Budget 1 day to go
New Tax Proposals
US in slowdown, not recession: Bush
EU slaps biggest-ever fine of $1.34 b on Microsoft
Govt issues new telecom licences
Google gains as MS-Yahoo! impasse continues
New aviation policy by March-end, says Patel
Garment machinery makers eye B’desh
SEBI seeks clarification from Rel Infratel, 24 others
Ruchika M. Khanna
Tribune News Service
Chandigarh, February 27
The food processing and wellness sector, which is the fastest growing segment in the industry, wants a special impetus by the government as the farming community would be the ultimate beneficiary. The industry is unanimous as it says it does not want any special tax deductions, but simple corrections in tax structure, so that this industry can grow further. The food industry is estimated to be worth over $200 billion, and would grow to $310 billion by 2015.
India is the second largest producer of food, the world’s largest producer of cereals and milk, the second largest producer of rice, wheat, sugar, fruits and vegetables and the third largest producer of cotton. “India has the highest number of food-processing plants. Food processing industry here is getting globally competitive and the government must have a separate fund allocation for this sector, mainly for research and development. The excise duty should be fixed at 5 per cent, just as in the case of Australia and some European countries,” says H.L. Mahajan, chairman and managing director of Maxwell Wellness Care. He also feels that the government should create proper road infrastructure in the tax- exempt states, where most of this industry is located.
Vijay Setia, president of All India Rice Exporters Association, wants the government to correct anomalies in the refund of service tax paid on freight charges, saying that the refund should be given to all, irrespective of the mode of transport used by the exporter. “We also want that the government should bring in a legislation by which all farmers are given their payments through cheque rather than cash. This will be a multi-dimensional tool as it will help bring in more transparency, keep check on the market rates, if these are below or above the minimum support price; and, also bring financial inclusion of farmers,” he opines.
R.C. Gupta, general manager, Glaxo SmithKline (consumer healthcare), hopes that the finance minister reduces the excise duty from 16 per cent to 8 per cent and VAT on nutritional foods should be brought down. “In case the companies are outsourcing their production to other units in the non tax-exempt states, at least the credit of service tax denied to the company, should be passed on to the job worker (principal manufacturer). The disparity in central sales tax and VAT should be removed and restriction on VAT credit on stock transfer should be to the extent of CST rate,” he adds.
New Delhi, February 27
In a circular, which has not been made public in view of the budget presentation on Friday, the Central Board of Direct Taxes (CBDT) said lending and borrowing of securities under the new scheme notified by market regulator SEBI will not be subject to STT and capital gains taxes, sources said.
Short-selling is a transaction where an investor can sell stocks without owning them. The investor does this by borrowing stocks from another entity, selling them in the market and then buying them back before the market closes to return the same to the lender.
Sources, however, clarified that only lending and borrowings of securities will be exempted, while the gains arising out of such transaction will be taxed as per provisions of the Income Tax Act.
Lending and borrowing of securities will not be regarded as transfer for the purpose of capital gains as per the provisions of the Income Tax Act, sources said. The circular, according to them, also makes it clear that STT will not be applicable on such transactions.
SEBI and the RBI recently decided to put in place a full-fledged securities lending and borrowing scheme for all market participants in the securities market under the overall framework of Securities Lending Scheme, 1997.
Finance minister P Chidambaram, in his 2007-08 budget, had made an announcement to introduce short-selling.
SEBI, which was expected to allow short-selling by institutional investors from early this month, was waiting CBDT's clarification of taxation on the scheme.
Now that the clarifications have come, the market regulator might take a decision on allowing short-selling by all institutional investors shortly. Retail investors are already allowed to undertake short-selling of securities.
At present, institutions are allowed to take positions in the futures and options market. The move, allowing them to short-sell in the cash market, is expected to deepen the market further and allow stock values to reflect more accurately the opinions of all investors. — PTI
London, February 27
Darling’s proposal to levy £30,000 charge on non-domiciled taxpayers has generated much concern between Indian and other non-domiciled entrepreneurs and businessmen in the UK and some of them are reported to be preparing to quit Britain.
In a letter to the Financial Times, the UK wing of The Indus Entrepreneurs (TIE) said Darling’s proposals would undermine Britain’s attraction to thousands of investors and entrepreneurs from the Indian subcontinent.
Prominent Indian business leaders in Britain told the paper that they believed many would leave the country if the changes go ahead as planned.
They are also angry at the short notice that has left them little time to decide what to do next.
The non-domicile rule is a tax loophole that made Britain a favourite destination for the world’s super-rich, industrialists and businessmen. It was framed during the days of the British Empire.
It allows some residents of the UK to cite another country as their real domicile and then, unlike all other residents, to pay UK tax on their earnings in the rest of the world only if they remit the money to the UK. If they do not remit it to the UK, no tax is levied.
TIE, the world’s largest not-for-profit entrepreneurial group, said the proposals put at risk the jobs of thousands of British people employed by businesses owned by non-domicile people from the Indian subcontinent.
Entrepreneurs of Indian and Pakistani origin have built substantial businesses in the UK since they began arriving in numbers 50 years ago.
Not all of them claim non-domicile status, but most retain links with their countries of origin.
Indian companies have also been acquiring British businesses as part of growing business links between the UK and India. — PTI
Washington, February 27
"We're not in a recession, I don't think we will go in a recession. We're in a slowdown, and there's a difference," Bush said in an interview with American Urban Radio Networks yesterday. "No question there is softening now." The US President boasted of job growth since he took office in January 2001, but acknowledged that "economies go through cycles, and the question is how do you deal with the down-cycle." "I am confident in our economy," he said.
"Think about what we've been through since I've been President, recession, an attack, corporate scandals, major natural disasters, high oil prices, war and yet we had 52 months of uninterrupted growth and that speaks volumes about the American people and resilience," he said.
His comments came after the Conference Board private research group said its consumer confidence index had slumped to its lowest level since the US-led invasion of Iraq in 2003.
The survey was likely to provide fresh ammunition to some economists who are predicting that the world's biggest economy is on the verge of a recession. Other economists believe the economy has already fallen into a recession.
Economic growth slowed abruptly to a 0.6 per cent annualised crawl in the fourth quarter of 2007 amid a two-year long housing slump and as a credit crunch swept the financial markets. — AFP
Brussels, February 27
The fine is the biggest in the European Union (EU) and the third of its kind to target the American software giant, raising the total to nearly 1.7 billion euros.
“Microsoft was the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an antitrust decision,” said European Competition Commissioner Neelie Kroes.
“I hope that today’s decision closes a dark chapter in Microsoft’s record of non-compliance with the commission’s March 2004 decision,” Kroes said.
In September, the EU’s Court of First Instance rejected a Microsoft appeal against a 2004 ruling with which the bloc’s executive imposed a 497-million-euro fine - and an additional 280.5-million-euro penalty in December 2005 - on the company for abusing its dominant position.
The EU argues that Microsoft has been able to reap unfair benefits and damage consumers by refusing to give so-called “interoperability” protocols - instructions needed by servers to work effectively with Windows - to its rivals.
Microsoft had initially demanded a royalty rate of 3.87 percent of a licensee’s product revenues for a patent licence and of 2.98 percent for a licence giving access to the secret interoperability information.
The company later reduced its royalty rates to 0.7 and 0.5 percent respectively, but only started charging what the EU considers a reasonable flat fee of 10,000 euros Oct 22, 2007.
According to Brussels, Microsoft had therefore failed to comply with its demands for three years.
The EU has in the past also objected to Microsoft’s decision to bundle its own media player with the operating system. The money raised by EU fines is paid into its budget. — IANS
New Delhi, February 27
A total of 22 licenses would be given away today to three new players, including permits for 19 circles to Datacom, according to senior officials in the Department of Telecom (DoT).
Birla’s Idea Cellular would get license for one circle in Punjab and Swan Telecom for the Delhi and Mumbai circles.
A total of 120 licenses would be distributed among nine companies, including Unitech, Spice, Shyam Telelink and others that were issued letters of intent on January 10.
Asked when the exercise would be completed, officials said all agreements with the nine companies would be inked by this weekend.
Subsequently, these firms would have to apply for spectrum (radio frequency) separately to start rolling out network in their respective circles.
The entry of new players is bound to increase competition in the GSM mobile segment and tariffs may fall in the coming months. The DoT has worked out that entry of 5-6 new players would result in fall in tariffs by at least 50 per cent from the current level.
Officials said communications and IT minister A. Raja wants to, in fact, bring local mobile call tariffs to 25 paise a minute and domestic long-distance call rates to 50 paise.
This will be possible only through increased competition. — PTI
Seattle, February 27
Not much has progressed since Microsoft offered to buy Yahoo! on February 1, a proposal that was rebuffed by Yahoo's board as undervaluing the company. Microsoft has countered by saying its offer was fair and urged the board to take a second look.
The union of its two biggest Web rivals could eventually loosen Google's grip on online search and advertising, but a messy takeover battle followed by a complicated integration could give Google ample time to build on its advantage.
''Google benefits if Yahoo! is in a state of limbo,'' said RBC Capital analyst Jordan Rohan. ''The longer the uncertainty persists, the greater lead Google has in online advertising.'' The impasse between Microsoft and Yahoo has lasted almost a full month and while analysts think that the two companies will eventually strike a deal, the stand-off shows no signs of a quick resolution.
Microsoft has not ruled out a proxy fight to win Yahoo! and Yahoo! continues to probe for other options.
After clearing those hurdles, Microsoft and Yahoo! will have to merge two different advertising systems and consolidate completely separate back-end computer systems.
Microsoft expects the Yahoo! transaction to close in the second-half of 2008, but analyst Marianne Wolk at Susquehanna Financial Group said a deal may not be finalized until early 2009, meaning Google may not face a stronger number two in Web search and advertising until 2010.
Google has proven what it can do when given an opportunity to build on a lead.
Over the last year, Google's US Web search market share has jumped 11 percentage points, while Yahoo! and Microsoft have both posted steady declines, according to research firm comScore. Factor in Web searches done overseas and Google's lead is daunting — with three-quarters of the world market.
Without a clear number two to challenge Google, advertisers and Web site publishers may opt to stick with the status quo. — Reuters
Kolkata, February 27
“We are expecting that a notification for the new policy approach, which is now awaiting Cabinet approval, will be issued in March-end rolling out much more simpler rules than the existing ones for allowing new airports,” civil aviation minister Praful Patel told reporters today.
Patel, who was here to attend the signing of an agreement for the country’s first aerotropolis project at Durgapur, said the proposed guideline had been finalised by a small high-level committee, comprising the Prime Minister, finance minister, Planning Commission deputy chairman, and himself.
He said the committee that formulated the new policy guideline, was appointed by Prime Minister Manmohan Singh after a discussion of the issue at the meetings of the Cabinet Committee on Infrastructure. Once the new policy was in force, a steering committee, comprising representatives from the director general of civil aviation, home ministry and the defence ministry would be set up to ensure early clearance to new airport projects.
Earlier, speaking at the function, Patel described the proposed aerotoropolis, which is to be set up at Andal near the steel city of Durgapur in Bardhaman district, as ‘path breaking’. The minister said the government was looking for more such ventures in different parts of the country.
The technical services agreement for the greenfield airport under the Durapur aerotorpolis project was signed between Bengal Aerotorpolis Projects Ltd, a consortium of four private and public sector companies and Changi Airports International International, Singapore.
The Rs 10,000-crore aerortopolis project would comprise the country’s first privately owned airport, an industrial zone, including an information technology park and a township. — UNI
Garment machinery makers eye B’desh
Ludhiana, February 27
The Garment Machinery Manufacturers And Suppliers Association here today signed a memorandum of understanding with the Bangladesh Engineering Industry Owners Association for co-operation in exchange of technology, quality control and exploring business opportunities.
The agreement would help micro, small and medium enterprises here to gain significant market for their jute processing and garment finishing units.
“We are currently procuring most of the machinery from Japan, Taiwan and China. The machines, particularly garment finishing and jute processing are far cheaper. Besides, our manufacturers often face problems in getting an effective service backup and we hope India’s advantages of manpower availability and geographical location would take care of these problems as well," said Mohammad Abdul Motaleb, head of the eight-member delegation from Bangladesh.
As a result of the agreement garment machinery manufacturers here, who have so far focused on supplying machines to South Africa, Nepal and Sri Lanka, are expecting a significant rise in export. "We had not really tapped the potential that market in Bangladesh holds. Export, as a result of this agreement, is likely to cross Rs 200 crore by 2009," said Ram Krishan, president, Garment Machinery Manufacturers And Suppliers Association.
Mumbai, February 27
According to the latest processing status of draft offer documents filed with SEBI on or after April 1, 2007, clarifications are awaited from lead managers in relation to the draft offer document of 25 firms. These firms include Reliance Infratel, Cox and Kings (India), JSW Energy, Oil India, Mahindra Holidays & Resorts and NHPC. Reliance Infratel had filed the draft prospectus with SEBI on February 4 for entering the capital market with a public issue of 8.91 crore equity shares.— PTI
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