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BANKING, REALTY POWER LEAD GAINERS

Beaten down sectors of banking, real estate and power were the lead performers during early trade. Banking index on the BSE was up 7.4 percent, whose surge was

contributed by heavyweight and largest bank State Bank of India which rose 6.23 percent to 1,484.75 rupees and largest private sector lender ICICI Bank Ltd., that surged 9.18 percent to 722 rupees.

Realty index was 7.27 percent up, caused by upward movement in major scrips like DLF Ltd. which rose by 8.31 percent to 491.90 rupees & Unitech Ltd. which rose 8.56 percent to 170.50 rupees. Power sector index also surged by 6.68 percent with leading energy player Reliance Infrastructure Ltd. gaining 8.63 percent to 998.60 rupees.

ICICI Bank Ltd. was the top performer on the Sensex-30 pack followed by Reliance Infrastructure. State-owned heavy electrical company Bharat Heavy Electricals Ltd. gained 8.45 percent to 1,732.55 rupees, and second largest private sector bank HDFC Bank Ltd. gained 8.15 percent to 1,190.05 rupees. Billionaire Anil Ambani controlled Reliance Communications Ltd. surged 7.56 percent to 503.55 rupees.

Broader market breadth was positive as 82.17 percent shares from 2,176 trading shares gained, while 27 out of 30 Sensex shares zoomed, and 96 out of BSE-100 shares were higher.

It is estimated that around 24 lakh people applied for 20,000 clerical posts advertised by the State Bank of India showing that there are more takers for a career in banking. This is specially so as bank wages are likely to be revised by the end of the current fiscal, for which negotiations are going on between the unions, Indian banks association and finance ministry.

The hiring is expected to go up significantly in 2008-09 due to an increase in business opportunities in retail banking, marketing and expansion in rural banking.

According to the Indian Institute of Banking and Finance (IIBF), which is conducting examinations for the banking sector, it has been receiving requests to conduct recruitments from a number of banks for next year and there will be a mega recruitment drive in the early 2009.

Interestingly, the hiring is getting broad-based, bringing in specialists along with generalists for various cadre posts.

This is the first time NHB has proposed such a scheme. "This is a new initiative which will provide liquidity to lenders and free up capital. This will ultimately channel more resources to the housing finance sector. This will also ease pressure on home loan interest rates," NHB executive director RV Verma told ET. Here's how the proposed structure will work -- NHB would hold the purchased assets on its balance sheet for onward securitisation. In the process, the portfolios will get more seasoned with NHB. In other words, it will act as a warehouse of mortgage assets to be securitised and then sell to investors without diluting the standard of the assets.

REMFs, which were touted as a major instrument enabling retail investors to participate in the booming realty sector, have been delayed partly because the Securities & Exchange Board of India (Sebi) and the finance ministry are still trying to sort out the taxability of such scheme.

The Central Board of Direct Taxes (CBDT) has agreed to provide it the same tax status as the equity oriented mutual funds, as was requested by the Sebi. This implies that the REMFs will be exempted from dividend distribution tax and investors spared from paying long-term capital gains while selling their shares.

However, according to the Income Tax Act 1961, equity oriented mutual funds are those which have at least 65% direct investment in securities of the listed companies.

Interestingly, under Sebi's guidelines, REMFs must invest a minimum of 35% of their funds directly into real estate assets and the rest into mortgage-backed securities, debt and equity instruments floated by the realty companies, thereby making it difficult for them to qualify as equity oriented mutual funds.

"As per the REMF structure laid out by Sebi, these funds would more-often-than-not be akin to debt funds," an expert said. Unlike equity-linked funds, debt-funds attract both capital gains tax and dividend distribution tax. This creates complications as investors are indirectly being denied the tax incentives given to equity oriented funds, the officials said.

"For a clearer understanding and in order to include REMFs, the finance ministry will have to change the definition of equity oriented mutual funds in the IT Act," Ajit Krishnan tax partner (real estate), Ernst & Young said. He added there were other issues, which were delaying the launch of such schemes.

Analysts note that apart from taxation issues, the instrument is not gaining currency because of a weak stock market. Stocks of real estate companies have been battered badly in the recent months. "The outlook for real estate sector is so bleak that no one wants to float REMFs," says Dhirendra Kumar, CEO, Value Research India Pvt Ltd, a mutual fund research firm.

The markets regulator had approved the REMF guidelines in its June 26, 2006 board meeting and notified these rules  as part of the amended mutual fund regulations in April 2008.

Is it possible to claim tax deduction for housing loan EMI and HRA simultaneously?

A. HRA and home loan provisions are two different issues as far as the Income Tax Act (ITA) is concerned and one does not influence the other. So, you may own a flat or any number of flats, either in the same city that you work in or anywhere else in the whole of India or for that matter abroad -- this will, in no way influence the HRA deduction that you are entitled to. Conversely, notwithstanding the amount of HRA that you receive, your home loan deductions on the EMIs for the house that you have bought or intend to buy will not be affected.

"In a situation like this, encouraging inflow would help ease inflation. Easing of ECB should happen logically. Sooner or later there will be a high-level co-ordination committee on ECB," finance ministry sources told PTI.

The sources said the upcoming HLC would have discussion on relaxing the norms further. The HLC on external commercial borrowing comprises finance ministry officials and representatives of SEBI and RBI.

When asked about the amount of ECB that could be allowed for Indian companies, the sources said the finance ministry suggests policy and RBI considers it and decides the quantum.

"It is the RBI which decides the number," they added.

Red Fort Capital which manages three active funds under its aegis including an offshore and a domestic fund for Indian real estate market, as well as a hedge fund for listed Indian entities - is already in talks with some of its existing investors for floating the new fund, which would invest in infrastructure projects in the country. It may also rope in new investors to the proposed fund.

Growing infrastructure
"The new fund is likely to be over $600 million and will focus on projects such as ports and power, amongst others. In fact, some of our existing investors approached us for a fund in the infrastructure, a sector whose risk profile is very different than the real estate segment. Globally, the returns for infrastructure projects are in teens whereas in India it averages at about 20 per cent," Mr Subhash Bedi, Director and Partner, Red Fort Capital Advisors, told Business Line.

He said that in future, the investments in infrastructure projects could also find synergies with the projects that Red Fort has funded in the real estate sector. "For instance, there could be synergies between port projects and development of warehouses," he pointed out.

A PMS fund manager said: "It is relatively easier to get approvals for PMS services than VC funds. With a PMS registration, these funds will be able to invest in listed and unlisted companies without really having to disclose much about their investments."

Violating relevant Sebi PMS rules, most of these funds are targeting live real estate projects, which are facing tough times as a result of lower sales and higher borrowing costs.

"Overseas funds stand to benefit greatly from this arrangement as VC funds investing into India no longer enjoys tax pass-through benefits, even if they are registered in tax havens like Mauritius or Cayman Islands.

However, the modus operandi of bringing in money to India is not very clear as of now," said a Mumbai-based wealth manager.

Description :1. National Highways Authority of India (NHAI) collects user fees from users for different sections of National Highways, bridges and bypasses.
2. Proposals (Separately for Each of the Fee Plaza Mentioned Below) are invited latest by 12-08-2008 upto 13 Hrs. from firms of Chartered Accountants for empanelment as Local Fee Auditor for the following toll plaza(s). The firm should have (a) an office in a city / town near the place where the plaza is located, (b) at least of 5 (five) year's standing as on date of submission excluding the year of its establishment (C) have minimum 3 (Three) full time partners out of which at least one should have minimum 5 (five) year's total experience in practice. All the three partners should be with the firm since last three years and at least one of the partners must reside at / near the toll plaza mentioned below. The firm must have not less than 5 Article clerks / Audit Assistants. All qualification, experience and existence shall be reckoned as on the date of the submission of application. Interested firm, on self - certification of above eligibility, may obtain prescribed application form including scope of work from the Project Director at above address, to be submitted within the date / time specified as stated in the advertisement. Same shall be opened on 12-08-2008 at 17.00 Hours at above address and authorized representative of the offerers can be present / attend the opening Mere fulfilling above eligibility criteria will not entitle a firm for empanelment. Name of Fee Plaza : (1) Vantada Toll Plaza, Nr. Porbandarat (Km. 10+755 NH-8B) (2) Supedi-Bhandar, Bridge Toll Plaza, (Km 89 NH-8B). Desired location of HO / Branch of the Firm and residence of their partners : Porbandar / Rajkot

Last Date :12/08/2008

Address :S.S. Singhvi, The Project Director, National Highway Authority of India, Project Implementation Unit, 301-304 Krishna Con-Arch-I, Nr. Kolecha Chowk, University Road, Rajkot, Gujarat-360 007.

Phone :0281-2585139 / 2586903

Description :Appointment of Chartered Accountant for Monthly Concurrent Audit.

Last Date :28/07/2008

Description :Requires Chartered Accountant Firms to Establish State level Expert Management Cell for everseeing Migration to Double Entry Accural based Accounting System in ULBs in AP.

Last Date :24/07/2008

Address :Managing Director, APUFIDC, 2nd Floor, ENC (PH) Complex, Kashana Buildings, AC Guards, Hyderabad-500004.

Description :Appointment of Chartered Accountant for Monthly Concurrent Audit work.

Last Date :23/07/2008

``No annexures, TDS/TCS certificates are required to be annexed to the returns of income.'' an official statement said. A senior CBDT official said that all informations regarding TDS are recorded in the PAN (permanent account number) data of a tax payer.

He said the department collects data on TDS from various sources and keep it in the PAN data banks of tax payers. Therefore, he said, the tax payers should just provide the TDS informations in the specified column in the return form. If the figure provided in the return is not matched with the data collected in PAN, then the department would ask the tax payer to furnish the Form-16.

The credit for TDS and tax collected at source (TCS) will be allowed on the basis of details furnished in the relevant schedules of the return forms. Assessing officer will not disallow claim in this regard (return against excess tax paid) only on the ground that the TDS/TCS certificates have not been filed along with the return of income, the statement said.

Also, to enable tax-payers to file returns in the electronic mode, the new return forms have been made annexure-less, except ITR-7, which is the returns for trusts. The electronic return filed with electronic signature will be treated at par with a physical sign.