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B U S I N E S S

Now, withdraw up to Rs 1 lakh from ATM
New Delhi, May 30
Bank customers can soon withdraw up to Rs 1 lakh in a single day from ATM machines, and can shop for even an higher amount of Rs 1.25 lakh with their debit cards. Also, as much as Rs 3 lakh can be transferred in a day to another account through ATMs as also over phone.

StanChart IDR issue price fixed at Rs 104
Mumbai, May 30
British banking major Standard Chartered today said it has fixed the price at Rs 104 for its Rs 2,490-crore Indian Depository Receipts issue, the first such share sale in the country.

Essar to buy 59% in AGC Networks
New Delhi, May 30
Continuing its acquisition-spree in the IT and BPO space, diversified conglomerate Essar Group today announced it would buy majority stake in AGC Networks from Avaya of the US for $44.5 million.

Market Update
Market still not out of woods
Last week, wild swings finally ended on a positive note as sentiment across the world got a fillip after the Chinese government dismissed reports that it was considering paring down its holdings of eurozone bonds.


EARLIER STORIES



Tax Advice
Rebate allowed on amount deposited in SCSS u/s 80C
Q. Please advise whether SCSS A/c with PO also qualifies for exemption under Section 80C on the lines of STD for 5 years with a bank. I am aware that such a STD is not payable before maturity i.e. 5 years. Is interest payable quarterly, as with PO SCSS in which TDS is also deducted? My SCSS account falls due on 11.5.2010.

Shareholders okay 6 pc stake sale in BSE
Mumbai, May 30
The Bombay Stock Exchange shareholders yesterday approved a proposal to sell six per cent stake in the bourse to a strategic investor at its annual general meeting, enabling the board to go ahead with the plan.

Tata Beverages eyes buyouts in US, Europe
Mumbai, May 30
Tata Beverages (formerly Tata Tea) is eyeing acquisitions in the US and eastern Europe besides drawing up plans to expand its product portfolio beyond its core tea and coffee, a senior company official said.

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Now, withdraw up to Rs 1 lakh from ATM

New Delhi, May 30
Bank customers can soon withdraw up to Rs 1 lakh in a single day from ATM machines, and can shop for even an higher amount of Rs 1.25 lakh with their debit cards. Also, as much as Rs 3 lakh can be transferred in a day to another account through ATMs as also over phone.

The enhanced limits for ATM withdrawals, debit card swiping and fund transfers would save the consumers from running to bank branches, that too within banking hours, for such large transactions. Currently, the maximum the customers of most of the banks can withdraw through ATMs is Rs 50,000 in a day.

While HDFC Bank is allowing these enhanced banking limits to its customers with effect from June 1, other banks might soon follow the suit.

The ATM withdrawal limit for HDFC Bank Imperia Gold Debit Cards now stands increased to Rs 1 lakh, and that for shopping to Rs 1.25 lakh, from Rs 50,000 per day.

Besides, the ATM card and shopping limit for Easy Shop Regular International/ Maestro/NRO Debit Cards would stand increased to Rs 25,000 and Rs 40,000 respectively, from Rs 15,000 and 25,000 respectively.

The bank is currently in the process of informing its customers about these enhanced debit card limits. Given the competitive nature of the banking business, other banks would have to soon follow HDFC Bank in increasing their own card limits for ATM withdrawals, shopping and fund transfers, a senior official at a rival bank said.

Also, the holders of Kid's Advantage Debit Cards can withdraw and shop for Rs 2,500 in a single day, higher from Rs 1,500 and Rs 1,000 currently.

"The above revised limit are not applicable to the card holders whose current limit are different from the ones stated above and will continue to enjoy their requested/offered limits as sanctioned before," HDFC said. PTI

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StanChart IDR issue price fixed at Rs 104

Mumbai, May 30
British banking major Standard Chartered today said it has fixed the price at Rs 104 for its Rs 2,490-crore Indian Depository Receipts issue, the first such share sale in the country.

The lender, which is the oldest foreign bank in the country, had come out with a public offer of 24 crore IDRs, that include 3.6 crore receipts reserved for the anchor investors. The price-band of the issue was fixed at Rs 100-115.

The IDRs are expected to be listed on the Bombay Stock Exchange and National Stock Exchange by June 11, the bank said in a press release here.

Every 10 IDRs represents one Standard Chartered ordinary share. These shares will be allotted on or around June 7, with each new ordinary share having a nominal value of $0.50, the bank said.

The issue, which was open for subscription from May 25-28, was oversubscribed 2.2 times amid good demand for the units from the institutional investors, although it received a lukewarm response from the retail investors.

"The response to the IDR offer has been excellent. We have achieved a book that is well over two times covered despite market volatility. The IDR listing will further build on our brand presence in India, one of our key markets," StanChart Group finance director Richard Meddings said. PTI

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Essar to buy 59% in AGC Networks

New Delhi, May 30
Continuing its acquisition-spree in the IT and BPO space, diversified conglomerate Essar Group today announced it would buy majority stake in AGC Networks from Avaya of the US for $44.5 million.

The deal would catapult the Essar Group's IT and BPO arm Aegis among the top five IT solution providers along with IBM, Wipro and TCS in the country.

"We have entered into a definitive agreement, under which the Essar Group would acquire Avaya's entire 59.13 per cent stake in BSE/NSE-listed AGC Networks for Rs 206.19 crore, or Rs 245 a share, subject to regulatory requirements and completion of the open offer," Essar said.

The acquisition would be done through Essar Services Holdings. The company will come out with an open offer for an additional 20 per cent stake at a price determined as per the formula specified in the SEBI takeover code.

The company will make a mandatory public announcement tomorrow on the deal. Assuming all shares are tendered in the open offer, total size of the offer would be about Rs 78 crore.

AGC Networks, earlier known as Avaya Global Connect, is a converged communication solutions provider focused on the India and Australian markets and employs nearly 500. The current management is expected to continue and spearhead the business post-closing, the company said.

Commenting on the deal, Essar Group's IT arm Aegis MD and global CEO Aparup Sengupta said, "Essar in a short span has become a key player in solutions integrator space and would benefit immensely from the depth and width of expertise AGC Networks has. PTI

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Market Update
Market still not out of woods
by Lalit Batra

Last week, wild swings finally ended on a positive note as sentiment across the world got a fillip after the Chinese government dismissed reports that it was considering paring down its holdings of eurozone bonds. The key benchmark indices rebounded from three and a half months low hit early in the last week, tracking recovery in global stocks. The S&P CNX Nifty regained the psychological 5,000 mark after falling below that mark in the previous week.

The Sensex had slumped to three-and-a-half-month low on sustained selling by foreign funds triggered by risk aversion amid euro zone debt worries. Till last Thursday, foreign institutional investors (FIIs) have sold Indian shares worth Rs 13,067 crore this month.

The previous week spike cannot be assumed to be a trend reverser as the market still depends on the global market, which continues to be highly volatile and fragile. The GDP figure that the RBI is expected to announce during the week will be closely watched as far as domestic trigger is concerned. Hence, in the absence of any significant positive developments the market mood still remains bearish.

JSW Energy

The power sector presents itself as a huge long-term opportunity in India. This is considering the huge gap between demand and supply that exists currently. The government is trying to push on its investment plans in the sector. It is another point that the execution has been painfully slow on the ground. The sector has also seen a spate of private sector companies announcing their grand plans. One such company is JSW Energy.

Incorporated in 1994, JSW Energy Ltd. (JSWEL) is an established power company with 995 MW of operational generating capacity. The company had come out with an IPO in December 2009. The company has 2,655 MW of generating capacity in the construction or implementation phase. In addition, the company has generation projects at early stages under development with a proposed combined installed capacity of 7,740 MW. JSWEL has been in the power generation business since 2000. The company is also engaged in the power trading business, and has also entered into joint ventures (JVs) in mining, turbines and generators manufacturing and power transmission spaces.

JSWEL has a reasonably good operational history to boast. This is unlike some other power companies that recently came out with their IPOs despite having no prior experience in operating large power projects. The company currently has around 995 MW of projects under operation. Out of this, 260 MW has been under operation since the past nine years. All its plants, including the newly set up 735 MW of capacities, operate at high plant availability ratios. These also have high capacity utilization (measured by PLF or plant load factor). Experience of operating power plants is a big positive in favour of JSWEL as compared to its new peers in the industry.

Given the above positives and the fact that the company is all set to double its power generation capacity in the current fiscal, the stock looks a good bet at the current price level of Rs 118 for an investor with two years time horizon. The risk to our recommendation is the execution risks that are associated with the implementation of its various projects.

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Tax Advice
Rebate allowed on amount deposited in SCSS u/s 80C
by SC Vasudeva

Q. Please advise whether SCSS A/c with PO also qualifies for exemption under Section 80C on the lines of STD for 5 years with a bank. I am aware that such a STD is not payable before maturity i.e. 5 years. Is interest payable quarterly, as with PO SCSS in which TDS is also deducted? My SCSS account falls due on 11.5.2010. How should I utilise the proceeds i.e. opening new account with PO or with bank and whether 0.5 per cent interest is extra payable to senior citizens.

Secondly, please guide about maturity period for infrastructure bonds of Rs 20,000 eligible for additional exemption over Rs 1 lakh. What about interest, whether the same is tax-free or not.

Sudarshan Kumar Jain

A. Any sum deposited in an account under the Senior Citizen Savings Scheme (SCSS) Rules 2004 is deductible under Section 80C of the Income-tax Act 1961 (the Act). Such a deposit can be either with a bank or with a post office. The lock-in period of 5 years is in respect of such deposit as well as the interest accrued thereon. In case the interest is withdrawn earlier, the same is liable to be taxed in the year of withdrawal.

2. You should withdraw the amount after the expiry of the lock-in period. The amount so withdrawn should be utilised for depositing again under the said scheme.

3. The additional deduction of Rs 20,000 for the purchase of long-term infrastructure bonds is allowable for assessment year 2011-12. The scheme in respect of such long-term infrastructure bonds is yet to be announced by the Central Government. The notification as and when issued would give complete details with regard to the maturity, lock-in period and interest payable on such infrastructure bonds. The Finance Minister had not stated in the budget speech that the interest from such bonds will be exempt from tax. However, these aspects would be clear as and when the notification in respect of the issue of such bonds is issued.

Senior citizen status

Q. I shall be grateful if you let me know if I can avail of the exemption limit of Rs 1,80,000 as a senior citizen. I will be 65 on 15.06.2010. I am to file the IT return by 31.07.2010.

Avtar Singh

A. You would be entitled to claim the status of a senior citizen for the assessment year 2011-12 as you would be attaining the age of 65 years in the year ended 31st March 2011. The return in respect of the said assessment year is to be filed by 31st July 2011.

Direct Taxes Code

Q. It is understood that the Direct Taxes Code will apply w.e.f. financial year 2011-12 and under it the savings under Section 80C like PPF, NSC will be governed by EET and not EEE as at present. I have a few lakhs in my PPF account and am a senior citizen.

2. My presumption is that EET would apply only to the PPF accounts opened after 31.3.2011 or the deposits made in the existing PPF accounts after that date and to the NSCs purchased after that date. Whether the deposits in PPF account as on 31.3.2011 will remain under the present system of EEE. Kindly confirm.

3. In case the presumption as above is not correct, then what is the correct position. Kindly advise what should I do with the existing balance in PPF on 31.3.2011.

4. How can I avoid taxation on savings when the DTC comes into force.

Gurnam Singh

A. The Direct Taxes Code as announced earlier is under revision. The position with regard to the taxability of PPF, NSC etc. would be clear as and when the revised version of Direct Taxes Code is available. The newspaper reports indicate that the new version of Direct Tax Code should be available by the first week of June 2010.

Section 44AD

Q. Please refer to your reply to a query of Vinod Kumar in The Tribune dated 12.4.2010. I want to clarify.

1. That I am running a STD PCO and photostat shop. Please clarify if I am covered under Section 44AD. As amended in the Finance Bill 2009 am I required to keep books of account if my turnover is less than Rs 40 lakh previous year and I show my net profit more than 8% of my total sale/gross/receipts.

2. My wife is running recruitment services. Please clarify whether she is also covered under Section 44AD. If yes, what kind of record evidence is required regarding total sale/turnover/receipt to satisfy the I-T department?

GM Singh

A. The provisions of Section 44AD would be applicable for the income earned during the financial year 01.04.2010 to 31.03.2011. The amended provisions apply to any assessee carrying out business except the business of plying, hiring or leasing goods carriages whose total income or gross receipts do not exceed Rs 40 lakh.

Accordingly, both you and your wife would be covered under Section 44AD of the Act for the purposes of assessment. You should be able to prove the sale/gross receipts with an authentic records i.e. sales tax/VAT/service-tax returns or any other record which can prove that your turnover or gross receipts did not exceed Rs 40 lakh. The onus in this regard would be on you.

Tax on ex-gratia payments

Q. Kindly give your advice on the following points:

1. Is the amount paid by the state government on account of ex- gratia grant under the Punjab War Heroes Families Rules to the wife/parents of an Army officer who died in Operation-Vijay while performing bona fide military duties taxable? If not, then under which Section? If it is taxable, then how the tax is to be calculated?

2. How tax is to be calculated on the withdrawal of amount from an NSS account opened in 1990.

Balbir Singh Batra

A. Ex-gratia payments are normally discretionary and therefore should not be taxable in accordance with the decision of the Supreme Court in the case reported in 195 ITR 877. However, in case the rules quoted by you in the query provide for a definite payment, it would be advisable to go through the rule so as to ascertain the position with regard to the taxability of such ex gratia payment.

2. The amount withdrawn from an NSS account is added to the other income of the assessee and tax is payable on the total income on the normal slab rate, including amount so withdrawn.

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Shareholders okay 6 pc stake sale in BSE

Mumbai, May 30
The Bombay Stock Exchange shareholders yesterday approved a proposal to sell six per cent stake in the bourse to a strategic investor at its annual general meeting, enabling the board to go ahead with the plan.

"The AGM has approved the proposal to sell 6 per cent stake in the company. This will enable the board to take the process ahead," a BSE source told PTI here.

The AGM also approved a minimum share price of Rs 375 per piece for the allotment of over 6.5 million shares on a preferential basis to the strategic investor, the source added.

Although the AGM has approved the share sale proposal, the sale process may take 'some more time' and is unlikely to happen in the immediate future, the source said. PTI

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Tata Beverages eyes buyouts in US, Europe

Mumbai, May 30
Tata Beverages (formerly Tata Tea) is eyeing acquisitions in the US and eastern Europe besides drawing up plans to expand its product portfolio beyond its core tea and coffee, a senior company official said. Besides a strong focus on the domestic market, the Tata group company also plans to strengthen its presence in the overseas markets of the US, Middle-East and Russia, the official said.

"Our strategy to go forward is to build a portfolio beyond tea and coffee and expand on our new products. We plan to strengthen our presence in the US, Middle-East and Russia. Acquisitions in eastern Europe and the US are also on our radar," the company's CFO L Krishna Kumar told PTI here. The company is aiming at enhancing its global portfolio and hence is looking at acquisition opportunities across the globe, he said. PTI

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