The government's direct tax collections could fall short of the budget target by about Rs 25,000 crore due to shortage of manpower, income tax gazetted officers association or ITGOA has said. Keeping a large number of posts vacant, in the grade of ACIT (assistant commissioner income tax) - incumbents of which handle all high revenue yielding cases - and/or JCIT, for a period ranging from 3 to 5 years is bound to adversely affect the revenue collections. "Worst part is that the Central Board of Direct Taxes does not have any plan to fill-up these posts immediately or in near future," said Rajesh Menon, National Secretary General, ITGOA. Menon said the ITGOA's calculation shows that the targeted working strength at the level of deputy commissioner of income tax and assistant commissioner income tax will be reduced to 1528 as against the sanctioned strength of 2914. |
Friday 19 July 2013
Staff shortage may hit direct tax collection
Allowing deductions for interest even before release of film was erroneous and subject to revision
AO can proceed to find out source of income even if seized goods released for entry in inventory boo
Request for settlement after date of signing of adjudication order but prior to its dispatch is vali
Cos. carrying on diverse functions in different economic sections of market to be excluded from comp
Essar Ports Net Up 48%
Jul 19 2013
Essar Ports, which today reported a 48 per cent jump in consolidated net profit at Rs 101.44 crore, is moving towards a dollar-based tariff structure to cut interest costs and mitigate the impact of falling rupee.
"We are trying to dollarise our earnings. The idea is that we will be able to borrow in dollars and have earnings in dollars, so we have a natural hedge and we get the advantage of lower cost of interests (on dollar loans)," Essar Ports MD Rajiv Agarwal.
The company has started charging customers at the Hajira port on its dollar-based tariff structure. It is also in talks with customers for implementing the same at other locations as well.
According to the new structure, the company will report earnings in dollar and customers will be charged either in dollar or its equivalent value in rupee.
This will help the company in cutting its interest costs, which have gone too high and also cushion the impact of falling rupee as both, debt and earnings being in dollar, will provide natural hedge to Essar.
Source:-www.indianexpress.com
Edible Oil Industry Urges Government To Impose Higher Import Tariffs On Refined Palm Oil
19 Jul, 2013
KOLKATA: The edible oil industry on Friday said that it faces an existential threat to the duty structure prevailing in India and the incentives given by major refined oil exporting countries like Indonesia and Malaysia to their domestic refineries.
The edible oil industry in India has made an investment of Rs 10,000 crore and employs around 5 lakh people.
In a release issued by the Solvent Extractors Association of India (SEA) said thatMalaysia has all along protected its refining industry by allowing crude palm oil export only under a quota. Now Indonesia has followed suit. ""Today the Indian industry faces an existential threat thanks to the duty structure prevailing in India and the incentives given by major refined oil exporting countries like Indonesia and Malaysia to their domestic refineries,"" the release added.
Since October 2011, Indonesia has also protected its domestic refiners in another way as well. The export tax on crude palm oil export is much higher than refined oil. The export duty rates are changed each month in line with market prices of palm oil. Higher the palm oil prices, higher is the export duty, and consequently higher is the difference between export tax on crude palm oil and refined palm oil / palmolein.
All this has a direct impact on the Indian domestic refined palm oil industry. The differential between the CPO and Refined Palmolein which was US$ 80 to $100 pmt earlier today stands at only US$ 10 pmt. The result is that imported refined oil costs less than domestic refined oil.
While Malaysia and Indonesia the two biggest exporters of palm oil have subsidized their refiners, the Indian government has moved in the opposite direction. In January, this year it imposed a duty of 2.5 % on CPO thereby lowering the duty differential between imported and refined palm oil to 5 % from the earlier 7.5 %. This despite the fact that a committee headed by former chief economic advisor to the Government of India, Dr Ashok Lahiri had recommended in 2006 that the duty differential be maintained at 7.5 per cent. Industry bodies such as the Solvent Extractors Association of India (SEAI) had protested the move saying that this would hit the industry hard.
The current scenario is even grimmer. There is now a very real scenario that refiners would start defaulting on their loans and this in turn would saddle banks with increasing non-performing assets (NPAs). Already one refinery has shut down while many others are struggling. This at a time when the NPAs of banks are already increasing due to an overall economic slowdown.
Also the industry had invested Rs 10,000 crore in creating 15 million tonne of refinery capacity after the government for the first time in the year 1999, introduced a duty difference between Crude Edible Oils and Refined Oils, with the purpose to encourage value addition of refining within the country. Clearly there has to be consistency in government policy especially at a time of industrial slowdown and foreign direct investment is also slowing down. Incidentally, the MNCs too are protesting the lack of consistency in government policy.
The shutting down of refineries will mean that even the soap industry will be affected as a key input for this industry Stearin is generated as a by-product during the refining process.
The problem is now a little too complex to be solved by a restoration of the status quo that prevailed till January this year. More needs to be done. The new tariffs to be introduced should take into account the prevailing duty structures in Malaysia and Indonesia. As mentioned earlier, Indonesia, in order to protect its own refining industry has introduced a variable duty structure, whereby a higher duty is levied on export of CPO and lower duty on Refined Palm Oil/Palmolein.
To counter this, and to protect its own refining industry, the Indian Government should levy higher import duty on Refined Palm Oil/Palmolein by differential duty in Indonesia plus 7.5% as fixed by Lahiri Committee. This duty difference should be 13.5%
Source:-economictimes.indiatimes.com
Parthasarathi Shome To Head Special Tax Panel For India Inc
July 19, 2013
Parthasarathi Shome, advisor to the Finance Minister, will head a high-level committee that will hear tax-related issues of industry groups every week, starting August 7.
He will be assisted by officers of the Tax Policy and Legislation (TPL) wing of the Central Board of Direct Taxes (CBDT) and the Tax Research Unit (TRU) of the Central Board of Excise and Customs (CBEC).
The finance ministry has been receiving representations from different associations on tax-related issues that affect the industry as a whole or impact a large section. The groups had been demanding a forum to put their views before the government.
Accordingly it was decided that a forum be constituted, chaired by Shome, that will meet every Wednesday at 3 pm.
"The request is found very reasonable. Exchange of views between industry groups and government on tax related issues or tax related disputes would give an opportunity to Government to hear the arguments of the industry groups. It will also give the government an opportunity to explain its stand on tax related matters. Thus this exercise would be mutually beneficial," the ministry said in a release.
Chambers of commerce, industry associations and various groups will have to submit a memorandum to Shome and then seek an appointment. However, the forum is specifically for industry groups and not for individuals.
Finance Minister P Chidambaram had announced the setting up of the forum on Wednesday, the first meeting of which will be held on August 7. The minister urged industry groups to take full advantage of the platform.
Source:-businesstoday.intoday.in
Even oral contract is enough to trigger TDS provisions
Hanung Toys Jumps After Winning Export Order
July 19, 2013
Hanung Toys and Textiles jumped 5.41% to Rs 76.95 at 9:23 IST on BSE after the company said it bagged an export order worth $60 million from a leading US-based buyer.
The announcement was made after market hours on Thursday, 18 July 2013.
Meanwhile, the S&P BSE Sensex was up 39.63 points, or 0.20%, to 20,168.04.
On BSE, 51,000 shares were traded in the counter as against an average daily volume of 74,032 shares in the past one quarter.
The stock hit a high of Rs 79 and a low of Rs 76.85 so far during the day. The stock had hit a 52-week low of Rs 67.40 on Thursday, 18 July 2013. The stock had hit a 52-week high of Rs 179.55 on 8 January 2013.
The stock had underperformed the market over the past one month till 18 July 2013, sliding 36.63% compared with the Sensex's 4.71% rise. The scrip had underperformed the market in past one quarter, falling 44.74% as against Sensex's 5.85% rise.
The small-cap company has an equity capital of Rs 26.58 crore. Face value per share is Rs 10.
Hanung Toys and Textiles said it won an order from a leading US-based buyer for exporting value-added home furnishing to the extent of $60 million (approximately Rs 360 crore) to be completed within three years.
Hanung Toys & Textiles reported net loss of Rs 33.06 crore in Q4 March 2013, as against net profit of Rs 43.66 crore in Q4 March 2012. Net sales rose 13.78% to Rs 528.42 crore in Q4 March 2013 over Q4 March 2012.
Hanung Toys & Textiles operates in two segments -- toys and textiles.
Source:-www.business-standard.com
Rupee Defence Drives Up Government Borrowing Costs
India's measures to protect its currency sent government borrowing costs sharply higher at a bond auction on Friday and dealers said the Reserve Bank of India (RBI) appeared to have intervened anew in the forex market in support of the rupee. Earlier, the embattled currency fell close to where it had been before a dramatic rescue mission by the RBI late on Monday, which sent bond yields surging and crimped the growth outlook for Asia's third largest economy.
India's benchmark 10-year bond ended its worst week in four-and-a-half years, with the yield rising 40 basis points, disrupting government debt sales and undermining central bank efforts to mop up liquidity to make it harder to speculate against the rupee. That in turn fuelled expectations of further measures to generate demand for the rupee, such as increasing the level of reserves banks must hold as cash or issuing offshore bonds. "Nobody really expects them to roll back these measures. The issue is whether they do anything further," said Hitendra Dave, head of global markets at HSBC India.
Prime Minister Manmohan Singh said on Friday the steps were temporary and did not signal a rise in long-term interest rates. "Once the short-term pressures have been contained, as I expect they will be, the Reserve Bank can even consider reversing these measures," Singh said, though he conceded the government's forecast of 6.5 percent economic growth in the fiscal year to March 2014 was unlikely to be met. However, some economists say the central bank's efforts increase the risk it may have to raise rates even as India's economic prospects weaken.Private economists have been cutting their forecasts for growth, with Deutsche Bank on Friday slashing its prediction to 5 percent, matching the lowest in a Reuters poll this week.
Bond markets have been in turmoil since the RBI's extraordinary move on Monday to support the rupee by draining cash from the market and pushing up short-term interest rates. A special bond auction on Thursday fell well short of its target.
RUPEE PRESSURE
The partially convertible rupee ended at 59.35/36 per dollar, half a percent stronger on the day. Traders said the central bank appeared to have been repeating its recent late-session practice of selling dollars through state banks. The rupee has been hit especially hard in the recent global sell-off in emerging markets because of a current account deficit that hit a record 4.8 percent of India's gross domestic product in the fiscal year that ended in March.
Investors also fret over a lack of structural reforms to attract long-term investment.
For the week, the rupee ended 0.3 percent higher after hitting a record low of 61.21 to the dollar on July 8. "We will need dollar inflows to fund our current account deficit, otherwise we could end up with a balance of payment deficit," said Ashish Parthasarthy, treasurer at HDFC Bank, who favours an offshore bond issue to attract funds. "Through intervention, we will end up losing reserves. By losing liquidity and tightening rates, growth will be hurt." On Friday, the government managed to push through its scheduled sale of 150 billion rupees in bonds, with yields roughly 50 basis points higher than a week ago.
In another sign of disruption, the underwriters for Friday's bond issue demanded commissions of between 74 and 98 paise per 100 rupees of debt on issue, much higher than the usual 1 to 2 paise fee. A paise is one-hundredth of a rupee. India grew at 5 percent in the fiscal year that ended in March, its weakest in 10 years. India's struggle to attract big-ticket investment was underscored this week when ArcelorMittal (ISPA.AS) and POSCO (005490.KS) separately scrapped plans for multibillion dollar steel mills due to problems acquiring land and other hurdles.
The RBI's next monetary policy review is on July 30 and most economists polled this week expect it to keep the policy rate and cash reserve ratio unchanged. On Thursday, the RBI rejected most bids in a sale of bonds designed to suck funds from the market, selling just over one-fifth of a planned $2 billion of debt as investors demanded higher yields than it would accept.
Source:-www.indianexpress.com
India Turmeric, Jeera Edge Up On Export Demand
19-Jul-2013
MUMBAI: Indian turmeric futures edged up on Friday as a fall in domestic supplies and more export enquiries outweighed good progress in sowing and higher carryforward stocks.
The key August turmeric contract was 0.45 per cent up at 5,850 rupees per 100 kg on the National Commodity and Derivatives Exchange (NCDEX) at 0956 GMT.
"A decline in domestic supplies and fresh demand from overseas buyers are supporting turmeric prices," said Vedika Narvekar, a senior analyst at Angel Commodities.
Spot turmeric prices rose 14 rupees to 5,717 rupees per 100 kg in Nizamabad, a key market in Andhra Pradesh.
The pace of sowing has helped and yields are expected to benefit from the recent rains, traders said.
Turmeric cultivation usually starts in June and continues until August. A lengthy harvesting process begins in January.
Jeera
Indian jeera, or cumin seed, futures edged up due to some improvement in local demand and a rise in overseas demand, though higher local supplies weighed on sentiment.
The actively traded jeera contract for August delivery edged up 0.20 per cent at 13,590 rupees per 100 kg on the NCDEX.
"Jeera is expected to trade sideways as higher supplies may pressurise prices while overseas demand may support prices at lower levels," Angel Commodities said in a research note.
Spot jeera rose 16 rupees to 13,694 rupees per 100 kg in Unjha, a key market in Gujarat.
India is the largest jeera producer in the world, followed by Syria and Turkey. Abundant rains in leading jeera cultivating regions have raised the prospects of better sowing, traders said. Jeera is a winter crop, sown from October, and farmers depend on rains to moisten the land for sowing. Daily spot supplies of jeera range from 8,000 to 10,000 bags of 60 kg each in Unjha, still higher than expected.
Source:-economictimes.indiatimes.com
Bajaj Posts Rs 738-Cr Profit On Back Of Exports
Bajaj Auto, India’s second-largest motorcycle manufacturer, reported a net profit of Rs 738 crore for the quarter ended June, a 2.6 per cent rise compared with the Rs 718-crore profit in the year-ago period, as higher realisations from exports compensated for sluggish domestic volumes.
The rise was in line with estimates.
During the quarter, the Pune-based company’s volumes declined nine per cent, as the domestic market remained weak and shipments to Sri Lanka and Egypt were hit due to adverse geo-political conditions in those countries.
Net sales of the two- and three-wheeler manufacturer rose two per cent to Rs 4,808 crore, compared with Rs 4,714 crore in the corresponding quarter last year. Sales declined to 9,79,275 units, against 10,78,971 in the year-ago quarter.
The company recorded an earnings before interest, tax, depreciation and amortisation margin of 20.4 per cent during the quarter, against 18.8 per cent in the corresponding quarter last year.
Mark-to-market losses stood at Rs 96 crore, which the company said were notional and would be reversed during the tenure of the forward options contract.
While exports remained largely flat at $327 million, in rupee terms, these rose 10 per cent to Rs 1,876 crore. “Taking into account the current trend of the rupee vis-a-vis the dollar and the current position of hedged contracts, a further benefit on account of the depreciating rupee would accrue in the coming quarters,” the company said.
Dhananjay Sinha, co-head (institutional research), Emkay Global Financial Services, said, “Overall, sales volume is a concern for Bajaj Auto. There was a decline in the current quarter. The couple of quarters ahead might show marginal growth. Honda is expected to move up the curve, as it has good rural market exposure. The market share of Honda would fare better.”
Bajaj’s market share fell to 23 per cent, against 24 per cent in the year-ago period.
The premium motorcycle segment, in which Bajaj has a 46 per cent share, contracted 11 per cent during the quarter, hitting the company’s sales.
During the quarter, Bajaj Auto recorded dividend income of Rs 27 crore from its 47.96 per cent stake in Austria’s KTM AG. An additional Rs 47 crore was received as value-added tax refund in April.
To avoid choking supplies of high-margin Pulsar motorcycles, the company shifted production to its Aurangabad plant, even as production at its Chakan facility remained affected. On Friday, the partial strike at the KTM and Pulsar-manufacturing Chakan facility entered its 25th day.
In June, the company recorded a production loss of about 20,000 Pulsars. However, it maintained production at the Chakan plant was meeting 90-93 per cent of its current requirement.
“Whether there would be any upside to labour costs or not needs to be seen. (The ratio of) raw material costs to sales has fallen because of a fall in raw material costs. Both these costs may not be a disappointment ahead…Let’s see how it pans out,” Sinha said.
Source:-www.business-standard.com