Sonia Gandhi takes exception to DMK brinkmanship

NEW DELHI/CHENNAI: Congress chief Sonia Gandhi on Monday expressed displeasure over DMK's brinkmanship, telling M Karunanidhi's emissaries that the party's behaviour had been discourteous. 

The plainspeak came even as the sides appeared to be clawing towards a pact, though hurdles remain on Congress's demand to pick the constituencies it wants to contest. 

Sources said Sonia expressed her peeve when Union ministers M K Alagiri and Dayanidhi Maran visited her late on Monday evening as part of efforts to wrap up the seat-sharing talks which tensed the ties to the point of break-up. 

Sources said the Congress president, while being polite, told her visitors that the talks being held now could have been held earlier. Instead, DMK people chose to go public on the differences, sources quoted Sonia as telling the DMK ministers in a clear reference to DMK's threat to pull out its ministers from the Manmohan Singh government. She underlined to her visitors that Congress had been accommodating DMK's political demands all the while. 

DMK's top decision-making body had on Saturday passed a resolution to pull out of the central government, blaming its decision what it called Congress's desire to push it out of the ruling coalition. 

DMK sources said the Congress chief did not get into the details of seat-sharing, stressing that she was more concerned about coalition courtesies. 

Sonia's decision to meet the two DMK ministers, particularly Alagiri who has been playing hardball, was interpreted as signalling a breakthrough. Although she is not the last word on alliances, she does not get into the nitty-gritties of seats 

Congress likely to scale down seat demand 

That she chose to focus on coalition manners and not on Congress's claims in her meeting with the DMK duo kept the issue hanging. Sources said differences between the two sides had come down to 6 seats. Congress is still sticking to its demand for 63 seats, but indications are that it may agree to scale down the demand. Congress has been insisting to chose the dozen seats that it will contest over and above its share of 48 in 2006 polls.DMK has offered that Congress could choose six of those. 

The evening meeting followed day-long confabulations between the two sides. The ice was broken on Sunday night itself when Congress's troubleshooter Pranab Mukherjee established contact with DMK leadership, giving Karunanidhi room to re-engage with Congress. 

Mukherjee contacted Karunanidhi on Monday morning, leading the DMK ministers to put off their plans to pull out of the government. 

The ministers who to visit PMO at 6.30 pm were told by leadership to put off the plan by a day because, Karunanidhi's son M K Stalin claimed in Chennai, Congress had sought more time. 

The six DMK ministers in Manmohan Singh government met in the capital at the residence of Madurai strongman MK Alagiri to hammer out strategy. It was felt that Congress could take six constituencies of its choice while DMK could make that choice for ally in remaining six. Congress too sought one seat more than the tally of 60 to keep its pride intact in the bare knuckle bargaining. 

The DMK patriarch, controlling manoeuvres from Chennai, found his son Alagiri take the hardline of dumping the Congress but preferred the discretion of his younger son MK Stalin. He nominated textiles minister Dayanidhi Maran as the interlocutor with Congress heads in clear signals that he was keen to salvage the alliance after the Saturday night brinkmanship. 

DMK retained its pride because it was Pranab Mukherjee who reestablished the communication with a latenight call to DMK leadership and followed it up with another on Monday. Karunanidhi tried to impress upon Congress his predicament after delimitation because many of DMK's strong constituencies have got split.

Source: http://timesofindia.indiatimes.com/india/Sonia-Gandhi-takes-exception-to-DMK-brinkmanship/articleshow/7651517.cms

Duty hike on iron ore not to hit industry: NMDC

India's largest iron-ore miner NMDC today said the hike in export duty on the

RELATED ARTICLES

Sharma differs on banning iron ore exports

raw material to 20 per cent will not hamper the profitability of the industry, including the Navratna firm, to a big extent.

"Basic purpose of the imposition of duty is to discourage iron ore exports. So certainly it will dip in the profits for the industry in general, but I believe that the margins will not be that bad for the industry," NMDC Chairman Rana Som told PTI.

Explaining that current market prices of the raw material are hovering between USD 160 to 180 per tonne, Som said that domestic producers will still be left with a margin of about USD 40 to 60 per tonne after paying all duties, royalty and freight charges.

"The move will definitely knock off the profits of the industry players, but not to a very big extent," he said.

Finance Minister Pranab Mukherjee, in the Budget for 2011-12, had fixed a uniform export duty of 20 per cent on all types of iron ore, which is a vital steel-making raw material.

Before the Budget announcement, the export of iron ore lumps attracted a duty of 15 per cent, while export duty on iron ore fines was 5 per cent.

According to industry body FIMI, iron ore exports will fall by 35 per cent annually due to the increase in duty, thereby leading to lower domestic production and a rise in prices.

"Because of the hike in export duty, no fresh contracts are signed now... Only earlier contracts are being honoured. This would lead to lower domestic production of the raw material, resulting in an increase in price," Federation of Indian Mineral Industries (FIMI) President Siddharth Rungta said.

Talking about the impact on NMDC, Som said, "We export only about 10 per cent of our production and our main production is iron ore lumps, on which duty has been hiked by only about 5 per cent. So the impact will be very marginal on us."

The Navratna firm, which accounts for 15 per cent of the country's total iron ore production, has targeted a 25 per cent increase in output to about 30 million tonnes in the ongoing fiscal.

The company exports around 3,000,000 tonnes to Japanese mills and 400,000 tonnes to Korean steel maker POSCO, while the remaining stock is sold in the domestic market.

Source:-http://www.mydigitalfc.com/news/duty-hike-iron-ore-not-hit-industry-nmdc-851

Govt unveils “tool box” to counter black money

New Delhi: Unveiling the "toolbox" of counter measures to check black money, the government Tuesday has said the payments made to entities located in countries and tax jurisdictions which refuse to share tax-related information will attract a TDS(Tax Deduction at Source) of 30 percent or more.

"...any payment made to a person located in the notified jurisdictional area shall be liable to deduction of tax at the higher of the rates specified...or at a rate of 30 percent", says the 'toolbox' of counter measures which will be incorporated in the Income Tax Act.

The G20 leaders at Seoul summit last year had asked each country to develop a toolbox of counter measures against non-cooperative jurisdictions.

Under proposed provisions, the government will notify the countries and jurisdictions which are reluctant to share banking information and other details with it.

The provisions, proposed by Finance Minister Pranab Mukherjee in the Budget for 2011-12, are in line with the commitments made by India at G-20 meetings that it would come out with its own 'toolbox' of countermeasures to deal with tax havens.

These measures are aimed at discouraging transactions by "a resident assessee with persons located in any country or jurisdiction which does not effectively exchange information with India," said the Memorandum explaining the provisions of the Finance Bill 2011.

It further said that the persons dealing with entities in notified jurisdictions will not be entitled for any tax benefit unless they authorise the Central Board of Direct Taxes (CBDT) to seek financial information from the overseas bodies.

Moreover, the Memorandum added, the funds received from overseas entities would be treated as his income for purpose of taxation unless he is "satisfactorily" able to show the source of money.

Also such dealings will be treated as international transactions and all parties in the deal will be scrutinised under the transfer pricing regulations.

The amendments, according to the Memorandum, will come into effect from June 1, 2011.

These provisions, Mukherjee had said in his Budget speech, would "strengthen our system of collection of information from foreign tax jurisdictions...(and) discourage transactions with entities located in non-cooperative jurisdictions as may be notified by the government".

Source:-http://biz.zeenews.com/news/news_content.aspx?newsid=21584

Pranab offers little on inflation & corruption in Budget

Finance minister Pranab Mukherjee seemed determined to please all constituencies with his Budget speech on Monday, but if first impressions are anything to go by he was at best only partially successful. Significantly, on the two issues agitating most people today – inflation and corruption – he had little concrete to offer. ( Read: Pranab puts his money where his heart is ) ( Read: Bond is back, and the name's infrastructure ) 

India's middle class has over the last few years got used to the idea that finance ministers must hand out tax sops on Budget day and they weren't entirely disappointed, with hikes in exemption limits that could save individual taxpayers anywhere between Rs 1,030 and Rs 26,780. Senior citizens were the biggest gainers with those over 80 getting the largest tax savings. ( Read: Returns - File I-T? Forget it ) ( Read: Times guide to corporate tax ) ( Read: Times guide to indirect tax ) ( Read: Men get a small raise ) ( Read: Times guide to personal tax ) 

Business got an unexpected gift with the rollback of the stimulus package introduced during the global financial crisis being put on hold and the surcharge on domestic firms being pared. 

Foreign investors have been given greater access to India's capital markets. Reformers were given enough reason to believe that the process initiated 20 years ago has not been abandoned and would be carried forward, even if there were more promises of action in the future than actual changes introduced. ( Read: FIIs in no hurry to gatecrash D-Street ) 

There were promises too for the aam admi – who was referred to only once in the speech – but a closer look at outlays on social sector programmes suggests that the rhetoric hasn't really been followed up with the moolah needed to make it come true. ( Read: Tax trimmer ) ( Read: Seniors ki jawani ) 

The mood of the markets reflected the uncertain nature of the response to the Budget. Up almost 600 points at one stage, the sensex, probably on closer scrutiny of the fine print, ended the day barely 122 points up over the weekend close. ( Read: Main course for mkts: Stake sale ) ( Read: Raging bulls couldn't keep it up ) 

The speech had a whole section dedicated to black money. While there were few details in the speech, a reading of the Finance Bill suggests that some steps are being taken, particularly to check the flow of funds from countries with opaque disclosure norms. ( Read: The war's just begun, time for a blackout ) 

The middle class has reason to have mixed feelings about this Budget. While the tax sops will clearly be welcomed, their impact could be more than wiped out by the extension of service tax to cover healthcare and diagnostic facilities not covered so far and to a host of other services. ( Read: Rising healthcare costs enough to make you sick ) (Read: Check in, cheque out for hotel stay, happy hour ) ( Read: Pain in the neck for fliers as airlines hit fare pocket ) ( Read: Easy to cook, but hard to digest ) 

Similarly, at first glance, the fact that a one percentage point subsidy on home loan interest rates will now be available on loans up to Rs 15 lakh for houses costing up to Rs 25 lakh rather than on loans up to Rs 10 lakh for houses costing up to Rs 20 lakh may seem like very good news. But how many people who can put down Rs 10 lakh from their pocket would buy a house worth Rs 25 lakh or less? ( Read: Aam admi gets to hit home run ) 

Some sections of industry too might wonder whether extending the coverage of the minimum alternate tax (MAT) to units in special economic zones and a marginal hike in the MAT rate does not offset the gains from a lower surcharge. ( Read: Pranab SEZ special status won't MATter anymore ) ( Read: Holiday over as IT gets unwelcome MAT) 

Perhaps the only category to have unambiguously gained is the foreign investor. FIIs have been allowed to invest up to $40 billion in corporate bonds against the $20 billion available to them earlier. That's because they can now put in up to $25 billion cumulatively in long-term bonds of infrastructure companies against the $5 billion they were earlier permitted. ( Read: Rupee warms up to foreign hug ) 

Further, individual foreign investors can now invest directly in Indian mutual funds rather than having to route their money through FIIs. ( Read: Debt funds hit by DDT spray ) 

Reformers might be unsure whether they should celebrate or moan at the fact that parts of the Budget speech read more like the annual Economic Survey the ministry brings out. ( Read: No 'wow' factor here, but reform rollout is key ) 

On the plus side for them, it's after many years that the Budget speech has given assurances of bold reform – the subsidy regime, at least in kerosene, fertilizers and cooking gas, will be replaced by a mechanism of direct cash transfers to the intended beneficiaries, the FM promised. 

He also talked of new banking licences being issued to the private sector and discussion being underway to "further liberalize the FDI (foreign direct investment) policy". On the flip side, none of this is to happen immediately. ( Read: New bank swipes only for a few ) 

Disinvestment of public sector shares, Mukherjee said, would remain on course, but was quick to add that the government would retain both a majority stake and management control. 

Similarly, tackling inflation is clearly something the FM views as a long-term programme to be dealt with by developing warehousing facilities, cold chains and the like. From a purely budgeting point of view, the FM can claim that he has done a remarkable job by reining in the fiscal deficit to a projected 4.6% of GDP for the 

next year, but the numbers show that the achievement banks on unrealistic expenditure projections.( Read: Can farm growth take wind out of inflation? )

Read more: Pranab offers little on inflation & corruption in Budget - The Times of India http://timesofindia.indiatimes.com/home/union-budget-2011/Pranab-offers-little-on-inflation-corruption-in-Budget/articleshow/7598001.cms#ixzz1FJrTFImc

I-T limit raised to Rs 1.8 lakh; 60-yr-olds are now seniors

Finance Minister Pranab Mukherjee today proposed to raise the income tax exemption limit for general tax payers to Rs 1.80 lakh per annum from Rs 1.60 lakh at present and introduced a high new tax slab for senior citizens of 80 years and above.

Unveiling the Budget proposals for 2011-12 in the Lok Sabha, he also proposed to reduce the age limit for consideration as senior citizens from 65 years to 60.

Senior citizens will get tax exemption for income up to Rs 2.5 lakh, higher from Rs 2.4 lakh now.

As per the announcement, the increase in the income tax exemption limit for general tax payers (excluding women and senior citizens) to Rs 1.8 lakh per annum would translate into a benefit of Rs 2,000 for all tax payers.

At present, the general tax payers earning more than Rs 1.6 lakhs per annum are required to pay income tax.

Introducing a new tax slab for very senior citizens (80 years and above), Mukherjee said, they will not have to pay any tax for annual income up to Rs 5 lakh.

Source:-http://budget.business-standard.com/budget11/news.php?autono=63090

FM may raise tax exemption limit to Rs 2 lakh

NEW DELHI: With an eye on improving the public mood ahead of crucial polls in five states, finance minister Pranab Mukherjee appears set to appease the middle class as well as UPA`s aam aadmi constituency. 

An increase in the income tax exemption limit from Rs 1.6 lakh to Rs 2 lakh is expected to be part of Mukherjee`s Union budget speech on Monday. Though the exemption limit is Rs 1.6 lakh, this year, there is an additional benefit of Rs 20,000 for those who invest in infrastructure bonds. 

The benefit available for investment in these bonds is expected to continue though Mukherjee, who will present his third budget in his second innings in finance ministry, is unlikely to heed demands for a Rs 50,000 benefit for investment in these instruments. 

The veteran politician is also likely to announce a debt relief scheme for weavers who draw largely from the Muslim community and are a sizeable constituency in poll-bound Tamil Nadu and West Bengal, besides states such as Uttar Pradesh, Bihar and Andhra Pradesh. 

The amnesty may cost the Centre Rs 3,400 crore and would be similar to the Rs 70,000-crore debt waiver scheme for farm loans which is said to have turned the tide for UPA in the 2009 Lok Sabha elections. 

Heir-apparent Rahul Gandhi led a party delegation to Mukherjee on the weavers` scheme on Wednesday, lending weight to the demand. His authorship on the relief for minorities is part of an extended campaign for organisational revival in Uttar Pradesh which goes to poll next year. 

That powerloom and handloom weavers are also present in Tamil Nadu, which goes to polls in April, makes the proposed waiver a key election sop. It would be a magnet for the ruling DMK and textiles minister Dayanidhi Maran is learnt to have lobbied hard. 

Tax exemptions on cotton and silk yarns may add to weavers` relief. 

Congress circles are hoping that the budget will help beat down the perception of UPA`s decline, somewhat alleviate the pain of prices and turn people`s attention away from the scams that have eroded the goodwill that the Manmohan Singh regime enjoyed in 2009. 

The goodies will form part of Congress`s political outreach for key social groups in the backdrop of unrest over inflation. 

As per political calculations, the higher exemption limit may help blunt the pressure on the government from middle class which is weighed down by the burden of high inflation, which latest numbers put above 8%. Despite some moderation, food inflation remains above 11% and has upset monthly calculations for most households in the country.

Though the government could lose some revenue due to higher exemptions, the estimate is that higher growth will help rake in more revenue besides keeping fiscal deficit under check. 

Estimates suggest that the economy, despite the burden of higher interest rates and the spike in oil and metal prices, would grow at around 9%, helping the government to stay on course to achieve the fiscal deficit target of 4.8% of GDP

.

Source:-http://timesofindia.indiatimes.com/india/FM-may-raise-tax-exemption-limit-to-Rs-2-lakh/articleshow/7567189.cms