| GAAR has not been put on hold, says MoS finance | |
BS REPORTER
New Delhi, 29 November The finance ministry today said the General Anti- Avoidance Rules (GAAR) had not been deferred. " GAAR provisions have not been put on hold," Minister of State for Finance S SPalanimanickam told the Rajya Sabha in a written reply. Asked whether the decision not to defer GAAR had been taken, finance ministry officials said the Parthasarathi Shome committee's recommendations in this regard were being discussed. Earlier, citing administrative grounds, the Shome panel had recommended GAAR be deferred for three years. " GAAR is an extremely advanced instrument of tax administration— one for deterrence, rather than revenue generation. For this, intensive training of tax officers, who would specialise in the finer aspects of international taxation, is needed," the committee had said. Finance Act, 2012, had said GAAR provisions would be effective April 1, 2014, and would be applied from assessment year 2014- 15. The Shome panel had recommended GAAR be made effective from assessment year 2017- 18. Officials said the government wasn't likely to accept the Shome panel recommendations in toto. It is learnt Finance Minister P Chidambaram has proposed ayear's deferment. A decision on the matter would be taken by Prime Minister Manmohan Singh. It is expected the finance ministry would soon announce the final GAAR guidelines, specifying under what circumstances the rules would be invoked. Most recommendations of the Shome panel are likely to be accepted. | | FDI in retail: Govt, Opposition break logjam in Parliament | |
BS REPORTER,
New Delhi, 29 November In what could be termed a giveandtake understanding, the government and the Opposition parties today broke the four- day logjam in Parliament. The ruling United Progressive Alliance ( UPA) agreed for discussion with voting on foreign direct investment ( FDI) in the retail sector in both Houses, while the principal Opposition party, the Bharatiya Janata Party ( BJP), assured no disruption of normal business. While the discussion in the Lok Sabha has been slated for December 4 and 5, the timing of the debate in the Rajya Sabha will be fixed after consultations with various political parties. As soon as the House convened, Lok Sabha Speaker Meira Kumar allowed the discussion in the Lok Sabha under Rule 184. Confusion, however, prevailed over the debate in the Rajya Sabha and the Upper House was adjourned till noon. The matter was resolved after the government agreed to a similar debate in the Rajya Sabha, clearing the decks for a trial of strength over FDI in retail in Parliament next week. This will be the first such trial of strength in the 15th Lok Sabha. The decision led to an end of the stalemate in Parliament on the issue, which had paralysed proceedings for four days with both the left- and the right- wing parties making acommon cause. After the truce, Finance Minister PChidambaram moved the Bill to amend the Prevention of MoneyLaundering Act, 2002, for consideration and passing in the Lok Sabha. The legislative business of the House also included Home Minster Sushilkumar Shinde to move the Bill to amend the Unlawful Activities ( Prevention) Act, 1967, and minister of state in the Prime Minister's office, VNarayanasamy, to move the Bill to prevent corruption relating to bribery of foreign public officials of public international organisations for consideration. The government is also likely to try and get important Bills, including the Companies Act Amendment Bill, and the pension and insurance Bills, cleared in the current session. Earlier, following an all- party meeting and discussions with UPA leaders, the government signalled its readiness for a debate after Parliamentary Affairs Minister Kamal Nath held consultations with Opposition leaders Sushma Swaraj and Arun Jaitley yesterday. Although the government appears to be in a comfortable situation in the Lok Sabha, the Samajwadi Party ( SP)' s indications that it will vote against FDI in retail in the Rajya Sabha has made the exercise interesting in the Upper House. The government does not have a majority in the Rajya Sabha. The UPA and its allies have a strength of 94 members in the 244- member Upper House. The 10 nominated members might vote with the government. The Bahujan Samaj Party ( BSP) has 15 MPs and the SP, nine. Among the seven independents, three or four might support the government. The BSP, which extends outside support to the UPA, has 15 members and it has said it will disclose its stand on the issue on the floor of the House. In the Lok Sabha, however, the government is in a comfortable position. Both the SP and the BSP are giving support to the government and key ally Dravida Munnettra Kazhagam has also decided to go with it to keep communal forces at bay. The UPA enjoys the support of about 265 MPs in the Lok Sabha, which has a total strength of 545. With the support of the SP ( 22) and BSP ( 21), the backing for the ruling coalition goes beyond 300, against the 273 required. The Trinamool Congress, with 19 MPs, has also expressed its reservations on the Oppositions demand for voting on the issue. UPA government to move ahead with key Bills this session; begins with money laundering amendment legislation Trinamool Congress members stage a dharna at Parliament House in New Delhi on Thursday PHOTO: PTI | | Retail investors can shop for ₹ 10 lakh in REC bond issue | |
NSUNDARESHA SUBRAMANIAN
New Delhi, 29 November Retail investors can buy bonds of up to ₹ 10 lakh in Rural Electrification Corporation's ( REC) proposed tax- free bond issue of ₹ 5,000 crore. This is five times the limit allowed in typical initial public offerings, and the most retail investors can apply in any public issue. Last financial year, in an REC tax- free bond issue, initially, it had allowed retail investment of up to only ₹ 1 lakh. "At least 75 per cent of the aggregate amount of bonds shall be raised through public issue. And, 40 per cent of such public issues shall be earmarked for retail investors," said the draft prospectus. Bankers said these steps were part of the government's efforts to encourage retail participation in the product. Taxfree bonds were introduced in Budget 2011- 12, through which it allowed state- run infrastructure companies to raise long- term debt of up to ₹ 30,000 crore. After the success of these bonds last financial year, Budget 2012- 13 provided for the issuance of tax- free bonds of ₹ 60,000 crore. The REC bond issue, expected to open early December, is the first public issue this financial year. In a draft offer document filed with the Securities and Exchange Board of India last week, the company said to incentivise sellers, brokerage of up to 75 basis points would be paid on retail applications. So, for a single retail application of ₹ 10 lakh, the broker would collect ₹ 7,500. The offer document described retail individual investors ( category IV) as "investors applying for an amount aggregating up to and including ₹ 10 lakh across all series in each tranche issue — resident Indian individuals and Hindu undivided families through a karta." Investors applying for more than ₹ 10 lakh of bonds can bid under the high net worth individuals segment ( category III), in which the incentive for sellers is capped at 15 basis points. Though the coupon rates of these instruments are yet to be announced, experts expect the rates to be about 7.6 per cent for retail investors, while for other classes, the coupon rate would be 50 basis points lower. According to the offer document, the ceiling coupon rate for AA rated issuers would be 50 basis points lower than the reference government security rate for retail individual investors and 100 basis points lower than the reference government security rate for other categories of investors such as qualified institutional buyers, corporate buyers and high net worth individuals." Arun Kejriwal, managing director, Kejriwal Research and Investment Services, said, "The move to increase the limit for retail investors would bring a number of high net worth individuals to the retail category and avail of the high coupon rate. To make optimum use of the retail quota, high net worth individuals can also apply for their relatives and family members." AK Capital, Enam Securities, Kotak Mahindra, SBI Capital and ICICI Securities are the lead managers for the issue. TERMS OF REC TAX- FREE BONDS ISSUE Size: ₹ 5,000 crore Public issue portion: ₹ 3,750 crore Earmarked for retail investors: 40per cent of public issue Tranches: One or more Retail investment limit: ₹ 10 lakh | | Govt receives ₹ 44 cr in 3 years as unpaid dividend by firms | |
PRESS TRUST OF INDIA
New Delhi, 29 November The government today said it had received about ₹ 44 crore from companies holding up unpaid and unclaimed dividends, among others, in the last three years. Of the total, ₹ 20.90 crore has been transfered by companies to the government in the last financial year ( 2011- 12), ₹ 12.18 crore in 2010- 11 and ₹ 10.79 crore in 2009- 10, Corporate Affairs Minister Sachin Pilot said. | | Sebi exempts CARE Ratings from IPO grading process | |
SAMIE MODAK
Mumbai, 29 November The Securities and Exchange Board of India ( Sebi) has exempted rating agency Credit Analysis and Research ( CARE Ratings) from the mandatory grading process before its initial public offering ( IPO), set to hit the market next week. Earlier, the company had approached Sebi, seeking exemption from the mandatory procedure, saying this would have resulted in a rival rating agency gaining access to its books and insider information. "While assigning the IPO grading, the grading agency evaluates the issuer company's business operations. This would imply sharing its business information with a competitor," said D R Dogra, managing director and chief executive, CARE Ratings. Dogra said the company had made all the relevant disclosures pertaining to its business operations, financials and risk factors in its offer document to ensure investors took informed investment decisions. An email sent to Sebi seeking comments on the matter didn't elicit any response. According to Sebi regulations, companies have to secure grading for its offering from at least one credit rating agency registered with the regulator. In May 2007, to increase transparency and disclosures, Sebi had made IPO grading compulsory. Grading is aimed at helping investors assess the fundamentals of an IPO in relation to its peers. An investment banker involved with the CARE Ratings issue said the rationale behind asking for an exemption wasn't hiding information from investors. The company didn't want rivals to know its business strategies, he added. According to people in the know, CARE had suggested its issue be graded, based on information available in the public domain. However, most agencies were unwilling to grade the issue in this manner. | | | | | | | | | | |
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