SEBI, MFs want tax benefit for equity-linked schemes in DTC

New Delhi: The Securities and Exchange Board of India (SEBI) and mutual fund (MF) houses have asked the finance ministry to continue with the tax benefits on equity linked schemes (ELSS) in the Direct Taxes Code (DTC), which will replace the existing Income Tax (IT) Act, reports PTI.

The revised DTC draft, based on which the government is finalising the bill, has proposed to do away with the tax benefits available to people investing in the ELSS.

Under the IT Act, investments up to Rs1 lakh in the ELSS and dividends accrued on them are exempted from tax.

Besides, there is no long term capital gain tax on withdrawal of the funds after the three-year lock-in period.

Sources said SEBI and the mutual fund industry have written to the finance ministry to continue with the current exemption, as the industry is witnessing redemption pressure post the entry-load ban, a type of agent commission that was charged from investors.

During July, the industry saw Rs139 crore withdrawal from the ELSS portfolio, and till July the redemption was to the tune Rs349 crore.

Sources said retail investors benefit from investment in ELSS and SEBI wants that ELSS schemes continue to enjoy tax deduction.

After banning the entry-load, since August 2009, this is the first time that the market regulator has sought some benefit from the finance ministry.

Currently, ELSS comes under a method of taxation called EEE — wherein it is exempted at the points of investment, in the entire tenure of the investment and as well at the time of withdrawal.

The draft DTC does not include ELSS as one of the instruments, which will be subject to EEE mode of taxation.

Currently there are over 40 ELSS schemes in the market.

During the last fiscal (2009-10), the MF industry sold ELSS units of over Rs3,000 crore.


SEBI rejects RIL's consent appeal on insider trading issue

New Delhi: The Securities and Exchange Board of India (SEBI) is believed to have turned down any out-of-court like settlement sought by Reliance Industries (RIL) in the ongoing probe relating to alleged insider trading in shares of erstwhile group firm Reliance Petroleum Ltd (RPL), reports PTI.

Sources said that a final order could be made soon in this case by SEBI, which has rejected twice RIL's request for settling the case by paying a consent fee — an out-of-court settlement like resolution reached through negotiations between the two parties.

When contacted, an RIL spokesperson declined to comment on whether its requests have been rejected by SEBI for settling the matter through payment of consent fees.

The investigation into Mukesh Ambani-led RIL relates to alleged violation of insider trading norms way back in 2007 in the dealings of shares of now-delisted subsidiary RPL.

Market leader RIL's shares have been under pressure for nearly a month now amid speculations of an imminent SEBI order and have lost over 10% in value. Despite a gain of about a percentage point today, the stock continues to remain below Rs 1,000 mark. It closed at Rs 988.15, up 1.16%.

Sources said that RIL, in its second consent settlement request, offered a substantial increase to its earlier consent fee offer of Rs2 crore in November, 2009. But, the market regulator is said to have assessed the illegal gains from the alleged insider trading at over Rs500 crore and found the offered consent fee too less in comparison.

Incidentally, the capital market regulator would also hear on 3rd September a case related to alleged violations in the market dealings of two Anil Ambani group companies — Reliance Infrastructure Ltd (R-Infra) and Reliance Natural Resources Ltd (RNRL).

The two ADAG firms, along with some top group executives including chairman Anil Ambani, have been issued notices by SEBI in this regard and have been asked to appear for personal hearing on 3rd September. The case is believed to be related to transactions in 2007.

Interestingly, the SEBI probe on RIL also relates to transactions conducted in the year 2007, when it allegedly violated insider trading norms in dealings of shares of RPL.

The investigations into both the cases started on the basis of anonymous complaints received by SEBI.

A subsidiary of RIL, RPL was merged with the parent last year and subsequently delisted from the stock market.

SEBI had begun quasi-judicial proceedings against RIL after it found violations to insider trading regulations pursuant to its investigation in the trading pattern in the RPL stock for the period between 1 and 29 November, 2007.


Infra sector debt gap of over Rs1.62 lakh crore in 11th Plan

New Delhi: There is a debt funding gap of over Rs1.62 lakh crore in infrastructure financing for the current 11th Five Year Plan but the government has no plans to channelize foreign savings in the sector, reports PTI.

"There is...a funding gap of Rs1,62,496 crore or $40.62 billion in the debt component (for financing infrastructure)," minister of state for finance Namo Narain Meena told the Lok Sabha in a written reply.

He said that according to the projections of the Planning Commission, the total requirement of debt for infrastructure financing, both public and private, during the 11th Plan is likely to be Rs9,88,035 crore or $247.01 billion.

Of this, debt financing available has been estimated at Rs8,25,539 crore or $206.38 crore.

The minister said there is no proposal for using foreign savings in the infrastructure sector.

"The government has no proposed dedicated debt funds to channelize foreign savings into the infrastructure sector," Mr Meena said.

However, he added that a concept paper on setting up an India Infrastructure Debt Fund has been submitted by a committee constituted by the Planning Commission under the leadership of HDFC chairman Deepak Parikh.

Replying to another question, the minister said that the government has approved a Rs626 crore scheme for computerisation of state treasuries.

"The scheme, to be implemented in about three year beginning 2010-11, would support states and union territories to fill the existing gaps in their treasury computerisation, upgradation, expansion and interface requirements, apart from supporting basic computerisation," Mr Meena said.

The project is intended to bring more efficiency to the budgeting process and improve cash flow management, besides bringing in transparency in the public delivery systems of states and union territories, he added.


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