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Thursday, June 17, 2010


Top stories
17 June, 2010
1. Ulips , equity oriented MFs to lose tax cover in new- look code :
The CBDT plans to reduce the number of saving schemes eligible for tax deductions to only about half a dozen. Only PPF, GPF, pension’s schemes by PFRDA, and pure life insurance schemes will now be in the EEE bracket i.e. no tax either on investment, accumulations or withdrawals.
However Ulips and equity oriented mutual funds will not be tax free.
This was majorly done to boost revenues and encourage long term savings. The 3 lakh deduction as proposed by the DTC will also be lowered.

2. Income tax slabs to be crunched:
The finance ministry will tighten the slab rates as proposed by the DTC. The DTC proposes to increase the slab rate limits from 3 lakh to 10 lakh for the slab of 10% and from 5 lakh to 25 lakh for the slab of 20% tax rates. The industry experts do expect the CBDT to accept the proposed tax slabs as this would severely affect the revenue collections. In corporate tax to CBDT would not have the leeway to lower the tax rate from 30% to 25% as proposed.
Further the MAT and the STT rates will further not be reduced( the DTC proposed a cut of about 5% in mat on gross assets , but since the calculation of MAT will be done on book profits as before, this cut is no longer feasible from the tax revenue’s point of view.)

3. More about DTC
• The deduction of rs. 150000 on interest payments on housing finance loan will continue in the coming years too.
• The commerce department will in strict opposition to the finance ministry’s proposal to withdraw tax exemptions for new industrial units coming up in SEZ after the DTC is implemented in the coming fiscal.

4. New norms may force 13 PSUs to be delisted from the stock exchange:
About a dozen public sector units may be delisted from the stock exchange owing to absence of revival prospects and investor interest to meet the new listing requirements. The experts believe that the companies may also not generate any interest even in the case of disinvestment.

5. Investment banks stay away from HCL sell off: Hindustan Copper has been postponing its date for submission of the EoIs ( expression of interest ) from the investments banks. However the banks are not interest in taking part in the HCL disinvestment procedure because of the skyrocketing market cap of the company. The mar cap of the company is around 47274 crore rupees as opposed to its profits of just 154.68 crore. Trading at this price, according to the industry experts is non-justifiable.

6. Bankers are clueless on lending norms to farmers and exporters: the bankers are worried that the present subsidy of 2% given to them by the finance ministry may be bargained to a lower rate of 1% with the coming of the new base rate norms. The banks can not lend finance to farmers at a rate higher than 7% thus if their lending cost is 9% the rest 2% is met by the government. However with all the banks pegging their base rate at 8% the bankers worry that the subsidy limit may be reduced to 1%. This limit has earlier also been reduced from 3% to 2.

7. Sensex closes at 17,462.87 on Wednesday rising by around .29%

8. Nifty reaches 5233.35 , up by .21%

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