File your returns without Form 16

The government on Friday (i.e. 18th July 2008) said that the annexures and certificates relating to TDS like Form 16 are not required to be submitted along with Income tax returns.

"No annexures, TDS/ TCS certificates are required to be annexed to the returns of income. Wherever documents are attached with the returns, the receiving official is required to detach and return to the tax payer all such annexures" a statement from CBDT said. It said that the original documents and certificates may be produced by the assessees as and when called for by the AO.

The credit for TDS/TCS will be allowed on the absis of details furnished in the relevant schedules of the returns forms subject to relevant instructions on verification of TDS claims the statement added. AO cannot disallow claim in this regard only on the ground that the TDS/TCS certificates have not been filed with the return, the statement said.

what is better - bank deposit or FMPs?

What is better --- A Bank Deposit or a FMP?
Lately the interest rates on bank deposits have increased leading many investors to wonder whether a simple Bank Fixed Deposit (FD) would serve better than having to go through the process of investing in an FMP. Though Bank FDs and FMPs currently offer a similar rate of return; the tax impact tilts the scales in favour of the FMP.

Interest on Bank FDs is fully taxable whereas the return from FMPs is either subject to the Dividend
Distribution Tax (for the dividend option) or the capital gains tax
rate (for the growth option). The Distribution Tax rate @14.16% or the
capital gains tax rate @10% are lower than the income tax rate,
especially in the case of investors in the higher tax bracket. Tax
directly eats into returns, which is why FMPs have the edge over Bank
FDs.

To illustrate this point, have a look at
the following table. It is assumed that both, the Bank FD as well as
the FMP yield the same rate of interest i.e. 10.25% p.a. An investment
of Rs. 1 lakh is made in an FMP of 91 days. The corresponding figures
for the Bank FD appear alongside.

Mumbai, July 11 India’s sovereign credit ratings are under threat from factors such as rising fiscal deficit, rising inflation and widening current account deficits, said international rating agency Standard and Poor’s.
If these reasons last long, the ratings on India could be lowered to speculative grade, from the current stable grade, said a report issued by S&P.
The country’s credit profile has worsened in the past 12 months, but the upside and downside risks to its ‘BBB’ rating are currently balanced.
According to the report, risks like increasing fiscal deficit, high inflation and widening current account deficit are mitigated by India’s deep domestic markets, which allow it to finance large fiscal deficits without recourse to external funds, and by its strong external liquidity.
Subsidies to oil companies in the form of the Rs 94,600-crore worth oil bonds, the decision to waive farm loans worth Rs 71,000 crore, the 10-27 per cent reduction in the prices of complex fertilisers, and the increased outgo in case the Sixth Pay Commission’s recommendations are implemented are the reasons that will put pressure on the country’s fiscal position. Inflation challenge
Inflation, which is at a 13-year high, is a key challenge and there is a likelihood that Reserve Bank of India may hike policy rates again, the report said. This may push up bond yields, and consequently, the Government’s cost of funding would also increase, as the public sector is the largest borrower in the domestic bond market.
India’s current account is likely to reach $35 billion in the calendar 2008, higher than $25 billion in 2007, mainly due to higher oil prices and still-strong demand for external goods and services.
There is a possibility that the lowering of the sovereign rating may impact the ability of corporates to raise funds overseas. In any case, with the restrictions imposed on the RBI, there has been a slowdown in the overseas commercial borrowing.
According to RBI data, corporates had raised about $1.16 billion through ECBs and Foreign Currency Convertible Bonds in April and about $1.27 billion in May. As against this, in March the total overseas borrowing was nearly $4.47 billion
- The above article has appeared in Hindu business line on 11th July 2008

Calculation of appreciation / depreciation of currency
It never struck me that the students can get confused over this issue - but a query raised by one of our students made me realise this .. The issue raised is:

Situation 1:
Quote given : Re/$ = 40 (i.e 1$ = Rs.40)
$ appreciates by 10% - so what should the new quote be.

View 1: The new quote is 1$=44
View 2: The new quote is 1$ = 44.44
Solution: You have to read the situation like this -"THE SAME DOLLAR WILL NOW FETCH MORE RUPEES"
Correct view : 1$=44

Situation 2:
Quote given Re/$ = 40 (i.e 1$=Rs.40)
Re depreciates by 10%
You have to read the situation like this - "THE SAME RUPEES WILL NOW FETCH LESSER DOLLARS"
So the solution is:
Rs.40 = 1$
or Rs.40 = 0.90$
or 1$ = [40/0.90] = 44.44


A currency is said to have appreciated if one is able to purchase more of the other currency against it after appreciation. Thus $1=Rs.50 changes to $1=55 then one is able to get more rupees for the same dollar - hence we say $ has appreciated by 10%. This also indicates that the rupee has depreciated but the percentage would change. When you quote it with reference to rupees because then your initial quote would be 1Re = 0.02$ and the new quote would be Re1=0.01818 (based on1$=Rs.55) which would indicate rupee has depreciated by 9.1%

I hope the above clears some fog over the issue...
cheers and happy studying

Wake up and smell the daisies

For all those who are still living in a fools paradise, thinking that everything will be hunky dory .. wake up and smell the daisies. No point in behaving like an ostrich with its head in the sand hoping that the storm will go away. The crash in the market is real and here to stay for some time. I have been time and again telling that we are likely to see rough seas ahead - so brace yourself to be hit by a hurricance. Oil has crossed $145. My target for oil was $150 .. now that this almost been reached where next? Unless the governments are able to successfully pressurise OPEC to control price rises my call is $170. Inflation crosses 12%. Consumers are reeling under the impact of price rises. Stock market is testing the lower limits of 12000. Another repo rate hike seems inevitable because smart investors are taking advantages of the arbitrage opportunities given by a low repo rate and the high call money rates. Oil bonds are another disaster stories. Political stability is at a premium - the left seems to be hell bent on pulling out the plugs. If a Samajwadi - Congress combine were to emerge then chances are that the Reliance group (both Anil and Mukesh faction) would emerge healthy. Anil is close to Amar Singh and Mukesh's proximity to congress is too well known. FII's have been instructed to keep out of India for some more time. The selling pattern in the market in the past two days is something that needs to be analysed. FII's have not sold, MF's have not sold, retail investors cannot sell at these levels as they have all entered at a higher level- so it seems that the selling has been orchestrated by a few big corporates and individuals in the know about the political imbroglio that is brewing in the centre.

So, for all those who are thinking that these are good levels to buy.. please wait and watch before you commit hara-kiri.You may be better off donating that money to charities - atleast you get a better tax break!!!!

CA's asked to gear up

NEW DELHI: Prime Minister Manmohan Singh on Monday regretted the lack of
adequate attention to good corporate governance in public discourses and
cautioned the industry that it would fail to compete effectively in the absence
of global recognition on this count.

Inaugurating the diamond jubilee celebrations of the Institute of Chartered
Accountants of India (ICAI) here, Dr. Singh pointed out that in the era of
protectionism, “few bothered about corporate governance and transparency in
accounting and management. Such laxity is no longer possible...Shareholder
democracy has come to stay...”

Dr. Singh noted that chartered accountants were “the watchdogs of [the] new
corporate world” and said “the dynamism of globalised capital market and
emergence of knowledge-based economy has posed major challenges to accurate and
speedy financial reporting.”

Observing that the role of the accounting profession was also critical in
lending credibility to financial markets, the Prime Minister said: “Market
participants, investors and shareholders look to you [chartered accountants] for
high quality information, which ensures market discipline and foster confidence
of various stakeholders.”

In his address, Dr. Singh asked chartered accountants to expand their
overseas operations and seek global challenges and opportunities and also
highlight the need for a proper accounting system for funds received and spent
by panchayati institutions.

Urging chartered accountant firms to go global, Dr. Singh said: “Like our
engineers, doctors and other professionals, our chartered accountants too faced
global competition and stood their ground. It is for this reason that today they
are able to face the heat of that competition at home also.” Turning to
panchayati raj institutions, the Prime Minister said that the UPA Government had
laid great emphasis on the devolution of financial and administrative powers to
these bodies and asked the ICAI to meet the manpower needs of skilled accounting
personnel for the growing rural economy to “impart local ownership to
development schemes and encourage transparency and accountability”. “A proper
accounting system for funds received and spent by panchayat institutions will be
critical to making decentralisation a success,” he said.

Dr. Singh said that the Ministry of Corporate Affairs had taken an initiative
to amend the Chartered Accountants Act, 1949, to enable ICAI to strengthen its
professional standing. “A law of limited liability partnership is on the anvil.
This would help in the consolidation of small firms and promote
multi-disciplinary practices in line with the global trends,” he said.