The Standing Committee on Finance, headed by former finance minister and senior BJP leader Yashwant Sinha, is of the opinion that the income tax exemption limit should be Rs3 lakh while the DTC Bill has the provision of raising the limit to Rs2 lakh
New Delhi: A key Parliamentary committee on Friday is expected to adopt the crucial report on Direct Taxes Code (DTC) Bill and recommend raising the income tax (I-T) exemption limit to Rs3 lakh from Rs1.8 lakh at present, reports PTI.
The Standing Committee on Finance, headed by former finance minister and senior BJP leader Yashwant Sinha, will discuss the final draft of the report on the DTC Bill during its day-long meeting on Friday.
The committee is of the opinion that the income tax exemption limit should be Rs3 lakh. The Bill has the provision of raising the limit to Rs2 lakh.
The committee, according to sources, wants the government to raise the income tax exemption limit in view of the near double-digit inflation which has eroded purchasing power of rupee.
Finance minister Pranab Mukherjee had tabled the DTC Bill in Lok Sabha in August which was referred to the Standing Committee for scrutiny.
The draft report, prepared by the committee, has suggested categorisation of the home and commercial property for the purpose of income tax. The income from these two sources should accorded different tax treatment.
It wants the government to incorporate provisions to prevent misuse of the facilities and tax relief provided to People of Indian Origin (PIOs).
The DTC, which seeks to modernise the direct taxation system, will replace the Income Tax Act, 1961.
Although the government is unlikely to introduce the DTC from 1 April 2012, as planned earlier, it may incorporate some of the provisions of the proposed law in the Budget for 2012-13, to be unveiled on 16th March.
“If National Iranian Oil Company is to receive payments in India and in rupees, it will be liable to pay income tax as the money it receives would be treated as income,” said B Mukherjee, director (finance), HPCL. But neither NIOC nor Indian refiners want to pay the tax
New Delhi: Indian refiners want exemption from payment of withholding tax to start using a newly agreed mechanism of paying in rupee for the crude oil they buy from the Persian Gulf nation of Iran, reports PTI.
Iran had last month agreed to receive 45% of the over $12.6-billion payments it receives annually from India for exporting about 370,000 barrels per day of crude oil.
“If National Iranian Oil Company (NIOC) is to receive payments in India and in Indian rupee, it will be liable to pay income tax as the money it receives would be treated as income,” said B Mukherjee, director (finance), Hindustan Petroleum Corporation (HPCL), India’s third largest Iranian oil importer.
“The income tax levied is called withholding tax and is 40%,” he said.
Neither NIOC nor Indian refiners want to pay the tax.
“Mostly likely NIOC would not want to pay this high tax and wants HPCL to bear it. We clearly do not want to pay the tax as it will make our imports costlier. I might as well buy oil from somewhere else if this 40% stake is saddled on to me,” he added.
Indian refiners are keen to make payments in rupee as they suspect the current payment route through Turkey may close due to US and European sanctions.
Under the mechanism agreed last month, NIOC will accept 45% of the payments in an account opened in Kolkata-based UCO Bank. UCO Bank has been chosen because it has no US or European exposure and thus would not be impacted by sanctions.
Iran is India’s second largest oil supplier accounting for 12% of its needs.
Mr Mukherjee said Indian refiners currently pay Iran in euros through the Turkish bank, Turkiye Halk Bankasi.
There are apprehensions that Turkey may be forced to stop this after the move by US and the European Union (EU) to ban any entity involved in Iranian oil and gas or petrochemical sectors.
As part of the agreement, a part of the rupee payments will also be deposited in two Iranian private banks, Bank Parsian and Karafarin Bank. These are still not under sanctions that have been imposed on all state-run Iranian banks.
Iran can use the money it receives to buy machinery, metal products, iron, steel, minerals, clothes, fibre, sugar, tea, wood and automobiles from India.
Mr Mukherjee said refiners have not yet started paying in rupee because of the fear having to pay 40% withholding tax. A way out would be for New Delhi to exempt payments to Iran from taxes.
Mr Mukherjee said HPCL which had in the fiscal year ending 31 March 2012 contracted 3.5 million tonnes of crude oil for imports from Iran on a term contract, has signed for import of only 3 million tonnes next fiscal.
“The imports next fiscal will be at current year level...
the term for 2011-12 was for 3 million tonnes plus an option of an additional 0.5 million tonnes,” he said.
Mangalore Refinery and Petrochemicals (MRPL) is the India biggest buyer of Iranian oil at 7.1 million tonnes while Essar Oil buys 5.5 million tonnes. Indian Oi Corporation (IOC) has a term contract to buy 1.5 million tonnes while Bharat Petroleum Corporation (BPCL) could not commence its 1 million tonnes term imports from Iran this fiscal because it could not open an account with Turkey’s Halkbank for payment to NIOC.
Nifty may move in the range of 5,340 and 5,495
The market, which was range-bound and slightly in the negative terrain till the post-noon session today, surged higher and closed in the green on positive news from Europe. As we mentioned yesterday, unless the market makes a lower low, the uptrend is likely to continue. Today Nifty made a higher low and shot up later to hit 5,423. We may now see the index moving in the range of 5,340 and 5,495, subject to it making a higher high and higher low. The National Stock Exchange (NSE) saw a volume of 98.50 crore shares.
The market opened lower tracking weak Asian markets in morning trade as Greek policymakers failed to sew a deal on reforms and austerity initiatives, a requirement for a fresh bailout package in order to avoid a debt default. The Nifty opened down 25 points at 5,343 and the Sensex started the day at 17,648, down 59 points from its previous close. Metals, IT and oil & gas sectors were subdued in early trade.
The indices touched their intraday lows in the first hour itself with the Nifty going down to 5,339 and the Sensex falling to 17,609. The market remained range-bound in the absence of any fresh triggers. The benchmarks made an attempt to emerge into the positive at shortly after 2pm but selling pressure kept the market lower. Fluctuations continued with the benchmarks hovering on both sides of the neutral line in the post-noon session.
The market got its much-needed boost with the key European indices trading with gains of half to one percent in early trade. The benchmarks hit their intraday highs towards the close of trade with the Nifty touching 5,423 and the Sensex surging to 17,879. However, the market pared a small part of the gains at the end of the session. The Nifty closed 44 points higher at 5,412 and the Sensex settled at 17,831, up 123 points.
The advance-decline ratio on the NSE was positive at 1222:564.
The broader indices outperformed the Sensex today, as the BSE Mid-cap index surged 1.27% and the BSE Small-cap index gained 1.18%.
In the sectoral space, BSE Metal (up 2.05%) led the gainers. It was followed by BSE Realty (up 1.95%); BSE Bankex (up 1.85%); BSE Auto (up 1.78%) and BSE Consumer Durables (up 1.28%). On the other hand, BSE Oil & Gas (down0.24%); BSE Capital Goods (down 0.11%) and BSE Healthcare (down 0.03%) settled lower.
Sterlite Industries (up 4.59%); Jindal Steel (up 3.81%); Tata Power (up 3.38%); Bajaj Auto (up 3.30%) and HDFC Bank (up 2.79%) were the toppers in the 30-share Sensex list. The main losers were Sun Pharma (down 1.36%); Hindalco Industries (down 1.31%); DLF (down 1.15%); Bharti Airtel (down 1.13%) and Larsen & Toubro (down 1.01%).
The top gainers on the Nifty were Reliance Power (up 5.20%); BPCL (up 4.61%); Tata Power (up 4.40%); Sterlite Ind (up 4.07%) and Jindal Steel (up 3.88%). The main laggards were Sun Pharma (down 1.92%); DLF (down 1.44%); Grasim Industries (down 1.27%); Hindalco Ind (down 1.09%) and GAIL (down 0.97%).
Markets in Asia settled mixed on Greece’s woes and dismal economic data from within the region. China’s consumer price index rose to a three-month high of 4.5% in January, higher than analysts’ expectations of a 4.1% rise. Besides, Japanese core machinery orders dropped 7.1% in December from the previous month on account of a global slowdown, which impacted exports.
Among the benchmarks, the Shanghai Composite added 0.09%; the KLSE Composite rose 0.78%; the Seoul Composite gained 0.54% and the Taiwan Weighted climbed 0.52%. On the other hand, the Hang Seng was flat; the Jakarta Composite fell by 0.24%; the Nikkei 225 lost 0.15% and the Straits Times settled 0.03% lower. At the time of writing, the key European indices were trading 0.41% to 0.91% higher, ahead of the European Central Bank and Bank of England meetings slated to take place later today. Similarly, US stock futures were trading higher, boosted by the optimism in Europe.
Back home, foreign institutional investors were net buyers of stocks totalling Rs384.24 crore on Wednesday while domestic institutional investors were net sellers of shares amounting to Rs424.46 crore.
Engineering and construction firm Unity Infraprojects today said it has bagged two orders worth Rs485.42 crore from state-run firms HSCC (I) and Rites. The Rs414.15 crore order from HSCC (I) is for redevelopment of buildings, academic block and students hostel for Lady Hardinge Medical College and associated hospitals. The other order, worth Rs71.27 crore, is from Rites for construction of auditorium at the NASC Complex. The stock surged 4.94% to close at Rs46.70 on the NSE today.
Tube Investments has drawn up a Rs200 crore investment plan to set up a tube products facility near Chennai with a focus on the infrastructure sector. The plant, with a capacity of 3,000 tonnes a month, will manufacture hydraulic cylinder tubes for excavation and earth-moving equipment. The scrip gained 0.60% to close at Rs126.50 on the NSE.
Ramky Estates & Farms, part of the Ramky Infrastructure group, said it plans to invest Rs1,700 crore in the markets of Hyderabad, Chennai and Bangalore in the next three to four years. Besides these cities, the realty firm will expand its construction activities in other parts of the country, including Mumbai and Kolkata. Ramky Infra climbed 1.26% to settle at Rs245 on the NSE.