The uptrend is not broken but the market is finding it tough to head higher. The Sensex has to close above 17,900 over the next few days
The market closed a choppy trading session on a flat note. The Sensex settled at 17,730, down 25 points (0.1%) and the Nifty closed at 5,320, down 2.5 points (0.05%). The benchmarks started the day in the green, taking cues from Asian markets. The market was range-bound till the early afternoon session. It pared its gains on the negative opening in European markets to end marginally lower.
Asian stocks witnessed a mixed trading session today. Key benchmark indices in Japan, Indonesia, South Korea and Taiwan were up by 0.05% to 0.8%. Markets in China, Singapore, and Hong Kong were down 0.1% to 0.8%.
US markets ended steady in a volatile session on Wednesday after the Federal Reserve downgraded its assessment of the economic recovery and it vowed to keep easy money flowing. The Dow was up 4.9 points (0.05%) at 10,298. The S&P 500 was down 3.2 points (0.3%) to close at 1,092. The Nasdaq was down 7.5 points (0.3%) to close at 2,254. The Fed held overnight rates in the zero to 0.25% range, set in December 2008. The recent job and housing market reports had raised doubts about the economy.
Japan's annual growth slowed for the third consecutive month in May. Exports rose 32.1% in the year to May on gains in shipments of cars, steel and semiconductors, less than the median forecast for a 36.9% rise, the Japanese ministry of finance said. Exports to Asia, which account for more than half of Japan's total shipments, increased 34.4% from a year earlier, slower than a 45.2% annual increase in the previous month.
Back home, the food price index rose 16.9% in the year to 12th June, higher than the previous week's annual reading of 16.1%. The fuel price index remained unchanged at 13.18% in the year to 12th June.
The monsoon is 11.1% below normal for the period between 1st and 23rd June. India will ship at least 2 million tonnes (MT) of wheat if the monsoon is normal. The country's wheat stocks stood at 35.2MT as of 1st June, nearly nine times the government-set target of 4MT, while the rice inventory was at 25.3MT, sharply up from a target of 12.2MT.
Foreign institutional investors were net buyers of equities worth Rs265 crore on Wednesday. Domestic institutional investors were net sellers of Rs866 crore worth of stocks.
McNally Bharat Engineering Company (down 1.1%) has received an order for supply of an ash water recirculation & treatment system package for the Singrauli super-thermal power station for Rs41.4 crore.
Core K12, the US education arm of Core Projects & Technologies (up 5.5%), has bagged a contract covering 375 schools from the Los Angeles Unified School District to design and implement a comprehensive formative assessment programme for nearly 700,000 students. The contract, worth $24 million, involves diagnostic testing for all key subjects, at all grade levels.
Reliance Industries (RIL) (down 0.7%) has announced that its subsidiary, Reliance Eagleford Upstream LP, has executed definitive agreements to enter into a joint venture with US-based Pioneer Natural Resources Company under which Reliance will acquire 45% interest in Pioneer's core Eagle Ford Shale acreage position in two separate transactions. Pioneer and Newpek LLC, Pioneer's current partner in the Eagle Ford, will simultaneously convey 45% of their respective interests in the Eagle Ford to Reliance.
Infrastructure Development Finance Company (IDFC) (up 1.1%) has been classified by the Reserve Bank of India (RBI) as an 'Infrastructure Finance Company' within the overall classification of a 'Non Banking Finance Company.'
The law taxes anonymous donations. But a number of recipients of such grants don't want the spigot to be turned off, for obvious reasons
For the past three days, a group of seven Members of Parliament (MPs) along with a few chartered accountants, who are in charge of several charities, have been making the rounds of the Income-Tax (I-T) Department in Mumbai, to lobby against the scrapping of tax exemptions on anonymous donations. The MPs have been in touch with various charitable organisations and have already canvassed their support in Gujarat, before making their trip to Mumbai.
They have formed a 10-member petition committee headed by Bharatiya Janata Party's Bhagat Singh Koshyari for the restoration of tax exemption on anonymous donations. Besides Mr Koshyari, other MPs include BJP's Lalit Kishore Chaturvedi, Samajwadi Party's Bhagwati Singh, Indian National Congress' Thakur Viplove & Nandi Yellaiah and Ali Sabir from Lok Janshakti Party (LJP).
Currently there are only seven members who have been present to meet the officials but some more MPs will be flying in today to have a word with I-T officials, reliable sources confirm.
In Mumbai, there have been quiet meetings at the luxurious five-star InterContinental The LaLiT Hotel, with an objective to lobby for the scraping of tax exemptions on anonymous donations. The busy MPs and chartered accountants have been meeting senior I-T commissioners and officers in charge of tax exemptions to make them change their stance on the matter.
The MPs will be making further trips to various parts of the country in the next few days. They would be visiting various charitable organisations, like institutions for the blind & deaf, orphanages and destitute & widow homes, to garner support for their cause.
This comes at a time when the government is proposing to make donors pay tax for any donations they offer to religious bodies, while at the same time the income of these religious entities will continue to get tax breaks, subject to certain exceptions. Clearly this should be worrisome for these MPs.
The change of rules regarding anonymous donations had come about in 2006, when the then finance minister P Chidambaram made anonymous donations taxable by framing a new law in the rule books under Section 115BBC of the I-T Act. At that time, he had said that anonymous donations to wholly charitable institutions needed to be taxed at the highest marginal rate, whereas donations to partly religious and partly charitable institutions or trusts could be taxed only if the donation is specifically for an educational or medical purpose. However, donations to wholly religious institutions and religious trusts were not to be taxed.
Before the regulation was passed, charitable institutions and organisations were exempt from paying any tax if they claimed in their I-T returns that they have received secret donations. According to some, this allowed people to donate black money to a trust and then take grants against it, thereby making their black money legitimate.
But the Opposition, as usual, was the first to criticise the amendment. The BJP, even in difficult times, has always enjoyed the support of some well-known spiritual figures and self-styled godmen, many of whom head such trusts. Former BJP president M Venkaiah Naidu headed the Rajya Sabha committee on the petitions and had asked the government not to impose any tax on secret donations to charitable organisations. He had said, "The committee has noticed that people donate for noble causes without divulging their names, irrespective of the source of the donations and it therefore cannot be concluded that every anonymous donation is from unaccounted sources. It is also quite likely that people may donate from their regular income and yet not disclose their identity."
While the lobbying has been going on ever since the 2006 announcement, NGOs and MPs have sent letters to various entities on this matter. In January 2008, various NGOs-which included HelpAge India, AccountAid, Oxfam Trust and National Foundation for India-had sent a letter to Mr Chidambaram, Montek Singh Ahluwalia (deputy chairman, Planning Commission), and Indira Bhargava (chairperson, Central Board of Direct Taxes).
In these letters, these NGOs made the recommendation that the I-T authorities can get details of the anonymous donor from his banker and anonymous donations should not be made taxable as there are a lot of individuals and organisations who would like to remain anonymous while giving for charity. Again, a lot of charitable organisations collect donations through charity boxes at public places where it is not possible to trace every individual donor.
All said and done, the lobbying of the 10-member petition committee has been gaining momentum over the past few days.
From 1st July, there will be no service tax on construction of low-cost housing, power distribution and some other services. However, domestic and international air fares will rise by Rs100 and Rs500, respectively, with the government issuing a notification to bring air travel into the service tax ambit.
Starting next month, there will be no service tax on construction of low-cost housing, power distribution, foreign travellers in transit, those flying to and from the Northeast, services within ports and airports, and certain tournaments and championships, reports PTI.
On the other hand, domestic and international air fares would rise by Rs100 and Rs500 respectively from 1st July with the government issuing a notification to bring air travel into the service tax ambit.
"The notification shall come into force on 1st July," the Central Board of Excise and Customs (CBEC) today said in several notifications related to separate areas issued to enforce the provisions of the Finance Act 2010.
Low-cost housing under the Jawaharlal Nehru National Urban Renewal Mission and the Rajiv Awas Yojana has been exempted from service tax beginning 1st July. The government also exempted certain services that are provided within ports and airports from tax.
"Repair of ships or boats or vessels belonging to the government of India, including the Navy or the Coast Guard or the Customs, but does not include government owned public sector undertakings," the CBEC said as to the services exempted from tax.
Other services within ports and airports that have been exempted from tax are supply of water, supply of electricity, medical treatment, formal education, fire service agencies and pollution control services.
The finance ministry exempted the taxable services provided to any person by another person authorised to distribute power under the Electricity Act 2003 for power distribution. Besides, tax exemption has been allowed to tournaments and championships organised by certain bodies such as national sports federations or federations affiliated to it, School Games Federation of India, Association of Indian Universities and Para-Olympic Committee of India, among others.
The government also exempted foreign travellers from service tax if they are in transit to a different country without passing the immigration and customs area.
People employed or engaged by the aircraft operators in any capacity on board the aircraft have also been exempted.
Further, those flying to and from the North-eastern states-Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Baghdogra (in West Bengal)-have also been exempted from service tax.
However, the finance ministry has postponed the exemption of service tax in relation to transport of specified goods by railroads. The exemption, which was earlier delayed to 1st July from 1st April, has now further been delayed till January, 2011.
The government had proposed in the 2010-11 budget that 10% service tax be charged on air travel aiming at raising Rs600 crore and Rs1,000 crore annually.
It had proposed to expand the scope of air transport services to attract service tax to include domestic journeys and international journeys in any class.
The notification, issued by the Department of Revenue on Tuesday, said that for domestic travel, "10% of the gross value of ticket or Rs100 per journey, whichever is less" would be charged from passengers travelling in any class, business or economy.
For international journey, it would be "10% of the gross value of the ticket or Rs500 per journey, whichever is less, for passengers embarking in India for an international journey in economy class."