SAP eyes second slot in Indian IT database management business

Buoyed by growth trends in the last year, global IT firm SAP expects to become the second largest player in the IT database management business in the country in coming years. "We acquired 20 new clients in the first quarter (ended march 31, 2012). From the growth trends that we are seeing, we expect to be No 2 in database business," SAP India Managing Director Peter Gartenberg told reporters here. The company is relatively new in the database management business but expects to catch up fast with its competition, specially in India. "India is among top 4-5 markets where we have to win ... the impact that India has on global market and technology ... we cannot afford to lose," SAP's Global Executive Vice President Steve Lucas said. The company is world's fourth largest player after Oracle, IBM and Microsoft in database business.

Max New York Life clocks Rs 733-cr net profit in FY12

Private life insurer Max New York Life Insurance posted a 159 per cent growth in net profit at Rs 733 crore for the fiscal year 2012 on the back of sales of endowment and money-backed products. The profit was at Rs 283 crore in the year ago period.Gross premium grew 10 per cent at Rs 6,391 crore (Rs 5,813 crore). The renewal premium recorded a growth of 20 per cent at Rs 4,489 crore.During the year, the solvency margin of the company increased to 534 per cent on better reserves as compared to 365 per cent last year. The solvency surplus in FY12 stood at Rs 1,703 crore (Rs 892 crore in FY11). The company sold 5.72 million policies in FY12. “We were the early ones to start long-term savings and protection (LTSP) policy. We have maintained the protection cover mandated by IRDA (Insurance Regulatory and Development Authority) at 10 times the sum assured,” said Ms Anisha Motwani, Chief Marketing Officer, Max New York Life Insurance.

MCA panel seeks tough biz responsibility norms

Companies may now have to inform shareholders about the policies taken by them to tackle the menace of corruption, including bribery. They may also have to inform shareholders of how many complaints they receive, as well as how many they resolve.The committee, constituted by the Ministry of Corporate Affairs, has given its report on implementing business responsibility norms. In the report, the panel has recommended a framework that would direct a company to disclose specific details on all segments of their businesses, including audits and human resources.

Offline bit in online income tax filing to end

The one major irritant in online filing of income tax returns may be eliminated this year. This is the offline process at the end of the online one, where you need to take a printout of what is called the ITR-V form, sign it, and mail it to the I-T department's centralized processing centre (CPC) in Bangalore. Krishna Rao, who has just taken over as the I-T commissioner of the CPC, said the law and information technology ministries were examining the matter, and he was hopeful a solution would emerge soon. It's still not clear though if the new system would be in place by June-July , when the bulk of individual filings happen. In the last fiscal, 1.65 crore returns were filed online, but ITR-V forms of as many as 25 lakh people were not received by the CPC. Many forget to send the forms in the stipulated 120 days; in some cases, these get lost in the post. The I-T authorities need to be absolutely certain about the identity of the person filing the form, which is why it currently mandates a physical signature.

Madhya Pradesh State Civil Supplies Corporation Limited Bhopal

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Link :  http://www.hudco.org/Site/FormTemplete/RFIViewDetail.aspx?id=2297&Flag=TenderDetail

Gold imports fall 32% on strict govt measures

Gold imports to India declined 32.4 per cent in 2011-12, as the government stepped up measures to control the precious metal’s flow into the country, including rises in import duties.A Reuters poll estimated that gold imports to India stood at 655 tonnes in the last financial year, compared with 969 tonnes the year before. In 2009-10, the year which saw a a worsening global economic sentiment, following the collapse of the US investment bank Lehman Brothers in September 2008, India’s gold import stood at 816 tonnes.The decline in the past financial year assumes significance as the Gems and Jewellery Export Promotion Council (GJEPC) has been receiving repeated complaints from its members for non-availability of gold in remote areas. Looking at the growing appetite of Indian consumers for gold, the decline in import may put further pressure on prices.

Easing interest rates may not be an easy task for RBI

Voices forecasting interest rate cuts by the Reserve Bank of India is getting feebler by the day. Indeed, there are odd ones calling for even a rate rise.Slowing economic growth, rising prices, sliding currency and deteriorating government finances may possibly throw up a deadly cocktail - stagflation - a state of low growth and rising prices. If the government takes a leaf out of oil companies' decision last week to raise petrol prices, and follows up with increasing diesel, cooking gas and kerosene prices, inflation rate may jump to double digits making talk of interest rate cut meaningless. Even if economic growth rate falls to multi-year lows the Reserve Bank of India could not ease rates aggressively for fear of fueling inflation, one of the factors that has halted investments. The government does not have the fire power either to provide fiscal stimulus. Complicating decision making is the growing imbalance in the financial system where deposits growth is at a 7-year low. RBI's sale of US dollars to arrest the Rupee slide is sucking out rupees from the system and inflation is eroding savings. Of course, a financial catastrophe if Greece exits the Euro zone could turn the argument in favour of series of rate cuts.

Indian companies paying less for audits

How much did auditors charge companies to certify that their financial records are in order? Just Rs 16 for every Rs 1 lakh of the company's turnover in 2011, suggests a report by the Chennai-based chartered accountancy training centre, Prime Academy. Audit fees are actually down from Rs 17.4/lakh of turnover in 2010 and Rs 18.2/lakh in 2006. That suggests companies are not really paying more for ensuring compliance, despite an increase in the size/turnover of their business over this period. A report, titled ‘Who are India's top auditors and how much do they charge' has considered a sample of 2,332 listed companies that account for 77 per cent of the total market capitalisation of BSE.But sectors that have plenty of compliance issues to tackle appear to be spending more on audit fees. Companies in sectors such as oil and gas, power and transport and communication paid Rs 84 lakh to Rs 1 crore on an average for an audit. Oil and gas emerged as the top paying industry. In all, audit firms charged an average Rs 21 lakh for each audit they undertook in 2011.

Proposal to hike duty on diesel cars on card

Amid widening price difference between petrol and diesel, the Finance Ministry is looking at the possibility of raising excise duty on diesel cars, a suggestion which was mooted long back by the Oil Ministry. "Hiking excise duty on diesel cars is still on the agenda. It was not taken up during the Budget. It will take some time. It will happen," a Finance Ministry official said. To discourage consumption of subsidised diesel by personal vehicle owners, the Petroleum Ministry had suggested imposition of higher duty on purchase of diesel cars. While the Petroleum Ministry has been asking for a hike in the excise duty on diesel cars, the Heavy Industries Ministry is opposing the move. The Oil Ministry has argued that the additional amount garnered can be used to make good a part of the loss that fuel retailers incur on the sale of diesel at government-controlled rates.

Transfer pricing revenue to rise Rs 3,000 cr in 2013-14

With the Finance Act bringing domestic transactions under the transfer pricing scanner, income tax revenue is expected to rise by Rs 3,000 crore in 2013-14, said tax authorities.“We will start looking at domestic deals for the first time this financial year. We expect 50 per cent of domestic companies to be affected by this, increasing the revenue of the income tax department by Rs 3,000 crore,” said a Mumbai based senior income tax official.Transfer pricing adjustments in 2007-08 stood at about Rs 1,600 crore, increasing to Rs 44,500 crore in 2011-12. Earlier, transfer pricing was applicable on companies with cross-border operations. However, from this financial year, the finance minister has brought domestic firms and transactions into the net.

Black money cases: Income Tax department forms lawyer teams for prosecution

The Income Tax department has initiated a special country-wide exercise to engage a battery of lawyers for fighting black money cases and filing prosecution in a host of other tax evasion cases.Finance Minister Pranab Mukherjee, in his white paper on black money tabled during the recently concluded Parliament session, had said that "to facilitate the launch of prosecution in cases of evasion of taxes and speedy trial and early conclusion, provisions for constitution of special courts, summons trials, and appointment of public prosecutors have been included" as part of the multi-pronged strategy to combat the menace.

Demands on IT companies to be relaxed by the Income-Tax department?

There is a flicker of hope for Indian software companies battling a barrage of claims from the Income-Tax Department. In the last few days, the Central Board of Direct Taxes, an arm of the finance ministry, has asked tax offices in cities where the software firms are based to share their views and details on tax notices served on these companies. The board is taking a relook at the tax demands and may come out with a clarification that is expected to soften the tax blow on many software companies, including some of the big names in the Indian IT industry, a tax official told ET. In the last two years, several software companies came under tax scrutiny as assessing officers argued that tax exemption cannot be claimed by companies for 'body shopping' deals as well as on earnings from exporting software that was not developed within software technology parks (STP), export-oriented units (EoU) and special economic zones (SEZs).

Dressing up a forex gain

Accounting for changes in the foreign-exchange rate is a sore point for many corporate entities, as rate movements pose several challenges. To make it worse, Indian GAAP principles tend to be nebulous and conflicting.Consider, for example, a company holding an investment in a US subsidiary. To hedge this investment against foreign-exchange risks the company takes a dollar forward contract, which it rolls forward each year under a documented hedging strategy. In accordance with the accounting standard AS-11 — The Effects of Changes in Foreign Exchange Rates, the forward premium is amortised over the life of the contract.Exchange differences on the forward contract are recognised in the profit-and-loss statement. However, investment as a non-monetary item under AS-11 is not re-valued and is stated at historical cost. This would result in an accounting mismatch as the P&L recognises gains and losses on the forward contract but not on the investment.

Source: Hindu Business Line

Power cos may be pushed to hike tariff

As many as 18 upcoming power projects with an aggregate capacity of over 25,000 MW might be forced to violate their tariff commitments and seek a much higher price from consumers. This is because the coal ministry has rejected a request from the developers of these projects for assured coal linkages and they might have no other option but to resort to the open market for fuel. The projects to be affected include Essar Power’s Mahan, Adani’s Tiroda and GMR Energy’s Kamalanga stations. With no “tapering coal linkage” in sight, the developers of these projects won’t have the option of getting coal at (lower) notified prices from Coal India (CIL) until production commences at their captive mines.

Source:  Financial Express

India to remove 'undue' export subsidies to textile industry

The US, EU, Japan and Turkey are pushing India for dismantling its 'undue' export subsidies to the textile industry, but New Delhi is keen on further talks to temper the phase-out and to ensure that the key export sector is not stripped of all support."Yes, we indeed will have to take away some export subsidies given to textile industry in three years as the threshold level for qualifying for such sops has been breached. But, the country will be careful to ensure that it takes away only what necessarily has to be taken away," a senior commerce department official told ET.The subsidies and countervailing measures agreement of the World Trade Organization (WTO) allows countries with per capita income below $1,000 to give export subsidies as long as exports from a particular sector is lower than 3.25% of world trade. India's share in the global market for textiles is almost 4% and has been higher than the threshold level for five years.Since countries are given eight years to remove the subsidies, India has time till 2015 to do so."The government needs to carefully negotiate what kind of subsidies need to go as the textile sector gets a number of subsidies that are not directly targeted at it, but is given to all industry in general," points out DK Nair, secretary general, Confederation of Indian Textile Industries.

Source: ET

Irda bans products with highest NAV guaranteed

The Insurance Regulatory and Development Authority (Irda) has asked life insurers to stop selling highest net asset value (NAV)-guaranteed products.In a recent communication to all life insurers, the regulator has said, “The marketing of products labelled as highest NAV product shall not be allowed”. These products contribute almost 20 per cent to the total premium collection of life insurers.Irda, in the past eight months, had informally expressed its discomfiture with such products at several fora. The regulator’s argument was that such products led to systemic risks associated with the way funds were managed and posed the risk of a heavy sell-off in equities when stock markets fell. Highest NAV-guaranteed products are those that promise to pay the highest value the fund achieves during a certain period, say, five or seven years. However, to maintain that NAV consistently, insurers have to take risks by investing in stocks aggressively. That could lead to undue risks.

Source : Business Standard

Mauritius structures — gazing through a crystal ball

Mauritius has been a popular location for intermediary holding companies for multinationals and others investing in India. This popularity is due to several factors including the capital gains tax exemption available under the India-Mauritius Tax Treaty. The treaty, which had underpinned the emergence of Mauritius as the dominant channel for foreign direct investment into India, has been under constant scrutiny by Indian tax authorities as a result of alleged abuse by investors.In the past, a circular issued by the Central Board of Direct Taxes that allows tax treaty benefits based on a valid Tax Residency Certificate (TRC) of Mauritius, and the Supreme Court ruling (in the case of Azadi Bachao Andolan 263 ITR 706) upholding the validity of the circular, had provided a reasonable level of certainty to taxpayers. With a series of high-profile court rulings, including one from the Authority for Advance Rulings (in the case of E*Trade Mauritius Ltd 324 ITR 1, where it was observed that the legal structure of the Mauritius company cannot be disregarded and legitimate tax planning was permissible), it seemed as if the status quo was restored on the use of the tax treaty.

Source: Hindu Business Line

Life insurance firms get relief; to be out of MAT regime

The Finance Ministry has withdrawn its proposal to bring life insurance companies under the Minimum Alternative Tax (MAT) regime.Had this provision been adopted by Parliament, life insurance companies would have had to pay MAT at the rate of 18.5 per cent. However, the existing provision prescribes income-tax to be payable at the rate of 12.5 per cent and that too after accumulated loss is wiped out. This, with the amendment in the Finance Bill 2102, will continue.The Finance Minister, Mr Pranab Mukherjee, in a list of amendments to the Finance Bill, said that the provision (amendment to section 115JB of the Income-Tax Act) will not apply to any income accruing or arising to a company from life insurance business.Mr Sunil Jain, Partner, J Sagar Associates, says, “Removal of MAT on income from life insurance business will help players plan their cash flows better given that MAT does impact their cash flows. A positive news for a sector awaiting increase in limits of FDI for years.”

Source: Hindu Businessline

Money-laundering law: Rigorous jail, hefty fines await tax offenders

Tax evaders could be in for trouble as the government is mulling placing tax crimes on a par with money laundering offences that have severe criminal and financial implications. India could bring income-tax offences under its anti-money laundering law, making way for easier prosecution, rigorous imprisonment, fines and shifting onus on the accused to prove he is not guilty."An inter-departmental group has been set up to examine the changes required," a senior finance ministry official told ET.The group's recommendations could then be placed before Parliament and changes made to the Prevention of Money Laundering (amendment) Bill, 2011.The offences will include concealment of income, failure to deposit tax deducted at source and false evidence.These changes are consistent with a global plan drawn up by the Finance Action Task Force, an inter-governmental body to combat money laundering and terror financing, of which India is a member.Many countries have already incorporated these offences in their money laundering laws even though the FATF adopted them as part of new standards in February this year.If these offences become scheduled offences under the anti-money laundering law, they will attract rigorous imprisonment of three to seven years and a fine of up to 5 lakh. A proposed amendment to PMLA has suggested open-ended penalty, to be decided by courts, as opposed to a maximum of 5 lakh fine now.

Source : ET

Shapoorji Pallonji, New Vernon to sell stakes in 3 IT Parks for Rs 2000 crore

Shapoorji Pallonji Real Estate and PE fund New Vernon are selling their investments in three Information Technology (IT) parks in Chennai, Pune and Gurgaon for a cumulative value of 1,500-2,000 crore, a person directly involved in the transaction told ET."They have been in the market for some time now. Shapoorji holds 26% stake in these parks while the remaining is held by PE fund New Vernon, which it picked up in 2006," said two investment bankers, requesting anonymity.A Shapoorji Pallonji spokesperson did not respond to an email query sent by ET. Repeated phone calls to New Vernon went unanswered.The real estate arm of Shapoorji Pallonji Group has a chain of IT parks in special economic zones, called SP Infocity, across locations such as Nagpur, Gurgaon, Manesar, Mohali, Kolkata, Chennai and Mysore.Shapoorji Pallonji Real Estate is currently building a 2.70 million sq ft IT park in Chennai, which is being developed in two phases. The first phase, spread over 950,000 sq ft, has been completed and is being leased to firms such as HSBC, Amazon and Saksoft.

Source: ET

Treasury Sells $5 Billion of AIG Stock in Third Offering

The U.S. Treasury Department agreed to sell $5 billion of shares in American International Group Inc. in a stock offering, with the bailed-out insurer buying $2 billion of the total.The Treasury is selling 163.9 million shares at $30.50 each, compared with the May 4 closing price of $32.83, the department said in an e-mailed statement yesterday. The transaction, the government's third offering of AIG's shares since last May, reduces the Treasury's stake in the insurer to 63 percent from 70 percent, according to the statement.Chief Executive Officer Robert Benmosche, 67, has sold assets to help raise funds to buy back shares from the U.S. The company said in March that dividends from insurance subsidiaries along with proceeds from divesting a plane-leasing unit, a stake in Hong Kong-based AIA Group Ltd. and other holdings will allow it to generate as much as $30 billion that could be returned to shareholders by the end of 2015."The company has been able to monetize sales of non-core assets and we expect this to continue for the longer term," JPMorgan Chase & Co. analysts led by Arun Kumar said in a note to clients May 4, before the sale was announced.

Source: Sfgate

Inter-ministerial group on Vodafone deliberates on its notice; holds issue not covered under BIPA

The inter-ministerial group (IMG) constituted to respond to Vodafone's arbitration notice held that the issue of taxation was out of the ambit of the Bilateral Investment Protection Agreement (BIPA) between India and Netherlands. "Taxation does not come under BIPA. Money for deal came from over 20 companies (which are subsidiaries of Vodafone) ... We will meet next week again," said an official after attending the first meeting of the IMG. The government had set up the IMG to formulate India's response to the notice given by the British telecom giant under bilateral investment treaty on the proposed retrospective change in the finance bill that would make all overseas indirect transfers with and underlying Indian asset taxable in India. The group, headed by finance secretary R S Gujral, includes representatives of the ministries of external affairs, telecom, law and revenue. "Today's meeting was a preliminary one. The IMG will meet again before finalising the response," the official said. The Dutch subsidiary of UK-based telecom major Vodafone had last month served a notice on the Indian government invoking the BIPA. 

Source : ET