HDFC Bank to slash lending rate by 0.2%

HDFC Bank has decided to cut its benchmark lending rate by 0.2 per cent, making loans cheaper for borrowers.The base rate, or the minimum lending rate, of HDFC Bank will become 9.8 per cent from the existing 10 per cent, sources said.At the same time, the benchmark prime lending rate (BPLR) of the country's second largest private bank is expected to be slashed by similar percentage points to 18.30 per cent.The new rates would be effective from tomorrow, sources added.HDFC Bank has become the first bank to cut lending rate after RBI's mid-quarter review of monetary policy which kept all policy rates unchanged earlier this month.While the short-term lending rate (repo) has been kept unchanged at 8 per cent, the CRR, portion of deposits banks are required to park with the RBI, will be 4.75 per cent.

Gold rallies 3% as EU summit boosts confidence

Gold prices rallied 3 per cent on Friday and were on track to end June with their first monthly rise in five as a deal to shore up banks and cut borrowing costs at a European Union summit sparked a surge in assets seen as higher risk. Euro zone leaders agreed to take emergency action to bring down Italy's and Spain's spiralling borrowing costs and to create a single supervisory body for euro zone banks by the end of this year, a first step towards a European banking union. The news sparked a sharp rally in European shares, a 1.9 per cent jump in the euro versus the dollar, and a near $4-a-barrel gain in oil prices. Spanish and Italian government bond yields fell, and safe-haven German Bunds slid. "The news has been positive for the euro and positive for confidence in general, which means that equities and commodities, including gold for the time being, have all received a shot in the arm," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said. 

Source: Economic Times

Education cess on service tax to continue under new regime

The education cess on service tax will continue to be imposed even after the switchover to the negative list system.The Joint Secretary (Tax Research Unit) of the Central Board of Excise and Customs, Mr V.K. Garg, in a letter to all Chief Commissioners of Excise and Customs, clarified that a new notification and new order, issued on Friday, will validate the continuation of education cess on Service Tax.“Any board circular that is contrary to the revised law will stand automatically superseded,” he added.But exporters will have no problem in getting exemption from service tax on payments to commission agents abroad. At the same time many new services such as train travel by air conditioned class will attract service tax from July 1.The Government has introduced the concept of negative list which will replace the system of positive list, which was in operation since 1994.

Source: The Hindu Business Line

GAAR may not apply to Singapore, Mauritius investments

Investors coming via Mauritius and Singapore may breathe easy, as the provisions of the General Anti-Avoidance Rules (GAAR) may not apply to their transactions. The government will also spare those foreign institutional investors (FIIs) who route their investments through tax havens, and are genuine residents of tax havens. To end uncertainty, a clarification will also be issued on retrospective amendments.A decade-old circular that prohibits the tax department from probing the veracity of a person claiming to be a resident of Mauritius to avail of treaty benefits may not be withdrawn. Earlier, the finance ministry was planning to withdraw it or provide a clarification that GAAR would override circular 789.

Source: Business Standard