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Wipro to recruit in UK
London, April 1
India’s IT major Wipro plans to launch its first recruitment drive on university campuses of Britain, creating hundreds of jobs there.                          
Azim Premji
Azim Premji

Banks mull strategy after RBI ups rates
Mumbai, April 1
A day after ICICI Bank upped its lending rates following RBI’s key rate hikes, several lenders were mulling their response even as IndusInd Bank hinted at a possible rise this week.

Cyber cafes in day, call centres at night
Chandigarh, April 1
The Reliance WebWorlds in Amritsar and Jalandhar have had a complete role makeover. From being the hi-tech internet cafes, these will now double up as small business process outsourcing (BPO) units, during night hours.


EARLIER STORIES

 

Costume under hammer

This undated handout image obtained on Sunday shows the extra-terrestrial costume worn by an actor in the 1979 sci-fi classic Alien, which  will be auctioned in Los Angeles. The costume, created by Swiss surrealist artist Hans Rudolf Giger, will be offered at an initial price of $75,000.
This undated handout image obtained on Sunday shows the extra-terrestrial costume worn by an actor in the 1979 sci-fi classic Alien, which will be auctioned in Los Angeles. The costume, created by Swiss surrealist artist Hans Rudolf Giger, will be offered at an initial price of $75,000. — AFP

Law firms eye IIT talent 
New Delhi, April 1
Hoping to tap multi-billion dollar growth prospects in legal process outsourcing business (LPO), law firms are exploring all possible avenues in their bid to attract talent, including the IITs, which are better known for churning out engineers.

Tax Advice
US lottery money taxable in India
Q. I purchased lottery ticket of the USA through my friend and won a very small amount of prize that enabled me to purchase the tickets for one year regularly. Sir, if I hit a jackpot, can I bring the amount to India through bank. I am ready to pay tax. Please advise me.

Market Scan
RBI’s step may retard economic growth
The Reserve Bank of India has raised both CRR (cash reserve ratio) for the banks and ‘repo rates’ with a view to check and bring down the inflation rate which now is at 6.44 per cent. CRR is the amount of cash the banks must park with the Reserve Bank (RBI), which has now been raised to 7.75 per cent in two phases: the first phase of 0.25 per cent comes into effect on April 14 and second instalment of the remaining 0.25 per cent would be on April 28.

 

 

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Wipro to recruit in UK

London, April 1
India’s IT major Wipro plans to launch its first recruitment drive on university campuses of Britain, creating hundreds of jobs there.

The software company, India’s third largest, has decided to recruit from Manchester and Warwick universities and the Cranfield School of Management in an effort to find local talent that can better understand cultural needs of its British clients, The Sunday Telegraph reported.

The firm’s participation in the annual university ‘milk round’ will reinforce growing prominence of business process outsourcing (BPO) sector in Britain.

Wipro is expected to announce the details of a new development centre serving key British clients. It will be located near Birmingham and employ about 500 persons.

Along side competitors like Infosys Technologies and Tata Consultancy Services, Wipro is among the BPO companies that have collectively emerged as one of India’s most important industries.

Azim Premji, Wipro chairman, told a newspaper in Hong Kong that planning for the Midlands Centre is well-advanced, although negotiations with various regional bodies and internal discussions are yet to be completed.

Sites in north of England, Scotland and northern Ireland are also under consideration as Wipro looks to add to existing facilities in Reading and London's posh Canary Wharf.

As part of their training, Wipro’s employees in Britain will spend time in India with duration of their stay determined by technical complexity of their jobs.

According to Premji, country’s IT sector is expected to be worth $48 billion this year, accounting for more than 5 per cent of India’s GDP, and $60 billion by 2010.

Britain’s chancellor Gordon Brown visited Wipro’s Bangalore headquarters earlier this year and was briefed on British expansion plans. Europe has been one of the fastest growing markets of the company with revenues during its last financial year up by 48 per cent, accounting for almost a third of Wipro’s global IT service revenues. — PTI 

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Banks mull strategy after RBI ups rates

Mumbai, April 1
A day after ICICI Bank upped its lending rates following RBI’s key rate hikes, several lenders were mulling their response even as IndusInd Bank hinted at a possible rise this week.

Two private sector players - Yes Bank and ICICI Bank - hiked their prime lending rates (PLRs) over the weekend in response to RBI’s move to hike repo and CRR rates Friday.

“The days of absorbing increasing cost of funds are over.

The RBI’s move will definitely impact our cost of funds,” IndusInd Managing Director Bhaskar Ghose said here.

The bank will take a “balanced view” so that the business does not get affected by any sharp rise in lending rates, he said.

“Some banks have already hiked their rates. We will see what the larger banks do,” he said, adding, “while we have no intention of absorbing the cost of funds, we will take our decision next week.”

“You can certainly expect a minimum 0.25 per cent hike but it could go up to 0.50 per cent.” IDBI Bank Deputy Managing Director Jitender Balakrishnan, while admitting that the cost of funds would go up, however, said the public sector lender would take a decision on hiking its lending rates only after “discussing the matter”.

“The hike in repo and CRR will definitely impact the cost of funds. But whether we increase the lending rates or absorb the costs will be decided only at our board meet,” he said.

Decisions to hike rates are taken at the board level and IDBI Bank’s board is not scheduled to meet till end-April, he said, indicating that any possibility of an immediate response by the bank was remote.

The State Bank of India, the country’s premier lender, too has not yet taken a decision on its lending rates. “We are still estimating the impact on our balance sheet,” SBI Managing Director Yogesh Agarwal said. The bank is expected to discuss its lending rates over the next 10 days or so.

Chennai-based Indian bank’s Executive Director MS Sundararajan said his bank “would not be reacting by jacking up rates.” Terming the RBI’s move to hike its key rates as a “quantitative credit supply control technique” Sundararajan said his bank’s liquidity position was comfortable. — PTI

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Dena Bank

Dena Bank is planning a foray in non-life insurance segment and a decision in this regard is likely to be taken at its board meeting scheduled this month.

“We are thinking about it and this could happen in the current fiscal,” Dena Bank chairman and managing director P.L. Gairola said.

The board would consider and discuss the issue. It would be a three-way venture where the bank would rope in a local partner and company with the product base, he said. 

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Cyber cafes in day, call centres at night
Ruchika M. Khanna
Tribune News Service

Chandigarh, April 1
The Reliance WebWorlds in Amritsar and Jalandhar have had a complete role makeover. From being the hi-tech internet cafes, these will now double up as small business process outsourcing (BPO) units, during night hours.

After a successful pilot project in Hyderabad, Reliance WebWorld had recently decided to offer its 22 WebWorlds (12 in Punjab, seven in Haryana and three in Chandigarh) for setting up small BPOs. Under the scheme, the cyber cafe-cum-coffee shop chain rents out its premises for 12 hours at night (10 pm to 10 am) for running the call centre or BPO units.

Senior officials in Reliance Communications informed TNS that four of its WebWorlds across the country have been hired by private parties to run as BPOs at night. Other than Amritsar and Jalandhar , Reliance WebWorlds in Hyderabad and Nasik also operate as BPOs by night. Under the scheme, any entrepreneur can hire Reliance WebWorld's ready infrastructure without bothering about capital expenditure. Reliance Communication has 450 PCs across these 22 WebWorlds in 15 cities; and they are well equipped with multi-media, headsets and Voice Over Internet Protocol (VOIP). All that the entrepreneur has to do is hire their infrastructure, without any capital expenditure and can commence operations immediately.

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Law firms eye IIT talent 

New Delhi, April 1
Hoping to tap multi-billion dollar growth prospects in legal process outsourcing business (LPO), law firms are exploring all possible avenues in their bid to attract talent, including the IITs, which are better known for churning out engineers.
The LPO business in India is expected to grow to $5 billion over the next five years though it was nearly non-existent till a few months back.

With the shortage of required talent being a major hurdle for outsourced works, like patent drafting, law firms are rushing to the IITs and other premier engineering colleges in the country, besides regular destinations like law schools.
Recently, country's leading LPO firm, Pangea3, recruited 30 graduates from the current academic session of various IITs.

Exposure available in the LPOs is much wider as compared to research and development divisions of other organisations, Pangea3 CEO Sanjay Kamlani said.

In a bid to attract IIT graduates to this new avenue, law firms are offering a starting salary of about Rs 10 lakh per annum.

The LPO industry is eyeing IITians for high-end jobs like patent application and process prosecution of products, which are being outsourced from a number of sectors like IT, telecom, pharma and electronics. 
These engineers will work with lawyers to draft patent applications and analyse IP combining expertise in law and technology, differentiating Pangea3 in IP services space, he added.
This type of work is estimated to account for a major chunk of business coming to the Indian firms, but an average law graduate might not be able to execute these jobs efficiently, the experts believe.

These technical jobs include analysing and drafting papers for complex works like claims made by an inventor, mapping, making patent illustrations, proof published patent applications and issued patents and also conducting patent related studies.

There are a couple of more firms currently dealing in the LPOs like G B Law Solutions and Office Tiger, while a number of existing BPOs as well as new companies are planning to expand into this business and might soon tap the IITs to expand their workforce.
A study conducted by Crisil Research and Information Services said that Indian law firms could earn up to $4.7 billion by 2011 from tapping into massive $25 billion US legal offshoring business.

It is also estimated that 60 per cent of all legal work including patent prosecution will be outsourced to India by 2016. — PTI

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Tax Advice
US lottery money taxable in India
by S.C. Vasudeva

Q. I purchased lottery ticket of the USA through my friend and won a very small amount of prize that enabled me to purchase the tickets for one year regularly. Sir, if I hit a jackpot, can I bring the amount to India through bank. I am ready to pay tax. Please advise me.

— Vijay Kumar

A. In accordance with the provisions of Section 2(24) of the Act, any winnings or lotteries, crossword puzzles, racing including horse racing, card games and other games of any sort or from gambling or betting or any form of nature or whatsoever is considered to be part of income and therefore taxable under the provisions of the Act. Presuming that you are a resident and ordinary resident such income would be chargeable to tax under Section 115BB @ 30 per cent plus applicable surcharge and the education cess. The amount so earned can be brought back to India through official channels.

Retired employee

Q. I want to give your trouble regarding calculation of income tax on my retirement benefits. I retired on February 28, 2006. I received the following retirement benefits:

(1) DCRG: Rs 3,50,000

(2) Commutation: Rs 2,72,743

(3) GPF: Rs 1,43,268

(4) Leave encashment: Rs 2,34,140

In addition, I shall receive less than Rs 1 lakh as pension in 2006-07. I have queries as under:

(1) Whether above said amount of Rs 10,00,151 is to be included in the IT return for AY 2006-07 or in the next AY 2007-08?

(2) Whether after rebate of Rs 5 lakh, balance amount is taxable? (for A.Y. 2007-08)

(3) What is my tax liability?

(4) If the entire amount is to be included in the AY 2006-07, whether interest earned on these amounts is taxable and to what extent? I make it clear here that I have returned a sum of Rs 5 lakh taken as loan from private person on marriage of my daughter earlier.

(5) I have not included these amounts in the return for the year (assessment) 2006-07 please. Does the previous return for AY 2006-07 need revision?

— Ashok Kumar Goel, Patiala

A. (1) The letter written by you does not indicate that you are a government employee but on the basis of the receipt of Rs 1,43,268 from the GPF, it has been presumed that you are a government employee. The answers to your queries are, therefore, based on such presumption.

(2) The death-cum-retirement gratuity received by a government employee is exempt under Section 10 (i) of the IT Act, 1961 (The Act). Similarly, any payment in commutation of pension received under the Civil Pensions (Commutations) Rules of the Central Government or under any similar scheme applicable to the members of civil services of the union or holders of posts connected with defence or of civil posts under the union (such members or holders being persons not governed by the said rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a state or holders of civil posts under a state or to the employees of a local authority or a corporation established by a central, state or Provincial Act is exempt from tax under Section 10A(i) of the Act. The receipt of General Provident Fund is also not taxable as it represents your contributions to such fund. The payment of leave encashment received by an employee of the Central and state government as cash equivalent of the leave salary in respect to the period of earned leave at his credit at the time of his retirement is also exempt from tax under Section 10AA(i) of the Act.

The above amount of Rs 10,00,151 is, therefore, not required to be included in your taxable income in case you satisfy the conditions mentioned hereinabove. However, you must indicate in your return the fact of receipt of these amounts. There is thus no necessity of revising returns. The interest earned on these amounts would be taxable in case the same is not exempt under any other provisions of the Act.

Section 89

Q. I retired from Haryana on September 30, 2004. The pension arrears from Octobr 1, 2004 to September 30, 2006, has only been released / paid in the month of September 2006.

Kindly advice me whether I can adjust these arrears in previous year income tax return i.e. 2004-05 and 2005-06.

— Puran Asha, Chandigarh

A. The amount of pension pertaining to 2004-05 can be included in the return for the assessment year 2005-06 (previous year ending March 31. 2005). In case you have already filed the return for the said assessment year you can revise the same before March 31, 2007. The pension amount pertaining to 2005-06 can be included in the return for the assessment year 2006-07. In case you have already filed the return for the said assessment year you can revise the said return before March 31, 2008.

I would, however, suggest that you should seek the relief under Section 89 of the Act. The said section provides for the grant of relief where an assessee is in receipt of a sum in the nature of salary being paid in arrears or in advance or is in receipt, in one financial year, of salary of more than 12 months. This will obviate the necessity of revising the returns.

Salary of NRI

Q. One of my close relative is in merchant navy since couple of years. Till now he had been maintaining NRI status by working for more than six months each financial year. But, now under some family pressure, he may not remain out of country for more than six months.

In case he remains in India for less than six months, will he be treated like any other India, as far the tax liability is concerned?

I may add that he works with Japanese company and gets salary in US dollars, which he deposits in Indian banks.

— Praveen Kaur, Jalandhar

A. The basic condition to be specified by an individual to be resident in India in any previous year is either he is in India in the previous year for a period of 182 days or more or is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding previous year. The period of 60 days referred to above will be substituted by 182 days in case of an Indian citizen who leaves India during the previous year for the purposes of employment outside India or an Indian citizen who leaves India during the previous year as a member of the crew of an Indian citizenship.

Your relative must have been complied the above condition so as to be a non-resident in India. In case he does not comply with either of the above conditions, he would be treated a resident but not ordinary resident provided he satisfies the following two conditions:

(i) has been resident in India in at least two out of 10 previous years immediately preceding the relevant previous year.

(ii) has been in India for a period of 730 days or more during seven years immediately preceding the relevant previous year.

In case he satisfies these conditions he would be taxable in respect of income, which is received or deemed to have received in India during the previous year or accrues or arises or is deemed to accrue or arise in India during the previous year. Accordingly, if the salary by your relative is not earned in India, such salary may not be taxable in India. Such benefit however would be available for a period of two years.

Senior citizen

Q. I am senior citizen my date of birth is June 26, 1933. My total income derived through pension is Rs 1,28,450. Besides, I get approximately Rs 20,000 as dividend from various companies (which is variable) I have no other source of income. I am residing in my own flat.

A friend of mine has advised me to put my savings, which I received at the time of retirement (say merely 12 lakh) in Government of India’s scheme for senior citizens in bank where the rate of interest paid is 9 per cent taxable interest becomes payable quarterly. My queries are as follows:

(a) Whether I will be required to show this income in my annual income-tax return.

(b) I am told that the banks deduct 10.2 per cent tax on interest at the source itself.

(c ) Besides the above deduction to source whether I will be required to pay some more tax if so what amount.

(d) Whether the tax already paid at source will be adjustable.

(e) Whether I will be required to file an income tax return?

— H.S. Bindra

A. (a) You will be required to show the income earned on deposits under senior citizen scheme in your income-tax return.

(b) The banks are required to deduct tax at source from the interest income in case the amount of interest exceeds Rs 5,000. This limit is proposed to be increased to Rs 10,000 by the Finance Bill, 2007, and will be effective for assessment year 2008-09 i.e. for the previous year ended March 31, 2008. The payment of tax would depend on your total income.

(c) As the complete detail of your total income is not given in the query, therefore, it is not possible to work out the tax payable by you.

(d) The tax paid at source will be adjusted against the amount of tax payable on your total income.

(e) You would be required to file your income-tax return in case your total income exceeds the maximum amount which is not chargeable to tax before availing the deductions under Chapter-VIA (e.g. deduction under Section 80C, 80D, 80U etc.) of the Act.

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Market Scan
RBI’s step may retard economic growth
by J.C. Anand

The Reserve Bank of India has raised both CRR (cash reserve ratio) for the banks and ‘repo rates’ with a view to check and bring down the inflation rate which now is at 6.44 per cent. CRR is the amount of cash the banks must park with the Reserve Bank (RBI), which has now been raised to 7.75 per cent in two phases: the first phase of 0.25 per cent comes into effect on April 14 and second instalment of the remaining 0.25 per cent would be on April 28. The RBI has also raised the ‘repo rate’ from 7.50 to 7.75 per cent. The ‘repo rate’ is the rate at which the RBI lends to banks against securities. This measure will tighten liquidity in the market. This third increase in the CRR over five months would, as estimated by a financial paper, drain Rs 43,000 crore from the banking system. The Reserve Bank (RBI) has also reduced the rate it will pay on the CRR balances by 0.50 per cent.

These measures may check inflation rates but may also retard economic growth. It would also lead to an increase in the cost of funds and the banks will now have to raise both lending rates and deposit rates. The RBI believes that these measures would shortly bring down inflation rates to 5.5 per cent. Too much will depend on rabi harvest and procurement. The wheat harvest was expected to be much higher than the previous year. But unseasonal rains and hail in Punjab, Haryana and in western UP has damaged the wheat crop. High growth in agricultural products is really needed to check and cut inflation rate.

It appears almost certain that India will have to import wheat from abroad to meet domestic needs. There are also reports that the wheat stocks in the USA and Australia are low and India may have to pay high prices to import wheat. The Reserve Bank’s measure to check inflation is likely to raise interest rates both for the corporate sector and for the common man.

The Asian Development Bank (ADB) has predicted that the South Asian economy, including India, will grow at a slower pace of 7.7 per cent in 2007 due to tight monetary measures, though finance minister still believes that the economy would grow by 9 per cent. Experts believe that the current financial year for the stock market will not be as good as was the financial year 2006-07.

Tightened monetary policy of the RBI is bound to oblige the banks to hike lending interest rates, including housing loans, loans for consumer goods, and personal loans. This may also affect the rates of the real estate sector and would slow down the growth of infrastructure projects. Market prices of real estate (plots as well as flats and housing property) are likely to come down.

Last week the rupee had an exchange ratio of Rs 43.01 against the dollar. This has now slightly gone up. This may adversely affect profitability of the software companies, which derive the bulk of their revenues from the USA and Europe. There are also reports that in the USA there is a distinct slowdown of the economy and a fall in consumer confidence data as well as shortfalls in mortgage payments. International crude prices have also started looking up.

The banks have already raised interest rates on fixed deposit investments and are likely to raise it still higher. This may lead to sizeable drain from the equity market by investors who would like to park their fund in bank fixed deposit.

Investors should mark time and make no fresh investments.

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