throat diseases.

METHOD OF TREATMENT
 


1.. As you wake up in the morning 
before brushing teeth, drink 4 x 160ml glasses of water .....interesting 

2. Brush and clean the mouth but do not eat or drink anything for 45 minutes

3. After 45 minutes you may eat and drink as normal.
 

4. After 15 minutes of breakfast, lunch and dinner do not eat or drink anything for 2 hours
 

5. Those who are old or sick and are unable to drink 4 glasses of water at the beginning may commence by taking little water and gradually increase it to 4 glasses per day.

6. The above method of treatment will cure diseases of the sick and others can enjoy a healthy life.
 

The following list gives the number of days of treatment required to cure/control/reduce main diseases:
 

1. High Blood Pressure - 30 days
 

2. Gastric - 10 days
 

3. Diabetes - 30 days
 

4. Constipation - 10 days
 

5. Cancer - 180 days

6. TB - 90 days
 

7. Arthritis patients should follow the above treatment only for 3 days in the 1st week, and from 2nd week onwa rd s - daily.

This treatment method has no side effects, however at the commencement of treatment you may have to urinate a few times.

It is better if we continue this and make this procedure as a routine work in our life.
 

Drink Water and Stay healthy and Active...
 

This makes sense .. The Chinese and Japanese drink hot tea with their meals ...not cold water. Maybe it is time we adopt their drinking habit while eating!!! Nothing to lose, everything to gain...

For those who like to drink cold water, this article is applicable to you.

It is nice to have a cup of cold drink after a meal. However, the cold water will solidify the oily stuff that you have just consumed . It will slow down the digestion.
Once this 'sludge' reacts with the acid, it will break down and be absorbed by the intestine faster than the solid food. It will line the intestine. Very soon, this will turn into fats and lead to cancer.. It is best to drink hot soup or warm water after a meal. 


A serious note about heart attacks
: Women should know that not every heart attack symptom is going to be the left arm hurting.
Be aware of intense pain in the jaw line.
 


You may never have the first chest pain during the course of a heart attack..

Nausea and intense sweating are also common symptoms.
 

60% of people who have a heart attack while they are asleep do not wake up.
 

Pain in the jaw can wake you from a sound sleep. Let's be careful and be aware. The more we know, the better chance we could survive... 

Thursday, 15 September 2011

ICAI need to disclose Standard Criteria for verification as per Regulation 39(2)

The appellant Institute of Chartered Accountants of India (for short ‘ICAI’) is a body corporate established under section 3 of the Chartered Accountants Act, 1949. One of the functions of the appellant council is to conduct the examination of candidates for enrolment as Chartered Accountants. The first respondent appeared in the Chartered Accountants’ final examination conducted by ICAI in November, 2007. The results were declared in January 2008. The first respondent who was not successful in the examination applied for verification of marks. The appellant carried out the verification in accordance with the provisions of the Chartered Accountants Regulations, 1988 and found that there was no discrepancy in evaluation of answerscripts. The appellant informed the first respondent accordingly.


Wednesday, 14 September 2011

Standards for cyber security audit - K. P. SHASHIDHARAN



Digital crimes are so difficult to solve as they are committed with lightning speed and precision.

AICPA recently introduced a Statement on Standards applied to evaluate controls on services performed by a service organisation.
Cyber attacks have increased at an alarming rate in the Internet-powered e-business environment. Websites of government agencies, corporates and individuals are systematically attacked, increasingly using impeccably-engineered automated software for phishing and accessing critical information assets. Unlike other physical crimes such as automobile thefts or house burglary, crimes in the digital terrain are committed with lightning speed and precision.
Corporates are increasingly switching to new technologies on cloud computing, and outsource many functions to service organizations. These companies demand assurance from outsourced service providers, identifying risks and mitigating them. Approximately 42 per cent of cloud service providers follow the PCI DSS (Payment Card Industry Data Security Standard) standard. This global security standard applies to all organizations that engage in credit card business, intending to provide the credit card industry adequate controls for data integrity, authenticity, confidentiality and availability, designed to prevent potential financial or identity fraud and theft when using a credit card.

AUDITING STANDARDS

American Institute of Certified Public Accountants (AICPA) developed SAS 70 (Statement on Auditing Standards) in 1992, defining what an auditor should do to assess the internal controls of a service organization. This standard requires the auditor to categorise audit reportsinto Type I or Type II, customised at the request of the service organization or the user organization.
In a Type I report, the auditor evaluates the efforts of a service organization at the time of audit to prevent accounting inconsistencies, errors and misrepresentation. After assessing the controls in place within the organization, the auditor provides a Type II report, providing additional information on effectiveness of agreed-upon additional controls. Independent audit assessment builds credentials, customer's trust and confidence. Besides, Type II reports pinpoint operational deficiencies that need rectification.

ATTESTATION ENGAGEMENTS

Considering the recent technological innovations, AICPA replaced SAS 70 by the Statement on Standards for Attestation Engagements – SSAE No. 16 on June 15, 2011, on the lines of globally-accepted international accounting standards. This standard will be applied to evaluate controls on services performed by a service organization, and its internal control on financial reporting. The service organization may undertake an SSAE 16 engagement that mandates SOC 1 Report (Service Organization Control Report). Such a report highlights control deficiencies to the management of the service organization, the financial auditor of the service organization, and its customers.
Keeping in view the emerging marketplace requirements, AICPA has examined controls relevant to the security, availability, integrity, confidentiality or privacy of the information the system processes for customers and has designed appropriate guidance. The standard and guidance require preparation of SOC 2 Report and, in certain circumstances, even an SOC 3 Report, analysing and resolving key issues of controls.
When a company outsources a function to a service organization, it is important to sign up an SSAE 16 engagement with the service organization, as it may obtain mission critical information assets, such as patient information for medical claims for a health insurer. In such circumstances, the health insurer should insist on assurance from the service organization, such as the cloud service provider regarding the privacy of the key digital data. And the information system auditor should deploy the comprehensive checks required under the revised engagement standard SSAE 16, and prepare his report, ensuring security of the information system.
(The author is a Director-General, CAG Office.)

Monday, 12 September 2011

MODIFICATION IN PPF SCHEME

MODIFICATION IN PPF SCHEME : DEPOSIT LIMIT RAISED FROM RS. 70,000 TO RS. ONE LAC WHILE RATE OF INTEREST ON ADVANCES AGAINST DEPOSITS IN PPF SCHEME RAISED FROM 1 PER CENT TO 2 PERCENTAGE POINTS
PRESS RELEASE, DATED 6-9-2011

The Committee on Comprehensive Review of National Small Savings Fund (NSSF) headed by Deputy Governor, RBI has recommended revision of certain provisions of PPF Scheme, 1968 and benchmarking of interest rates on various small savings schemes with the secondary market yields on Central Government securities of comparable maturities with suitable spread.
The Committee has recommended increasing the deposit limit under PPF Scheme from existing Rs. 70,000 to Rs. 1 lakh per annum and fixing of rate of interest on advances against deposits in PPF scheme at 2 percentage points as against the prevailing interest rate on such advances at 1 per cent.
The Committee has further recommended benchmarking interest rate on small saving schemes to interest rate on Government securities of similar maturities with a positive spread of 25 basis points on all schemes except for 50 basis points for 10 year NSC and 100 basis point for Senior citizens Savings Scheme. Recommendations of the Committee have been referred to State Governments and concerned Ministries/Departments of Central Government for their comments.
This information was given by the Minister of State for Finance Shri Namo Narain Meena in a written reply to a question raised in Rajya Sabha today.


Saturday, 10 September 2011

Centre to Move Ahead with Companies Bill

As part of its effort to showcase its commitment to transparency and accountability, the government has decided to move forward with the Companies Bill, 2011. The Prime Minister’s Office has stepped in asking the corporate affairs ministryto move ahead with the proposed legislation.
The government would like to introduce the bill in the winter session of Parliament.
More significantly, the PMO has suggested that there needs to be an emphasis on ensuring that there are independent directors on the board of companies. This was decided at a review of ministries dealing with industry and commerce by the Principal Secretary to the Prime Minister TKA Nair. The Companies Bill, 2009 requires public listed companies above a prescribed size to reserve a third of all seats on the board for independent directors. It requires that independent directors (or their relatives) not do business with the company which amounts to more than 10% of the turnover of the company in the past two years. Permitting financial transactions with the company up to this point creates a potential conflict of interest.
The listing agreement under the SEBI Act prohibits independent directors from a material financial relationship with company but does not define the term ‘material’.
In its review of the Bill, parliamentary standing committee on finance had recommended that the liabilities of independent directors should be limited to enable them to act freely and objectively. It suggested that the appointment process of independent directors be made independent of its management.



Friday, 9 September 2011

Govt committee suggests Increase in PPF limit, Saving Interest rate, Withdrawal of KVP

A government committee has suggested raising interest rates on Post Office savings bank deposits to four per cent, a suggestion that could benefit lakhs of small depositors.  The Committee on Small Savings also recommended linking returns on other small savings schemes with interest rates on government securities.  It has also suggested that Kisan Vikas Patra (KVP) be withdrawn and annual investment limit for the popular Public Fund (PPF) be raised to Rs 1 lakh from Rs 70,000 at present. Provident
The committee recommended that interest rates for Post Office savings deposits be raised to four per cent from 3.5 per cent at present, in line with the Reserve Bank’s decision to hike rates on savings bank deposits.
Under the new formula, suggested by the committee headed by RBI Deputy Governor Shyamala Gopinath, small savings schemes would provide better returns to investors.
Interest rate for one-year deposit scheme would go up to 6.8 per cent from 6.25 per cent, while returns for the PPF would improve to 8.2 per cent from 8 per cent.
With regard to taxing returns on the small savings schemes, the committee said the issue should be considered by the government while firming up the Direct Taxes Code ( DTC )), which seeks to replace the Income Tax Act, 1961.
Noting that the small savings schemes are agent-driven, the committee suggested that the commission on them should be gradually reduced from four per cent to one per cent.


Thursday, 8 September 2011

Can liaison office generate taxable income?

It is quite common that foreign companies planning to do business in India set up a liaison office for undertaking promotional work as a prelude to actual commercial activities. A liaison office needs prior approval from Reserve Bank of India. Since the liaison office is not permitted to do any commercial activities, it is generally believed that the existence of a liaison office will not generate any taxable income in India.
It may be clarified that where the liaison office creates a permanent establishment or establishes a business connection, the foreign company would become liable to pay tax on the profits, which can be attributed to the liaison office. But if liaison office doesn’t create any of the aforesaid relationship, liaison office will not attract any income tax in India.


Wednesday, 7 September 2011

Richest & Poorest Ministers

Prime Minister Manmohan Singh and his ministerial team declared their assets that places his own wealth at 5.1 crore ($1.3 million), while Urban Development Minister Kamal Nath is richest with over 250 crore ($55 million). Defence Minister A.K. Antony seems the poorest with 35 lakh ($77,000).

Among the so-called big-four in the council, Finance Minister Pranab Mukherjee is worth around 3 crore, Home Minister P. Chidambaram around 25 crore, Antony around 35 lakh, while External Affairs Minister S.M. Krishna commands a little over 3 crore.

Among the other heavyweights, Agriculture Minister Sharad Pawar is worth 12 crore
.


ICAI’s moderation criteria

In a dispute under the Right to Information Act, the Supreme Court last week ruled that the Institute of Chartered Accountants of India must disclose, if asked by acandidate in its examination, the standard criteria relating to moderation employed by it for the purpose of making revision. The court also rejected the argument of the institute that it had copyright over question papers and therefore they could not be disclosed even after the tests. It also rejected the argument of the institute on the burden cast on it by supplying information to failed candidates. Out of nearly 4 lakh candidates, only 16 per cent pass. If all of the failed candidates seek information on their answer sheets, the work of the institute will be stalled, it had argued. The court said that “Additional workload is not a defence. If there are practical insurmountable difficulties, it is open to the examining bodies to bring them to the notice of the government for consideration so that any changes to the Act can be deliberated upon. Examining bodies like ICAI should change their old mindsets and tune them to the new regime of disclosure of maximum information. Public authorities should realize that in an era of transparency, previous practices of unwarranted secrecy have no longer a place.


Tuesday, 6 September 2011

The good and not so good features!

Since the start of your professional life your well wishers including family members and friends might have told you, “Work Hard and Earn More”. You possibly made it the mantra of your life but the day you received your pan card and approached the income tax department, the mantra started to sound like a myth after your rendezvous with the demon called Income Tax. Now the mantra caption sounds like “Work Hard and Earn More to Pay More in Taxes”.

In such a scenario as a taxpayer you are likely to look out for good news whenever you hear that the policymakers are doing something regarding Income Tax. One such policy decision that is likely to affect you is the introduction of the DTC (Direct Tax Code). The Finance Minister has reassured that the DTC will be hopefully cleared in the winter session of Parliament and will be implemented from Apr 2012.  Let’s look at what is in store based on the decisions that stand as of today.

The Good News

Enhancement of Tax Slab

Smile as the tax exemption limit now stands at Rs 2 lakhs which was earlier 1.6 lakhs. The tax burden is lessened by 41,000 in the highest tax slab.

Individuals Income Individuals Tax rate
Up to Rs 2,00,000 Zero
Between 2,00,000 to 5,00,000 10% of (Total Income – Rs 2,00,000) Between 5,00,000 to 10,00,000 30,000 + 20% of (Total Income – Rs 5,00,000) More than 10,00,000 1,30,000 + 30% of (Total Income – Rs 10,00,000)

Investor friendly Capital Gain Tax

Only half of the short term capital gains on equity will be taxed.
Long term capital gains from equity have been left untouched. Capital gains from property will be considered as income and for tax purposes the gain will be added to your income. Hence your tax liability will be calculated as per the slab you fall under after the addition of gains.

Enhancement of Exemption limit from 1.2 Lakhs to 1.5 lakhs

With DTC now it will be easier to claim exemptions as it will reduce the confusing number of investment options available. An individual can still claim deduction of Rs 1 Lakh as per old tax regime but the investment options will reduce to NPS, Superannuation funds and pension funds like EPF and PPF. Also, the exemption for tuition fee for children is now part of this 1.5L where you can claim a deduction for a tuition fee of Rs 50,000 if you pay tuition fees (max 2
children) or if you have taken health insurance/mediclaim policy or if you have invested in pure life insurance product where the sum assured is 20 times annual premium.

Tax benefits of home loan

It is unclear if the principal due repaid for your home loan will continue to enjoy tax benefits but the new DTC bill has most definitely retained the tax benefits on the interest due repaid on your home loan.

EEE treatment of GPF, PPF and pure life insurance products

In earlier tax code, investments in the above schemes were governed as per EET where investment and accumulation was tax free but withdrawal was not. In the New DTC it’s proposed that the withdrawal from these schemes will also be tax exempt.

Enhancement of medical reimbursement limit

Now you can be happy even if you fall sick as DTC proposes to enhance the medical reimbursement limit from Rs 15,000 to Rs 50,000.

The Not So Good News

No Leave Travel allowance

If you like to go on holidays, DTC will tax you from now onwards.

No special treatment for being a woman

No gender bias as per DTC as the extra tax benefit for women seems to be non-existent.

Reduction in tax exemption period of NRIs

NRIs will be taxed if they are earning in India and their stay exceeds from 60 days. Earlier tax exempt period was of 180 days. This sounds like a bad news but the finance minister has assured that this is under discussion and just staying in India for 60 days doesn’t make NRI’s liable for taxation as there are other clauses attached to it.

DTC in its current form sounds to be tax payers friendly and let’s hope Indian Government carry’s on with tax reforms so that we start loving the Tax Daemon. For the time being “Thumbs Up” for the DTC.