India's first all-women bank will start operations from November this year through six branches spread across the length and breadth of the country, Finance Minister P Chidambaram said. "It will be inaugurated in November. Initially we should start with at least one branch in each major region of this country, South, West, East, Centre, North and North-east. So that will mean immediately we should start with six branches," he told PTI in an interview.On whether the idea of a women's bank had been suggested by Congress President Sonia Gandhi, Chidambaram said: "It is part of the Jaipur Declaration that we should consider setting up a bank for women. It is completely consistent with my own instincts and leanings. Therefore, I accepted the idea and announced a national bank for women."He further said he will assemble the best brains from the industry to chalk-out a blueprint on the bank by month-end. "I'm going to ask a couple of bankers and a couple of others to sit together and write a blueprint for me.Hopefully, the blueprint will be ready by the end of March and then we will go ahead and try to implement it," he said.The country is all set to get an all-women bank in November this year with the government announcing an initial capital of Rs 1,000 crore for the purpose.According to the Finance Minister, there will be "no problem in getting a license" for the all-women bank as it will be 100 per cent owned by the government of India. I hope to complete all the preparatory work by October, he said.Asked whether there will be some special schemes offered to women, Chidambaram said: "That will be in the blueprint that is being written. Let them write the blueprint and then I will make it public."Chidambaram had proposed setting up of the country's first all-women bank while presenting the Budget on 28 February.The proposed bank will lend mostly to women and women-run businesses, provide support to women Self Help Groups (SHGs) and their livelihood.Moreover, it will employ predominately women which addresses the gender-related issues and empowerment and financial inclusion. However, it will take deposits from men and women both.(PTI)
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In warning to tax dodgers, Indian Finance Minister P Chidambaram said that a huge amount of data is being mined to go after them and ruled out any amnesty scheme for defaulters."No. In income tax there is no case for amnesty. Because now almost all returns are online except a small category which was exempt. We have a huge amount of data which is being mined. Therefore, there is no case for amnesty today. Best case I can make out is tell people 'please don't hide your income'. Just admit your income and pay tax and be a proud citizen," he told PTI in an interview.He was asked whether government would consider giving an amnesty to tax defaulters to unearth an estimated huge amount of black money on the lines of amnesty given to service tax defaulters announced in the budget.Chidambaram pointed out that no tax burden had been imposed in the budget on any category of people other than a "small burden" of 10 per cent surcharge on relatively affluent 42,800 people with incomes of over Rs one crore a year, he pointed out on Sunday.That number was deliberately used to "shock" the nation that in this country "which swears by truth and virtue" there are only 42,800 people who admit an income of over Rs 1 crore, he said.Dispelling apprehensions that the tax could continue beyond one year, the Minister said, "surcharges have been imposed in the past and they have been removed". He gave the instances of removal of banking cash transaction tax and fringe benefit tax which were removed in subsequently budgets few years ago.The Minister also allayed fears that tax on super rich would drive away people saying "... nobody will move anywhere, I assure you. Nowhere in the world you can afford to employ so many domestic helps. Wellness does not only come from wealth. It comes from host of other services that we have in place." Voicing the hope that "other measures" proposed to be taken and the "shock" of the number would persuade more people to declare their true income, Chidambaram said that based on data mining notices have been issued to 35,000 people.Those served the notice have been told about what they had spent and about their purchases despite which they had not filed income tax returns, the Finance Minister said, adding another 35,000 notices are going next week to be followed more notices."We have got the central process cell in Bangalore which processes all income tax returns using most advanced software.So, if the information which we have from other sources is not matched with the information with IT returns, that will be thrown up," he said.To a question, Chidambaram said there are no estimates on the amount of black income and the number who should be in the net but who are not.But, he said, in a country with 125 crore people, after excluding 67 per cent of the people under food security and elderly people and children, there would be 15 crore people with incomes in various segments."The top 10 per cent should have large income...I think the number must be several times 42,800 who have high income," he said, adding they may not be earning Rs 1 crore but certainly Rs 75 lakh or Rs 50 lakh."They should be admitting to that income and paying income tax. I think not paying taxes is misdemeanour. Not paying the right kind of tax is another misdemeanour," he said.The Finance Minister said that central processing centre in Ghaziabad, inaugurated last week, will now be able to track every single TDS deduction and match it with whether the deductor has remitted the money to the government and issued TDS certificate to the deductee."Every deductee can now see online what are the deductions that have been made by other deductors. The FIU unit is mining the data and generating data for the CBDT. The whole lot of activity going on."So my appeal to the people would be that there is no place where you can hide your income any more. Just admit your true income and be proud. Why should anybody be ashamed that he has a high income. When I was a lawyer, I had a high income in the past. I was quite proud about it. Why should I hide my income. You admit your income and pay your tax," he said. Asked if there are any punitive measures on way against tax evaders, Chidambaram said, "No. I say my policy is stable tax rate. Non-adversarial tax administration and a fair and just dispute resolution mechanism."I think the method that we are following is mine the data. Issue notices and gently push them into filing returns and pay the taxes. This is the correct way to go about it".To a question that he had not addressed the issue of black money in the budget, the Minister said, "these are your sexy subjects. I could go into a long lecture about the black money. I think it would be complete waste of time."Yes there is a black money in this country. There are reasons why black money is generated. We can make estimates of the black money. But simply by beating your breast about black money you do not solve the problem. You solve it by employing technology using process that will bring black money out and make the black money out and make the black money holders admit it and file the return".He said that three institutes were asked to make an estimate of the black money and they were working on it.On the amnesty for service tax evaders, Chidambaram said, service tax law is a benign administration and the gap between those paying and those not paying is 10 lakh registered assessees."We have to address this gap as one time measure. I don't have the machinery and the manpower to go after 10 lakh people who have not filed. Therefore, we are offering a one-time amnesty. Well amnesty is a strong word because the tax not only for the current year, they will have to pay the tax for five years. If they do then we will waive the penalty and the interest."I think it's a good offer. When I made the offer in Parliament, a lot of people applauded it. So obviously there is Parliamentary support for it and let's hope that several lakh people will take advantage of the offer and file the returns," the Minister said.(PTI)
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The rupee dropped for a second session on 1 March' 2013, hiting its lowest level in over a month-and-half as stop-losses were triggered in the dollar after rumours of a possible downgrade by Fitch Ratings and the follow-on breach of a key techinical level. The rupee's fall continued a day after India unveiled a surge in government spending despite expectations of an austerity budget to shore up its finances. Fitch Ratings sovereign analyst Art Woo had told Reuters post-budget on 28 February' 2013 that it would not impact India's sovereign ratings, though the country could find it challenging to meet its fiscal deficit target of 4.8 per cent for the next fiscal year. Traders, however, said there were rumors that Fitch was more than likely to downgrade India following Woo's interview to some local television channels earlier on Friday. "The euro came down, there were some rumours regarding Fitch talking of an India downgrade -- these together led to triggering of several stops," said A. Ajith Kumar, a senior foreign exchange dealer at Federal Bank. "A close above 54.75 is not good news for the rupee. The next major level to watch out for is 55.20 on the upside," he added. The partially convertible rupee ended at 54.90/91 per dollar, after hitting 54.9425, its lowest since January 9. The pair had ended at 54.36/37 on Thursday. The rupee dropped 1.3 per cent on the week, matching its fall in the February 15 week, which was its biggest weekly drop in three months. The UDS/INR pair hit a high of 54.73 in opening deals but quickly retreated. The 54.73 level was the 50 per cent Fibonacci retracement of the decline from the high of 55.89 on November 26 to the low of 52.87 on February 6. The breach of that level, triggered a further stop-loss in the dollar, traders said. Traders said sharp losses in the euro also hurt sentiment for the rupee. The dollar index rose to its highest in six months on Friday, buoyed by the greenback's gains against the euro with the single currency hurt by poor economic data from Italy even as the U.S. economy continued to show signs of improvement. "The rupee is broadly moving in co-relation to the equity markets for now. I think the pair could head higher in the short run and the direction may change post-April," said Rajeev Mahrotri, head of forex and debt trading at IndusInd Bank. "Commodities: gold and oil and the euro would be key things to watch for the ruepe. INR will not strengthen until gold comes off but the good news is that gold looks like it's headed further down," he added, predicting a range of 52.50 to 56.00 for the next three months. Local shares, however, rose on Friday, rebounding from three-month lows as budget losses were seen to be overdone. In the offshore non-deliverable forwards, the one-month contract was at 55.33 while the three-month was at 55.97. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and United Stock Exchange all closed at around 55.24 with a total volume of $7.06 billion.(Reuters)
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The fourth Union Budget of the ruling UPA government – and supposedly the last before general elections early next year - has turned a non-event for equities market. According to market researchers, barring select price upgrades in shares of housing finance companies, road pavers, infrastructure builders, FMCG companies, realtors and power utilities, the budget will have negligible impact on overall markets. Most analysts, whom BW consulted, are also not expecting any post-budget rallies this time round. The general consensus is that markets will consolidate at current levels – between 5700 and 5900 on the Nifty – over the next few trading sessions. “We’re not expecting any post-budget rallies this time around. It was a very normal, neutral budget with some support to select sectors – stocks of which could appreciate over the next few days,” Bharat Shah, head of institutional business at Ventura Securities, told Businessworld. Among (budgetary) announcements that were well-received by the markets include tax rebate for first time home loan buyers for up to Rs 25 lakh, removal of barriers with regards to distribution of NELP oil blocks, proposal to build 3,000 kms of roads, reduction in import duty for set-top boxes, higher defence and infrastructure spending, reduction in statutory transaction tax for equity trades and duty reduction on precious and semi-precious stones from 10 to 2 per cent. Interest subvention scheme by private sector banks for short-term crop loans, higher excise duty on cigarettes, higher excise duty on SUVs from 27 to 30 per cent and imposition of Commodities Transaction Tax (CTT) have dampened market sentiments. “It’s definitely not a big-bang budget. There’s mild positivity with regards to the estimated fiscal deficit numbers. But in overall terms, there’s nothing much to spur markets from current levels,” said Siddharth Sedani, assistant vice-president (portfolio Management Service), Microsec Capital. Brokers expect companies like LIC Housing Finance, Reliance Industries & ONGC, DLF, IRB, Gitanjali Gems, Rajesh Exports, Titan Industries, Entertainment Network India Ltd, Hathway Cables, Den Networks, Dish TV, Alok Industries, Rolta, BHEL, BEL, Tata Power, Punj Lloyd, L&T, NTPC, Bata Ltd and GMR Infrastructure, among others, to gain over the next few days on the bourses. Among stocks that are likely to correct over the next few days include private sector banks like ICICI Bank, HDFC Bank and Axis Bank, automobile companies like M&M and Tata Motors and cigarette manufacturers like ITC and Godfrey Philips. India’s lone listed exchange group – the Multi-commodities Exchange – MCX – may also drop on account of the introduction of CTT, equity analysts said. According to K. Subramanyam, AVP -Institutional Research, Asit C.Mehta Intermediaries, the budget was disappointing in the sense that some serious concerns were unaddressed. “Firstly, going by the concerns on the state of the equity markets nothing was announced to encourage retail investors to participate in Indian markets .The RGESS which could have been tweaked to be more effective was not done. Deposits in banks have been showing a falling trend and major power restructuring plans are ahead like re-structuring of SEB short -term loans where banks will play a vital role. No announcement to encourage retail savings in banks was done,” Subramanyam said. A section of the market is also not happy about the bulging food subside bill, which has grown from Rs 24,000 crore in 2006 – 07 to about 1,00,000 crore in 2014. “Government finances could further get aggravated and all reforms on the oil & gas front will come to nothing as it will be offset by this fast rising burden,” Subramanyam of Asit C. Mehta Intermediaries said.
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In an attempt to curb investment in gold, Finance Minister P Chidambaram on 28 February announced three measures to encourage the common man to invest in other avenues. While making Rajiv Gandhi Equity Saving Scheme (RGESS) more liberalised, Chidambaram also introduced inflation indexed bonds. "The Rajiv Gandhi equity saving scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares and she can do so not in one year alone but in three successive years," he said. "The limit for investors wanting to invest in RGESS has been raised from Rs 10 lakh to Rs 12 lakh," he added. In a move that will bring cheer to many prospective home-owners, Chidambaram announced incentives for home loan borrowers. Chidambaram said that any person taking a first time home loan up to Rs 25 lakh during the financial year 2013-14 will be allowed an additional tax deduction of interest of up to Rs 1 lakh. "A person taking a loan for his first home from a bank or a housing finance corporation up to Rs 25 lakh during the period 01-04-2013 to 31-03-2014 will be entitled to additional deduction of interest of up to Rs 1 lakh," he said. "This will promote home ownership and give a fillip to a number of industries like steel, cement, brick, wood, glass etc. besides jobs to thousands of construction workers," he added. On the issue of inflation-indexed funds, Chidambaram said, "In consultation with RBI, I propose to introduce instruments that will protect savings from inflation especially the savings of the poor and middle classes, these could be inflation-indexed bonds or inflation-indexed national security certificates," he said. The structure and tenure of the instruments will be announced in due course, he added. Chidambaram started his speech by reiterating the resolve of his government to cut expenditure and bring the Current Account Deficit back on track. He also pointed out how India is still the third fastest growing economy amongst the bigger countries. As the speech progressed, the FM went on to reiterate UPA's pet goal of inclusive development. he subsequently announced many schemes & allocations for SC, ST, women, differently-abled and other schemes such as Sarv Shiksha Abhiyan & provided additional allocation for the food security plan. (Agencies)
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The rupee rose on 27 February' 2013, touching an over two-week high at one point, on optimism the government will deliver a fiscally disciplined 2013/14 budget, attracting more foreign flows into the country. Investors are also hopeful the government will unveil measures to boost investments on Thursday when Finance Minister P. Chidambaram presents the budget for the year starting in April. The economic survey showed on Wednesday said India was likely to hit a fiscal deficit target of 5.3 GDP this year despite a significant shortfall in revenue, adding there would be further scope for monetary easing if the government continued with its fiscal consolidation plan. "INR rose as expectations are for an investor friendly budget and not a voter friendly one. But there was oil and defence demand in the late session which pulled rupee off highs," said Uday Bhatt, a foreign exchange dealer with UCO Bank. "I expect the rupee to hold in a 53.80 to 54.20 range until the budget announcement tomorrow," he added. Chidambaram is due to start presenting the 2013/14 budget in parliament starting around 11 a.m. on Thursday. The partially convertible rupee closed at 53.86/87 per dollar compared with its previous close of 54.09/10. The unit rose as high as 53.63, its strongest since February 11, but retreated a tad on month-end dollar demand from oil companies and defence-related firms. Traders said a rebound in shares from three-month lows in the previous session also helped, as recent blue chip underperformers rose on value buying. Globally, risk assets recovered from Tuesday's losses after Federal Reserve Chairman Ben Bernanke defended the US central bank's monetary stimulus, easing worries over a possible early retreat from bond purchases. In the offshore non-deliverable forwards, the one-month contract was at 54.19 while the three-month was at 54.82. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.1750 with a total traded volume of $6.45 billion.(PTI)
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The Indian non-life insurance industry is expected to continue its’ strong double digit growth of close to 20 per cent in 2013. Greater clarity is hoped to be gained on FDI norms in the insurance sector as the government mulls over introducing the Insurance Bill in the Budget session. The geographically diverse populace remains an opportunity for the industry as a whole to increase its penetration levels which is currently at 0.7 per cent. Distribution (reach) and awareness (knowledge of risk) amongst consumers continue to challenge the insurers. Persistent higher inflation and a slowing economy may force consumers to defer or avoid dispensable spends such as purchase of non-mandatory insurance coverage. Thus, certain amendments in the insurance distribution laws are welcome. We are hopeful for some bold steps on this front. We believe that rural insurance is an important sector which presents considerable opportunity for the General Insurance industry to penetrate deep and wide within the country. Certain path breaking incentives in the rural insurance segment in this budget can enable the Industry to focus and grow more in rural areas not only as a mandatory requirement but as an incentive to grow in a relatively untapped sector. Elimination of service tax on premiums charged for rural products and insurance detail meant for Farmers could be considered. Further an increase in fund allocation by the government in rural health care schemes such as RSBY will enable the insurance companies to widen their penetration and reach into the remote rural sections. The government’s role in terms of extending tax concessions for general insurance policies would encourage the Indian consumer to consider opting for higher protection for themselves, their family and for their hard earned assets. To increase the penetration of home insurance, relaxation of taxation norms in the premium of home insurance policies could aid in boosting sales of the products in this segment. GOI could also consider issues related to taxation of reinsurance as recommended by the industry. GOI could consider increasing the limits of tax exemptions under section 80D, given the high cost of medical care in the recent times. It is recommended that individual health insurance policies could be exempted from service tax. This move would allow larger number of individuals, especially from lower sections of the society to opt for a health cover. Besides motor and health, we believe that the SME sector will show strong growth as increasing number of entrepreneurs are now aware of their risks and of the varied insurance solutions available. Insurance premium for covering small and medium enterprise risks could be exempted from Service Tax; this will greatly help the SME sector in insuring their assets. For other insurance products, perhaps a reduction in the service tax of 3-4 per cent could be considered. Also we hope that the Government will announce a clear road map for the usage of AADHAR platform; not only for identification of individuals but also for a micro payment settlement gateway. This would help in bringing about a financial inclusion revolution in the country.KK Mishra, CEO, Tata AIG General Insurance Co. Ltd
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Nobody likes taxes. If possible, everyone wants to have some reduction, concession or at least simplification of compliance processes. It’s this time of the year that such expectations soars sky high coupled with the feeling of fear of the unknown. Different sectors and industries have already approached the government with their wish list. Budget 2012 brought about several changes in Indirect Taxes, with some of these changes being highly appreciated by the industry. The annual Budget 2013 is being tabled at a time when the government is reeling under the fear of deficit between revenue estimation of last Budget and actual revenue collected.The circular no. 967/01/2013 dated 1 January 2013, issued by the finance ministry demonstrates the frustration of the revenue authorities caused by the fear of deficit. It instructs the field formations to start recovery proceedings even when the stay petition is not heard by the appellate authorities within 30 to 60 days of filing appeal. While the Central tax laws has no provision for a time bound disposal of stay petitions filed against the demands, the failure of the revenue authorities who is responsible to pass an order, is good enough reason to start recovery proceedings against the assessee. In this Budget, the industry expects that the government is generous enough to insert a provision which makes it mandatory for the adjudicating authority to pass an order on pending stay petitions within a defined time period.By now, the industry is familiar with the occasional ‘bolt from the blue’ phenomenon, arising out of impact of the judicial pronouncements from the apex court. One of such judgement is the Fiat India case, where the Supreme Court judgement had an impact of unsettling the settled legal principals. The Supreme Court said that a discount given to an unrelated buyer, at the time of clearance goods from the factory cannot be allowed as deduction from the assessable value, since there is an indirect consideration flows back to the seller in the form of increased market share. If this legal position is strictly followed by the revenue, all discounts so far allowed as a deduction from assessable value will also has to be disallowed, because such discount will cause an indirect benefit of increased market share to manufacturer’s giving discounts. The impact of this decision, will for sure, be volcanic enough to unsettle the Indian businesses and companies can be saddled with demands on the last 5 years turnover, running in to thousands of crores.The industry expects that the government, act with maturity to amend the excise law; neutralise this negative impact of this judgement.Budget 2012 brought a paradigm shift in the Service Tax Law by introduction of the negative list regime. Post the shift, the service industry has certain expectation from Budget 2013. Partial reverse charge scheme should be reviewed and withdrawn as part payment by service recipient has increased compliance burden on the service recipient, besides increasing the lock up of Cenvat credit. Further, transaction between a branch outside India and head office in India is treated as import of service but the converse is not treated as exports. The said anomaly shall be addressed to restore confidence of the taxpayers about the fairness of the law. It is anticipated that abatement allowed from Maximum Retail Price be increased since no change has been made last year despite increase in Excise Duty rate. Further, in cases where additional excise duty becomes payable in future when price escalation is determined, it results in additional interest liability. Suitable amendments are expected to be made to clarify that interest is not payable in such cases. The government is taking various steps to increase the investment in R&D. To boost these efforts, input services, capital goods / raw materials used in R&D centre of manufacturing companies should be treated as eligible for claiming Cenvat credit even if the R&D centre is located outside the factory premises. Suitable amendments in this regard shall be made in the coming budget. Further, service Industry shall be encouraged to increase its share of export. The Served from India (‘SFI’) scrip which is given to the service exporters as an incentive, come with so many restrictions, that most of the cases it remain unutilised and lapsed, as the service Industry do not have much imports to utilise the SFI Scrip. The transfer of this scrip is limited to group companies and definition of the group company, is so restricted that in most cases the group company also cannot utilise the same. Hence, the SFI scrip shall be allowed to be used for payment of Service Tax and also shall be made freely transferable like Duty Entitlement Passbook (‘DEPB’) scheme. If a similar benefit such as DEPB is allowed to be transferred to a third party by the exporter of goods, why would a service exporter be denied of this benefit?Last but not the least it is expected that a clear roadmap for the implementation of Goods and Services Tax will be announced in the Budget 2013.Sachin Menon is Partner (Indirect tax) KPMG IndiaThe views and opinions expressed herein are personal businessworldonline (at) gmail (dot) com
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In a tale of contrasting fortunes, the Indian rupee on 12 March' 2013 appreciated by 23 paise to end at nearly two-week high of 54.18 on dollar selling and persistent capital inflows even as stock markets closed lower.Earlier in the day, the rupee commenced higher at 54.30 a dollar from last closing of 54.41. It then moved erratically on alternate bouts of buying and selling in a range of 54.17 and 54.40 as higher-than-expected Industrial Production (IIP) data for January was partially neutralised by rise in retail inflation for February. The rupee finally closed near the day's high at 54.18, showing a rise of 23 paise or 0.42 per cent. This is the strongest closing level for rupee since 53.86 on February 27. Yesterday, rupee fell by 13 paise, snapping a 3-day rally. The Indian stock market benchmark Sensex, however, saw a volatile trade today and closed further down by 81.29 points. In signs of recovery after a 2-month decline, industrial output in January grew by 2.4 per cent on account of better performance of manufacturing and power sectors. However, rate cut hopes were dampened after data showed retail inflation moved up for the fifth consecutive month to 10.91 per cent in February. "While IIP and retail inflation data did diminish rate cut hopes, all hope is not lost. Today, the rupee also reacted, albeit belatedly, to the positive trade data. Euro also provided support to the sentiment in favour of the local currency," said Harihar Krishnamoorthy, Treasurer, FirstRand Bank. According to provisional bourses data, FIIs pumped in Rs 730 crore in stock markets today. Globally, the dollar index was trading up by 0.1 per cent against the basket of six major currencies on optimism that the US economy is improving. Pramit Brahmbhatt, CEO, Alpari Financial Services said: "Rupee had a gap up opening. Dollar traded strong against most rivals today except Australian dollar and Indian rupee. Australian dollar strengthened and made 28-year high against the British pound. Local equity markets closed down by half per cent, which restricted rupee's gain." Although IIP numbers have come out much higher than anticipated, the escalating CPI seems to have dented the positive sentiments in afternoon trade, said Abhishek Goenka, Founder and CEO, India Forex Advisors. The focus will now be on the headline inflation figure which is due later this week, he added. Meanwhile, the premium for the forward dollar recovered on fresh payments from banks and corporates. The benchmark six-month forward dollar premium payable in August firmed up to 181-1/2-183 paise from previous close of 178-1/2-180 paise. Far-forward contracts maturing in February also bounced back to 342-1/2-344-1/2 paise from 336-338 paise. The RBI fixed the reference rate for the US dollar at 54.3365 and for euro at 70.7315. The rupee remained firm against the pound sterling to 80.60 from Monday's close of 80.95 and also rose further to 70.50 against the euro from 70.72. It also hardened against the Japanese yen to 56.49 per 100 yen from previous close of 56.64. (PTI)
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Kotak Mahindra Bank has raised about $90 million for a dedicated fund to invest in infrastructure sector, the company said in a statement on 12 March' 2013. The fund, Core Infrastructure India Fund Pte Ltd, will invest in companies engaged in industries like power generation and transmission, transportation, water treatment and supply, waste management and gas transmission in India, Kotak said. Japan's Sumitomo Mitsui Banking Corp, an affiliate of Brookfield Asset Management, Japan Bank for International Co-operation are the other main investors, in addition to Kotak Group, the statement said.(Reuters)
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