International hoteliers operating in the country through sales agreements with Indian hotels can expect some relief after the Delhi High Court ruled on January 30 that income paid by the Indian partner to its foreign counterpart is exempt from tax since it cannot be considered royalty or technical fees. The ruling in favour of US-based Sheraton International Inc was in response to an appeal filed by the Income Tax Department challenging the service agreement.
When AS-15 became operative in 2006, the initial estimate for additional pension provisioning was estimated at Rs 6,000 crore. However, the latest wage revision may bring in an additional 275,000 bank employees who opted for PF. Banks may also provide for the pension liabilities of 65,000 employees who have retired but have been seeking resort to the defined pension scheme since 1996. This will require additional provisioning of Rs 6,000 crore.
While the ministry sources clarified that the overall policy for fax editions is still under review, this proposal has been given approval on a case-to-case basis in FIPB's meeting held last week. The proposal was turned down twice earlier pending the review but the company had applied to FIPB under deferred proposal agenda in its meeting on January 9.
Official sources said the 2000-01 acquisitions -- notably the high-profile purchase of web portal India World Communications from Rajesh Jain for Rs 499 crore (Rs 4.99 billion) -- by Satyam Infoway could mark the start of the company siphoning funds overseas under the guise of acquiring companies. Satyam Infoway was merged with Satyam Computers in 2002.
The government is considering setting up a special purpose vehicle (SPV) for financing of non-banking finance companies (NBFCs) following the reluctance of banks and mutual funds to make available funds for the sector.
The Department of Industrial Policy and Promotion in the Commerce Ministry proposes to scale back the Foreign Direct Investment ceiling for the tobacco industry from 100 to 74 per cent and insert a caveat that cigarettes manufactured in the new ventures or in upgraded facilities must be mainly for consumption outside India.Sources said the department, which is responsible for the policy on FDI, is finalising a cabinet note aimed at comprehensive review of the tobacco policy.
Unlikely to launch formal probe into IT firm's Maytas move.
The Reserve Bank of India has started a review of the non-performing asset or bad loan classification norms to ease the flow of credit to corporate groups.The move follows a reference from the government and is aimed at relaxing the norms temporarily to enable companies to access funds during the economic downturn that is putting pressure on cash flows and repayment capabilities.The review has been sought by the finance ministry following appeals from various industries.
The Foreign Investment Promotion Board has cleared a proposal by German plastic moulding major Ralf Schneider to set up a wholly-owned subsidiary in India, setting aside objections raised by its former Indian partner Larsen & Toubro under Press Note 1 of the Foreign Direct Investment policy.
Most private firms see lower pay-outs; govt banks save the day.
Ministry officials said the matter is being reviewed with the objective of bringing down the FDI cap from 100 per cent to 26 per cent in line with the limit for news media. This decision for the review was taken while discussing the proposal of US-based Dow Jones and Company for setting up a wholly-owned subsidiary to carry out publishing the facsimile edition of Wall Street Journal in India.
Asks lenders to make sure that end use of advances to commercial real estate.
Field formations may re-examine cases from 1997.
The Reserve Bank of India (RBI) may be brought under the category of other regulators, who might have to park their funds with the government. Banking sources said the move would deal a final blow to the financial autonomy of regulatory bodies.
With banks apprehending large-scale defaults in the aviation sector, RBI is examining data from all lenders regarding their exposure to it. One of the options under consideration of the regulator is to extend the number of days for the banks to classify an asset as default.
Sebi likely to come out with a policy paper soon.
Promoters or issuers of foreign currency convertible bonds may be allowed to buy back the bonds if they go in for prepayment.
While ECBs are pure loans, FCCBs have an in-built option for the lender to convert them into equity of the companies on maturity. Both in ECB and FCCB, till maturity, the borrower is expected to make interest payments on the amount borrowed. Incidentally, the AAR ruling of October 10 had been sought by a non-banking finance company. Till October 31, NBFCs were not allowed to borrow funds from overseas in foreign currency.
ECBs may be allowed to put loans upto $ 500 million for rupee expenditure by Indian infrastructure companies under the automatic approval route. At present, such loans need RBI approval. The government may also raise the limit for dollar borrowings for rupee expenditure, which would need RBI approval. So, if a company is borrowing say $ 750 million, it can immediately access foreign funds up to $500 million without prior permission, but will need approval for the rest.
The screening of data is more intense in the case of foreign and some private banks which act as custodians for foreign institutional investors, according to sources close to the development. Indian banks, both public and private, send capital to their foreign offices for everyday requirements in the inter-bank market and for client commitments.
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