I-T dept plans to accept refund applications at ATMs

After tying up with banks for providing tax deducted at source (TDS) details through internet banking and payment of tax at ATMs (automated teller machines), the income tax department is planning to take the convergence of banking and tax services to the next level.

The department plans to give taxpayers the facility of applying for tax refunds and tax credits through ATMs.

Taxpayers will also be able to check the status of their refund applications at ATMs. They will also be able to spot mistakes they may have made while filing for refunds/credits.


In future, taxpayers may also be allowed to file returns through the banking channel.

“The revenue department plans to expand collaboration with banks. Taxpayers will be able to apply for refunds and get them through ATMs. They may also be allowed to file returns through ATMs. The idea is in initial stages, but some Nordic countries such as Sweden have already implemented it,” a finance ministry official told Business Standard.

The department expects these measures to increase tax compliance and collections, besides making the interface between the government and taxpayers more efficient and transparent.

For this, the department is ramping up its information technology (IT) infrastructure. The finance ministry has approved the setting up of two special purpose vehicles. One is called the National Information Utilities (NIUs) and will handle IT aspects of the Goods and Services Tax. The second is called the Tax Information Network. While the government will concentrate on policy formulation and enforcement, the NIUs will focus on implementation of IT systems.

The revenue department has already allowed banks to display Form 26AS of taxpayers on their internet banking portals.

Form 26AS is a consolidated statement of a financial year and has details of TDS, tax collected at source and advance tax/self-assessment tax/regular assessment tax deposited in the bank. It also includes refunds received during a financial year. The form is available only from assessment year 2005-06.

The facility of paying income tax through ATMs, launched earlier this year, is being provided by many banks, including Oriental Bank of Commerce, Union Bank of India, Corporation Bank and Axis Bank. Most were already accepting tax payments at their branches and portals.


Source: Business Standard

Govt set to make diesel and LPG more expensive

With Assembly elections over and the latest increase in petrol prices almost two weeks old, the government is set to make diesel, kerosene and domestic LPG more expensive.

The Ministry of Petroleum and Natural Gas has made a case for increasing the prices of these three fuels. This even as the government has said its growth target for the year will not be met because of inflation pressures.

An empowered group of ministers (EGoM) on fuel would meet on June 9 to decide the quantum of increase, said a senior ministry official.

TOUGH TIMES
Product	Increase in June last year	Current price in Delhi	Current under-recovery
Diesel	Rs 2/litre	Rs 37.75/litre	Rs 16.49
Kerosene	Rs 3/litre	Rs 12.32/litre	Rs 29.69
Domestic LPG	Rs 35/cylinder	Rs 345.35/cylinder	Rs 330.00

Rs 15.44/litre (or 32.21%) Rise in petrol price since June 25, 2010, when the fuel was decontrolled	$85.09/barrel Average price of Indian basket of crude oil in FY11	$110.55/barrel Current average price of crude oil
Source-Indian Oil, Petroleum Planning and Analysis Cell

These three products have a combined weight of 6.32 per cent in the wholesale price index, which rose 8.66 per cent in April. The weight of diesel, used in transportation, is a substantial 4.67 per cent. The latest increase in petrol prices by Rs 5 a litre has not started reflecting in the inflation data yet.

The petroleum subsidy bill of the government jumped 70 per cent in the last financial year to Rs 78,159 crore. This forced the government to increase the subsidy burden of upstream oil companies (ONGC, OIL and GAIL) from one-third to 38.76 per cent. “The subsidy burden of these companies may be back to one-third from the current financial year,” said the official.

At Rs 23,640 crore, the government has underestimated its petroleum subsidy bill for the current financial year. With revenues already under pressure, the fiscal deficit target of 4.6 per cent of the gross domestic product may not be met.

“Price of diesel, LPG and kerosene will have to go up (to cover the rise in crude oil prices). What EGoM has to decide is by how much,” said the official.
The last increase in prices of these products was in June last year, when crude oil was around $72 per barrel. Crude oil has averaged $110.55 a barrel this month. In June 2010, diesel prices were increased by Rs 2 per litre, kerosene by Rs 3 per litre and LPG by Rs 35. A similar increase is likely this June as well.

At present, government oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — lose Rs 16.49 on every litre of diesel, Rs 29.69 on every litre of kerosene and Rs 330 on every LPG cylinder that they sell. At this rate, their annual loss for the current year will be Rs 180,000 crore, more than double compared to Rs 78,159 crore in 2010-11.

On May 14, these companies raised petrol prices by Rs 5 per litre to Rs 63.37 per litre. Even though petrol has been decontrolled since June last year, they have not been able to pass on the full increase in input costs.

Source : Business Standard

FIIs shun big IT stocks; raise stake in mid-cap cos on attractive valuations

Foreign funds have taken a fancy for Indian mid-cap information technology companies due to attractive valuations and strong revenue growth potential. Overseas investors have raised stake in midcap IT companies in fiscal 2010-11, while mostly trimming holdings in large-caps, according to data compiled by ET Intelligence Group. Mid-caps in which foreign institutional investors have more than doubled stake during last fiscal include Polaris Software, Subex, Glodyne Technoserve, and KPIT Cummins.

They have also significantly raised stake in Persistent Systems , e-Clerx, Redington India and NIIT Technologies . During the same period, large-caps including Infosys and Wipro experienced fall in FII ownership, while TCS saw foreign fund stake remaining steady. The preference has been clearly for companies with strong revenue growth potential, offering niche services that enable them to maintain margins, and reasonable valuations.

"Even within mid-caps FIIs have increased exposure to companies with revenue growth and margin expansion visibility or companies with proven track record in the past four quarters which can lead to price-to-earnings multiple re-rating," said Pankaj Pandey, head of retail research with ICICI Securities. Large-cap IT companies are trading near peaks with forward multiple of 22 times fiscal 2011-12 earnings, Pandey said. This along with lack of fresh triggers leaves limited room for upside in near term.

On the other hand, institutional interest in tier-II companies has increased due to expectations of above-industry growth rate. Also, in terms of valuations many of the mid-caps are trading at significant discount to their peers. There are companies in the mid-cap space that have invested during the slowdown and are better placed to take advantage of the changing scenario, analysts said. Foreign funds have raised stake in Subex to 19.89% from 11.80% in last fiscal. Subex, which offers solutions to global telecom companies, had order book of $92 million at the end of 2010-11, up 45% from a year ago.

It reported sustained improvement in profitability over the past six quarters helped by nonlinearity of business model, where incremental revenues are not completely dependent on addition of employees. Mid-cap IT companies have not rallied post-recession as large companies gained market share of existing outsourcing contracts that further led to increased poaching within the sector, analysts said. This affected revenue growth of mid-sized companies. Some analysts sounded a word of caution on mid-cap IT firms due to high attrition rate as they cannot match the pay packages of their larger peers.

Source : ET

Petrol prices to rise again by 40 paise, diesel 12 paise; dealers to get more

Petrol will be costlier by 40 paise again after it witnesses a substantial hike of 5 a litre last week and diesel will cost 12 paise a litre more as the oil ministry has decided to raise the commission for petrol pump owners, who say their operations are not viable with the current margins.

"The oil ministry has approved raising dealers' margin and a formal order will be issued soon," a senior government official said requesting anonymity.

Oil ministry officials confirmed that dealers' margin in petrol has been raised by about 33% and diesel by 16% but could not indicate a date for implementing new rates. Pump dealers at present get 1.21 a litre on petrol and 0.76 a litre on diesel.

Margins could be revised when diesel prices would be raised after an Empowered Group of Ministers' (EGoM's) meeting expected soon, they said.

The empowered panel, chaired by finance minister Pranab Mukherjee , was scheduled to meet on May 11, but the meeting was deferred due to pre-occupation of Mukherjee in the West Bengal election. Officials anticipate that the panel would now meet after an impending cabinet reshuffle expected next week.

Meanwhile, over 38,700 dealers across the country are getting impatient as oil companies are raising fuel rates without paying attention to their concerns.

"Regional associations have written to us that they would resort to 'no-sale no-purchase' if margins are not raised immediately," Federation of All India Petroleum Traders (FAIPT) general secretary Ajay Bansal said. FAIPT is an apex body of regional dealers' association.

Bansal blamed oil companies for ignoring their demand. "I'm thankful to the petroleum ministry for revising our commission. But oil companies' should have also raised our margins when they were raising petrol prices by 5 last week," he said.

Chairman of a state-run oil company expressed ignorance about the commission issue. "The ministry has not told us anything about this margin," the chairman, who did not wish to be named, said.

Dealers have been demanding an increase in their commission for the last eight months. After they threatened to go on an indefinite strike from September 20, 2010, the government formed a committee to determine their fair margins.

The committee turned down dealers' demand of raising their margin by 5% of the sale value and recommended a moderate hike of commissions by 40 paise a litre for petrol and 12 paise for diesel. The ministry recently approved the committee's recommendation.

Dealers recently met petroleum minister Jaipal Reddy to demand a higher commission.

"The cost of operations has gone up dramatically and we want the ministry to increase our margins. The ministry has already appointed a committee that has recommended commission revision. We want the ministry to grant its approval at the earliest," said AIPDC convenor Arvindbhai Thakkar, who met Reddy last week.


Source: ET

Investors lose big money in 9 of 12 IPOs this year

The current weak market conditions have taken a heavy toll on investors of initial public offering (IPO). Of the 12 IPOs that closed this year and have been listed, investors of only three are still in the black. The combined loss to investors in the nine loss-making public offers is over Rs 2,100 crore, or nearly 19%, data from NSE and BSE showed. In the three IPOs in which investors have made money, the combined gain is about Rs 433 crore.

So far in 2011, IPO investors have made money in three offerings-Midvalley Enetertainment, Sudar Garments and Lovable Lingerie-in which appreciations have been 72%, 61% and 51% respectively. On the other hand, they have lost money in nine IPOs, including highly publicized ones like Muthoot Finance and Future Ventures , besides one from the PSU stable-PTC Financial Services. The biggest lossmaking IPO so far in the year has been Acropetal Technologies , where the stock has lost 72% from its IPO price of Rs 90 to its current price of Rs 25, its all-time low. Incidentally, within two weeks after the stock was listed, it had peaked at Rs 156, but since then it has been on a downhill journey.

Market watchers said that of late, due to weak market conditions, while good companies are deferring their plans to go public, littleknown companies are hitting the market. "Quality of the offerings is definitely an issue in these offerings," said an industry analyst. One indication about the quality of the offerings is that of the 12 IPOs which have been analysed for post-listing returns, none had the highest, that is 5 out of 5, IPO rating. Only two-PTC Financial Services and Muthoot Finance--had ratings of 4, while most had 2 or 3 ratings and three IPOs even had 1 out of 5 ratings, that is the lowest grade. These gradings are given credit rating agencies like Crisil , CARE and Icra


Source: ET

100 Infosys shares for 9.5K in 1993 now worth 4 crore

The country's second largest tech player Infosys Technologies has a shareholder base of 4,50,000. The company has paid a cumulative dividend of Rs 11,623 crore to these investors, says the company's annual report for fiscal 2010-11.

The journey that started with a measly capital of Rs 10,000-pooled by spouses of founders-has evolved into a balance sheet of Rs 26,000 crore with $3.8 billion in cash equivalents.

Its shareholders have grown their wealth in multiples. For instance, 100 shares issued in the IPO in 1993 at Rs 9,500 have multiplied into 12,800 shares valued at Rs 4.15 crore as on March 31 this year, indicating a compounded growth rate of 59%.

By March 31 1992, employees owned 13.6% of shares of the company. The employee stock option plan was introduced in 1994 and as of now, the company has given stock options worth Rs 50,000 crore to employees.

"I do not know of any Indian company that has given away as much as Rs 50,000 crore at current stock prices of stock options to employees. Today, every Indian employee at every level who joined us on or before March 2010 is a stockholder of Infosys," wrote Murthy in the annual report.

"Employees are our vital and most valuable assets. We have created a favourable work environment that encourages innovation and meritocracy ," the report says. Infosys added 17,024 (net) and 43,120 (gross) employees in 2010-11 taking their employee strength to 1,30,820. The company today has over 620 clients, 6,500 projects and 64 sales offices and 63 development centers spread across 75 cities in 32 countries.

Infosys also stresses on intensive levels of training for employees. During the financial year the total training provided to employees stood at over 1.5 million person days. The company also launched programmes to enhance the business competency of employees. The company has strengthened its campus connect programme aimed at building industryacademia connect.

Source : ET

After the crash, will silver phoenix rise again?

Silver prices are down to around $35 per ounce (1 troy ounce equals 31.1 grams) in international markets after touching a high of $49.845 per ounce on April 25, 2011.

This price was the highest since January 1980, when the white metal touched $50.35 per ounce.

So what are the immediate reasons for this fall in price of around $15 per ounce?

Rumours on Wall Street have it that George Soros, the famed hedge fund
manager, is selling his positions in gold and silver.

The Wall Street Journal reported: “George Soros’s big hedge fund, a firm operated by high-profile investor John Burbank and some other leading firms have been selling gold and silver, according to people close to the matter, after furiously accumulating precious metals for much of the past two years.”

Soros Fund Management had been buying silver to protect against the possibility of deflation (or the prospect of falling prices). “But now the $28 billion Soros firm...believes chances of deflation are reduced,” says the Journal. And so they are selling out.

Other than Soros, Mexican billionaire Carlos Slim is also rumoured to be selling silver futures as a hedge. These rumours have had a negative impact on the price of silver.

The minimum amount of cash or margin that needs to be deposited with brokers in order to trade silver futures at the Chicago Mercantile Exchange (CME) has been increased significantly. From today, investors will have to pay $21,600 per contract to trade silver futures on the margin.

That’s up from $8,700 required before April 25, 2011, when silver touched a high of $49.845. The current margin is $16,200 per contract.

How does an increase in margins impact the price of silver? Investors who are trading on the margin must get out of their positions if they can’t pay up the higher margin required. This in turn leads to a fall in price.

Let us understand this through an example. One silver contract on CME is standardised at 5000 ounces of silver. Prior to April 25, 2011, when silver touched a high of $49.845, the margin required to trade silver on the CME was $8,700 per contract.

Let us say an investor trading on the margin picked up one contract of silver at $46 per ounce. The position would be worth $230,000 ($46 x 5000 ounces). Of this, the investor’s equity would be $8,700, or the amount he has paid as the margin.

Now, let us say the price of silver goes up to $50 (it did not go beyond $49.845, but I am assuming $50 for ease of calculation). At this point, the investor’s position is worth $250,000 ($50 x 5000ounces). His equity increases to $28,700 ($250,000 - $230,000 + $8,700), so all is well.

At nearly $50 per ounce on April 25, 2011, silver reached a resistance level. As Michael D Sheimo explains in his book Stock Market Rules, “Resistance...is a level where stock market advances stopped in the past, where stock buyers stopped buying.” Silver had touched an all time high of $50.35 in January 1980.

Knowing this, the investors started to sell silver and the price of silver started to fall, and let us say, the price of silver was at $45 per ounce. At this point of time, the investor’s position would be worth $225,000. But his equity would be down to $3,700 {$8,700 - ($230,000, the initial position minus $225,000, the value of the current position)}.

Given that the exchange required a level of margin of $8,700, a margin call would be generated asking the investor to pay $5,000 more.

As the price of silver keeps falling, the investor will have to keep paying a greater margin, to keep maintaining a total margin of $8,700. At a price of $43 per ounce, the investor will have to pay $10,000 more to maintain a margin of $8,700.

As the price keeps increasing margin calls will keep getting generated, and at a certain point, the investor might simply run out of money and thus decide to sell out.

Also at a certain level, the exchange will also increase the margin required to trade silver in order to ensure that it does not have to keep issuing frequent margin calls to investors.

This is basically what has happened at CME. More margin calls have been issued to investors, and the margin amounts have also been increased at the same time. This has led to a situation where investors have sold out, leading to a fall in price of the white metal.

Of course on the brighter side the increase in margins will squeeze out the short-term speculators.

Investors selling out of silver ETFs

The falling price has also led to investors selling out of some of the biggest silver ETFs. This in turn has further accentuated the fall in price.

The falling price has led to a number of analysts coming out with sell reports on silver. But the point is what were these analysts doing when the price of silver was going through the roof? A major section of analysts now believe that the metal could fall to as low as $30 early next week. This would mean a fall of 40% from the top achieved on April 25, in a period of a little over two weeks.

Having said that, the fundamental reasons for investing silver, which I have discussed in my previous articles, still remain strong. “I’m holding for now, as the fundamental case is still intact. Short-term trading in this market is for professionals only. I am considering adding to long-term positions,” wrote Adam Sharp, editor of Wealth Wire in a recent column.

John Williams who runs Shadow Stats estimates that adjusted for inflation (using the consumer index), you’d be looking at a silver price of $490 per ounce.

A lot will depend on whether Ben Bernanke decides to launch Quantitative Easing 3 (QE 3). QE2 ends on June 30, 2011. Currently, the US is printing money to meet nearly 75% of its fiscal deficit. So, the chances are that they really wouldn’t have any other option but to launch QE3.

And as and when that happens, the price of gold and silver might start going through the roof again. As Sharp puts it, “By the time QE3 is announced (guessing early 2012 or before), I suspect we will be back at or above all-time highs.”


Source : DNA 

Loans to turn costlier as SBI hikes BPLR by 75 bps

State Bank of India on Tuesday took a “large step” to align its deposit and lending rates in the current rising interest rate regime.

India's largest bank upped its short-term (up to six months) deposits rates by 75 to 225 basis points.

The bank also raised the benchmark rates to which all its lending rates are linked by 75 basis points.

Higher EMIs

Following this, existing and new borrowers of SBI will have to pay higher EMIs on their loans.

The deposit and lending rate hikes are effective from May 12.

The rate hike follows the Reserve Bank of India raising by 50 basis points the repo and the savings bank rates last week. Repo rate, or the rate at which the RBI lends short-term funds to banks, now stands at 7.25 per cent.

With the savings bank rate moving up to 4 per cent, SBI had to increase short-term deposit rates. Else, savings deposits would have seen more inflows, thereby skewing the maturity pattern of its liabilities.

The highest interest rate hike of 225 basis points is for deposits of seven days to 14 days maturity from 4 per cent to 6.25 per cent.

With effect from May 12, the base rate and the BPLR will be 9.25 per cent (currently 8.50 per cent) and 14 per cent (13.25 per cent) respectively.

Benchmark ratesstill THE lowest

Even after the increase, SBI's benchmark lending rates are amongst the lowest in the banking sector due to its vast pool of current account and savings account deposits (CASA). Such deposits constitute about 45 per cent of its total deposits.

From July 1, 2010, banks have been lending at a spread over the base rate. Before this, they were lending with reference to the BPLR, at negative or positive spreads, depending on the customer.

The RBI directed that banks switch to the base rate system of loan pricing from the BPLR as lack of transparency in the latter hindered transmission of monetary policy signals.

Most of the banks such as Punjab National Bank, ICICI Bank, Bank of Baroda, Bank of India, IDBI Bank and Oriental Bank of Commerce have effected a 50 basis points hike in lending rates. Some of these banks also upped the short-term deposit rates.

Source : Business Line

Different options to plan your child’s future

Remember Farhan Qureshi in the 3 Idiots? His father planned out his education and career the day he was born. The senior Qureshi's career choice may have been out of sync with his son's passion for wildlife photography but the underlying objective — to secure the financial future of his child—was bang on target.

An increasing number of Indian parents is doing that today. In an online survey conducted by economictimes.com for ET Wealth last week, 63% of the 1,908 respondents said they started saving for their children's education when they were born. Another 9.2% had started even before the kid was born (see graphic).

That's good news, because the earlier you start, the more the time available for your investments to grow, and the bigger the corpus.
But are Indians choosing the right options  when investing  for their children?

Here's the bad news. An overwhelming majority is opting for low-yield instruments. Almost 45% of the respondents in our survey said they invest in the Public Provident Fund (PPF) and fixed deposits  for their children.
Another 38% have invested in traditional insurance policies. "Despite the numerous options available, Indian parents continue to rely on bank fixed deposits due to lack of awareness," says Ashu Suyash, country head, Fidelity International.

The encouraging part is that 43% also invest in equity mutual funds  and stocks for their children, while 26% have opted for child insurance plans that provide for the education of the child if the parent is no more.

The skew towards low-yield products also means that many Indian parents might fall short of the targets they have set for their children's investments. ET Wealth estimates that raising a child in urban India from cradle till college costs roughly Rs 55 lakh.

The calculation assumes that the child will take up a professional course costing Rs 10 lakh. This is the cost at today's prices and the amount has to be adjusted for inflation . Now comes the scariest part. Education costs, which constitute nearly 46% of the total expense on a child, are growing at a worrying pace of 20-25% per year.

Formulating a strategy

Fortunately for parents, there are enough investment products to help them fulfill the dreams for their children. Chosen appropriately, these options can help you save enough to send your daughter to the best medical college in the country, or book a ritzy 5-star hotel for your son's wedding.
How does one choose the right product? The first thing to understand is that there is nothing to differentiate the investments made for children from the rest of your portfolio .

They are exposed to the same risks, offer the same returns and are taxed at the same rate. No mutual fund  will give units at a discount or offer guaranteed returns just because a parent is saving for his child. No bank will offer you a higher interest rate.

No insurance company will charge a lower premium. The taxman too will not exempt any income. So, the same rules  that govern your own investments should apply to those made for your children.

Your choice should depend on four basic factors: the tenure of the investment, the risk you are willing to take, the returns offered by the option and the taxability of the income. Here's how these four factors can affect your investments.

Tenure of investment

Are you saving for your daughter's education? Or for your son's marriage? Financial planners say it is best to define your goals and segregate the investment for each goal.

"Since each goal has a different time frame, separating them will allow the parent to choose the most appropriate investment to reach that goal."

The stock market has historically been the best place to park your money for the long term. There are enough studies to prove that equities give the highest  returns in the long term.

"Don't invest in a long-term fixed deposit for your daughter's education when she is just a toddler. The money that is not going to be touched for a long period should ideally be in equities," says P.V. Subramanyam, a financial trainer at Iris.
For many parents, defining a goal that is 15-20 years away is not easy. Hyderabad-based Srinivas Vinjamuri and his wife Pratyusha are investing for their one-year-old daughter's education and marriage, but have not earmarked funds separately for the two goals.

"Right now, we are just putting money in a mix of balanced and equity mutual funds," says the manager in an MNC. That might work fine for the Vinjamuris right now as their first goal is at least 15-16 years away, but eventually, they will have to plan for each expense separately.

Risks and returns

Every individual has a different risk appetite. Equities are certainly a great option for creating wealth over the long term, but what good is this money if it leaves you tossing and turning in bed, agonising over how your investments are faring.

So choose an option that suits your risk tolerance. For this, first get your risk profile assessed by a financial planner.

In many cases, one does not even know how much risk he can take. "Most parents adopt a very conservative approach when it comes to investing for their children. This attitude is rooted in the choices their parents had made and is difficult to shed," says Bangalore-based financial planner Anil Rego.
As the table shows, the higher the risk you are willing to take, the higher your returns could be.

Then again, your ability to take risks depends on the time available. As we mentioned earlier, stocks and equity funds work best for long-term goals. However, if you are saving for your son's marriage in 2013, steer clear of volatile stocks and put the money in a debt fund, or even a fixed deposit.

Taxability of income

Keep in mind the income tax  rules that apply to your investments  Your child's income is actually your own. This is also the reason why PPF and insurance policies are so popular with investors.

The income from these options is tax-free, but there are other tax-efficient options as well. For instance, the income from equity and equity-oriented mutual funds is tax-free after a year. Investments in other funds can help you defer tax for years, even decades.

When you take into account  these factors, the investment portfolio for your child becomes a mix of short-, medium- and long-term products. Each option has something to offer, some financial goal to achieve (see graphic). Fixed deposits offer safety and assured returns but won't be able to beat inflation.

Mutual funds offer high growth but carry a risk and don't offer any insurance cover. Child insurance plans offer an insurance cover and help the wealth to grow but levy high charges. Gold helps fight inflation but doesn't offer diversification.

Source: Economic Times

Individual taxpayers need not declare high-value transactions

The Central Board of Direct Taxes (CBDT) has given a breather to individual tax payers from declaring high-value transactions with banks, mutual funds, credit cards, etc via the income tax return forms. The newly notified income tax return forms for the Assessment Year 2011-12 - including Sahaj, Sugam, ITR 2, ITR 3 - do not carry the dreaded Annual Information Return (AIR) blocks.

"We have dispensed the individual taxpayers from declaring it in their return," said a CBDT spokesperson when asked about the missing AIR fields in the form. In the Annual Information Return requires a person to declare investments above Rs 2 lakh into mutual funds, Rs 5 lakh and above in company bonds, debentures or in RBI Bonds and Rs 1 lakh or more in shares of a company. Also, cash deposits worth Rs 10 lakh in banks, payments of Rs 2 lakh or more for credit card bills and Rs 30 lakh or more in immovable property transactions too were to be notified. Earlier, the information submitted by the individual taxpayer and the institutions were matched. "If the AIR is missing from the individual's forms then that would be a reason to take up the return for scrutiny," said the CBDT spokesperson .

Sunil Talati, former president of the Institute of Chartered Accountants in India, said, "This certainly brings relief to millions of tax payers. The details required were cross verifiable and if some honest or genuine mistakes were occurring in giving these details, then assessing officers were causing avoidable problems to such assesses. All these will be now avoided and tax payers will be not harassed or give explanations." "However, AIR continues to be in the statute book. We are still getting the information from institutions and the assessing officer has the annual information return while he is looking at a taxpayers return," said the spokesperson. "AIR provide a wealth of information to the tax department.

In the tax returns one had to provide only that information that was reported under AIR (by the institutions such as banks, mutual funds, credit card companies)," said Ameet Patel , tax partner, Sudit K Parekh & Co. The aggregate of transactions at one particular institution are reported if they exceed the stipulated limit. "So, if you invest Rs 20,000 with a mutual fund once and then later invest 1.9 lakh with the same mutual fund company in the same financial year, then the mutual fund will report your investments that exceed Rs 2 lakh. However, if you invest the first Rs 20,000 with one mutual fund and another Rs 1.9 lakh with another mutual fund then it will not be reported and the taxpayer too was not supposed to report it in his tax returns," added Patel.

The department has made a special arrangement with National Securities Depository Ltd ( NSDL )) wherein companies issuing shares or bonds, banks, credit card companies, mutual fund houses, Reserve Bank of India, registrars and subregistrars for property transactions can file the annual information return either physically or online. These institutions notify the high value transactions an individual has entered into with them. "Transaction details will be available to department. So on selective basis I Tax officers can verify or select the cases for scrutiny and the purpose will be served and results can be achieved," said Talati.
Source : ET

Tips to find if a company is a good investment option

Not all companies in a high-growth industry are good investment bets.
There are ways to find the right ones

A perfect candidate?


You know the name of the company. You even use its products and love them.

The company is operating in an industry that is growing at a scorching pace and poised to keep the momentum at least in the next decade.

And guess what: it is listed in the stock market.

Looks like a perfect candidate to buy and hold, right?

Not really.

Take a look at these tempting examples.

Airlines industry :

The first candidate: the airlines industry. You like some of the private airlines that you have flown in over the past few years. You know that more people are flying these days thanks to the cheaper fares.You also know that the future of the industry is bright because only 3% Indians still use the airlines to travel and, with the Indian economy likely to grow at 8% per annum, producing more people with deep pockets, airlines are bound to do well.

Right? Not really. Save for one or two, most airlines are posting losses every quarter.

The culprit? The high crude oil prices. With brent crude at as high as $125 per barrel, the industry is piling up losses, and it simply cannot pass on the high prices to customers due to stiff competition, government regulations and policies

Telecom sector

Then there is the telecom sector, which, too, looks extremely promising at first glance. However, issues relating to corporate governance and investigations into the 2G scam continue to plague the industry. Besides, companies in the sector have invested a large sum and piled on debt for securing 3G licences.

There is no clarity yet amongst analysts as to how the companies would be able to monetise these investments

Real estate

Real estate is another sector where, going by how the prices have soared lately, opportunities look promising.Rising incomes, increasing urbanisation and favourable demographics will lead to a more than 20% growth in the segment.

However, the fact is the sector is not that robust.

Sales figures are nothing to boast about as prices and interest rates are ruling high.Then there is the issue of transparency, corporate governance and accountability

Organised retail :

Organised retail, too, looks a promising business, given the fact that a mere 5% of the retail market is organised. Clearly, the industry could easily grow at more than 20% for the next many years.Yet, most companies are not rolling in money.

In fact, they have to have efficient supply chains and keep their rental cost in check if they want to make any money.

Infrastructure :

Infrastructure is another theme that looks appealing, given the fact that there have been tall promises of adding 20 km of roads every day, huge demandsupply gap in power and so on.

However, government policies continue to dampen the prospects of this sector.

Choose a methodology

As you can see, choosing stocks or sectors based on your impression of the products or prospects of the industry could be counterproductive .

A company that is good according to you need not be the best bet. The same goes for the growth prospects, too.

Just because the industry is expected to grow at a rapid pace, you can't pick every company in the sector. "Growth is merely one of the parameters you have to look at before taking an investment decision ,"

Parameters to look at

There are various parameters analysts and seasoned investors look at besides growth rates in a company. Fundamental analysts believe that when you buy a share, you are buying a part of the company's business.

Hence, to get the price of the share, you actually need to know the worth of the business. This can be done by assessing the company's financials and arriving at a value per share.

The process involves analysing a company's management capabilities, competitive advantages , its competitors and the markets it functions in. You could look at key financial ratios such as operating margins, earnings per share and so on. After examining the key ratios of a business and analysing the underlying fundamentals, one can come to a conclusion about the financial health of a stock and put a value to it.

Share price as an indicator

If the share price is trading below the value arrived at by a fundamental analyst, investors should buy the stock, in anticipation of the share price rising to the true value in future. "Look at the valuations of each company before investing," says Sudip Bandyopadhyay, MD and CEO, Desti Money Securities. He also gives a high weightage to management track record and future business forecast.

Then there are analysts who look at the return on equity (ROE) as an important parameter. "If ROE is less than the cost of equity, it would be better to stay away from the company," says Rajesh Cheruvu , head of investment strategy, RBS Private Banking.

"As a thumb rule, in the case of largecap companies, one should expect a 11.5% ROE, while in the case of small-cap companies, you should expect over 13% ROE." Bharti Airtel fits the bill in the large-cap space and Ahluwalia Contracts in the small-cap segment. "In industries that are showing strong growth rates, look at only a few strong companies, that, too, with a time frame of five to 10 years," says Alok Churiwala, Managing Director, Churiwala Securities . He cites the example of Godrej Properties as a company in the real estate space, which, he feels, will be a winner due to its strong management quality and focused business model. "Go with companies that are in for the long haul," he says. This is because only strong companies emerge as winners after the consolidation of the industry. Finally, as you can see, seasoned investors pick a methodology that suits them and then refine it further. You can also follow the same strategy.


Source: ET