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"We came to the conclusion that prices are a function of demand and supply and since demand has come down prices have begun to come down and may come down further," said Sajjan Jindal, president of Associated Chambers of Commerce and Industry (Assocham).

"But if taxes that were imposed in good times are reviewed and revised in view of the bad times now prices will come down further," Jindal told reporters after a meeting of the chambers' full committee.

The Indian equities markets have been very badly hit by the current global meltdown because of a crisis of confidence and the real estate industry has been badly affected because of high interest costs, a top industry lobby said here Thursday.

"A crisis of confidence is affecting the stock markets and real estate market has been affected because of high interest and other costs," said Sajjan Jindal, President of industry lobby Associated Chambers of Commerce and Industry.

His comments came against the backdrop of the finance minister asking India Inc to cut prices and not lower production, calling such a strategy the best solution to counter a demand slowdown. Jindal also said banks must should more credit to small and medium enterprises (SMEs) if the economy has to pick up momentum. "Two months back banks had stopped giving even working capital but now they are writing to industry that they have surplus funds," he said.

A. At present, mutual funds do not invest directly in commodities. They are not yet authorised to invest in commodity futures. However, there are some, which act as a substitute, for commodity funds.

For instance, Magnum COMMA invests in stocks of domestic companies engaged in the commodity business. There are some others like, ING Optimix Global Commodity Fund and Mirae Asset Global Commodity Stock Fund, which put money in overseas mutual funds that invest in stocks of commodity-oriented companies abroad.

But overseas, there are funds that invest directly in commodity futures like PIMCO Commodity Fund, Rydex Commodities Fund and Oppenheimer Real Asset Fund to name a few. The minimum investment amount for these funds is around $5,000 (Rs 23,500@1$=Rs 45). For further details regarding these funds, you can visit their websites.

Q. What are provisions under I T Act which prescribes for TDS on interets?

A. Section 193 and 194A are tow section which prescribes for TDS on interest . Section 193 is for "TDS on interest on securities" and sec. 194A is for "TDS on interest other than interest on securities"

Q. What is the meaning of interest for the purpose of TDS?

A. As per section 2(28) of the I T Act, interest is defines as under:

(28A) interest means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised ;

As per section 2(28B ) of the I T Act,interest on securities means
(28B) interest on securities means,
(i) interest on any security of the Central Government or a State Government ;
(ii) interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act ;
Therefore, almost all kinds of interest chargeable to tax is under TDS liability.

Q. What is the basic exemption limit upto which no TDS is made?

A. The basic exemption in case of interest on securities paid by Government ,State government, corporation, RBI etc who deduct tax u/s 193 is RS 2,500 of aggregate interest paid or credited in a year.

In case of interest other than interest on securities (covered u/s 194A ) , the basic exemption is Rs 5000 in a year. However, in case of Banks or Co-operative societies or deposits with Indian publicly held companies , the limit of RS 5,000 is counted branch wise.

Q. When No Tax is required to be deducted?

A. When interest is paid or credited to

1. A banking company
   
2. A cooperative society engaged in the banking operation
   
3. Financial corporation setup by Central , State
   
4. LIC, UTI or any insurance company or co-operative society
   
5. Any institution or body notified for non deduction of tax at source.
   
6. partner by Firm on partner's capital.
   
7. A member of cooperative society where payer is cooperative society.
   
8. Interest in NSC,KVP or Indira Vikas Party
   
9. A depositor with primary agricultural society or cooperative for land mortgage.
   
10. Any interest paid on Refund from Income tax department or under Direct Tax laws.
    
11. Interest credited to NRE Account.
    
12. Interest on recurring deposits or savings account with banks or cooperative society.
    
13. Any interest paid on compensation amount awarded by Motor Vehicles Claims Tribunal where aggregate of interest does not exceed Rs 50,000.
    
14. Any interest paid by infrastructure capital company or fund or a public sector company on Zero coupon bond issued after 1-6-2005
    
15. In case declaration filed in form 15G or Form 15 H.

India has about 1, 50, 000 CAs of them about 70,000 practicing and it is projected that the country would need about 4, 00,000 in next few years. With about 10,000 CAs get inducted each year, the gap is likely to widen.

What is interesting is that CAs of today are different breed, they are not just accountants but have larger multi-dimensional roles, with multi-tasking skills, hence in greater demand.

A Chartered Accountant today is an accountant, a manager, a technology savvy professional and possibly a material for chief executive officer in a company. This is because CEOs of today are expected to also have good understanding of financial markets and CAs fit this role too.

Outsourcing hub

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.

CA Ved Jain

President ICAI

New Delhi

                                                Dated: 17.07.08

Sub:- Working Hours of Articled Assistants

Kindly refer to the announcement regarding working hours of the Articled Assistants issued by ICAI giving references to the Regulations 65 and 66 read with Regulation 60 of the Chartered Accountants Regulations 1988. (Copy Enclosed).

The new directives have practically deprived the candidates from pursuing their regular Graduation Courses from the Renowned/Reputed Colleges/Universities along with C.A. Course. Usually the morning college/University Time falls between 8 AM to 1.30 PM all over India.

By introducing these directives w.e.f. 01.04.08 specially 1(iii) and 1(vi), the ICAI has inadvertently deprived all students from continuing their regular graduation course with Article Training. The option left with the candidate is to go for graduation through correspondence only. What value it (Correspondence Course) commands for further studies/Career in case the Candidate fails to clear the C A Exam is known to every one.

In this regard, I would request to kindly consider following Facts/Ground Realities so that these directives can be withdrawn:-

   1. Most of the students who appeared in June '08 CPT have already joined B.Com. (Regular) course by paying the huge amount of Fee, because admissions to these courses are over in June '08 and classes have started. The result of CPT was declared only on 13-07-08, by which time nobody can wait as in case he could not clear the CPT, the opportunity of joining Graduation would also go.

   2. Now, after clearing CPT if the student has to discontinue Graduation course as per new directives and go for PCC registration, then
         1. The student has to pay for all 3 yrs. Fee for withdrawing himself from the college, because this is now made a condition in the Admission Form itself in some of the Colleges or at least has to pay the one year Fee.
         2. The student has to join correspondence course (this is suggested as solution if you talk to any Institute's administrator) for getting graduation degree. (No body can ever think it as a solution or equate this with regular B.Com. degree from the University / Colleges). The suggestion / alternative to pursue Graduation through IGNOU or other correspondence courses is JUST face saving which need to be reviewed keeping in view the interest of large masses as well the reputation of the ICAI.
         3. Since graduation is not compulsory, therefore, after 3 and ½ years of rigorous Training, if he could not clear the CA Exam then the student is left with 10+2 qualification which is highly unjustified by any standard. With this, you will agree that these directives will spoil the career of the students who after putting their 4 valuable years of life are neither eligible for any other course nor they can earn any livelihood for their parents and family. Does ICAI has this intention in mind? Does Institute guarantee that every one who joined CA Course will be declared pass after 3 and ½ years of Articled Training?

   3. Even in the professional courses like Engineering and MBBS, the college education is not denied. Further there is more or less certainty that the student will become Engineer or Doctor after the specified time. Do we have that certainty here?  If not then student is left with simple 10+2 qualification after 3 and ½ years. Does Institute know this fact ? Does Institute has any employment guarantee for these candidates ?

   4. It may be apprehended that under existing regulation, the students are not attending CA Offices and manipulating their time. Whose mistake it is ? ICAI being regulator failed to take action against such manipulators or the Members who allowed such manipulations to happen ? What is the role of students in this ? If any one failed to take action against the miscreant, should we put everyone behind the BAR ? Does Institute believe in Quantity or Quality of working hours ?

   5. For some one committing the mistake entire community of CA students should not be punished. These directives would act as punishment to the entire lot for no fault of them. What is required is to boost the Members' morality and honesty in imparting training and implementing the regulations. Let us remember the principle of justice which says that Let 100 criminals go scot-free but innocent should not be punished.

   6. Even under new directives some Colleges in some of the cities have started revising the timings to 6.00 AM in the morning to 10.00 AM or 10.30 AM to match the Institute's timing. Is it not manipulations thereby punishing those students whose colleges are not revising the timing to suit ICAI. The Institute may be satisfied and feeling pride that it's directives have been followed. But do we know at what cost ? The student has to get up at least by 4.00 AM daily, go for attending college up to 10.30 AM and then rush to  comply office hours of 11.00 to 5.00 PM. Thereafter, he should return to home and think of Break-Fast or Lunch. Dinner he should forget because by 9.00 PM he has to go to bed to wake up again at 4.00 AM in the next morning.

      Is this the life style we want for future generation? Is it not worst then the one that of Bonded Labour. Is it the dream with which India got freedom? Kindly rethink and realize where are we heading towards? With these inhuman conditions, can ICAI work as partner in Brighter Nation Building or working to dream only diseased India.

      Let us build Trust and give free environment to Members and Students so that they can be assured of their brighter future.

   7. As stated above under new directives also, manipulations have already started. Does Institute feel pride in punishing only sincere, honest and hard working students by depriving them of quality college education ?

      In view of above, I sincerely request you to kindly review these directives immediately and allow the status quo to be maintained so that quality college education for graduation and Training as articled assistant can be pursued together.  

      Last but not the least "Justice delayed is Justice denied".

      Thanking You,

      Encl: As above

      Yours truly,

      (CA Ramesh Mehta)

      Membership No. 71502

      Chief Manager (F&A), Room No. 7E22,

      M/S ONGC Ltd, CMDA Tower-I, 7th Floor

      1, Gandhi Irwin Road, Egmore

      Chennai - 600 008

      Contact: 9445005117 (Mob), 044 28573719 (o), 044 25356025 ®

1. As an NRI, am I eligible to buy mutual funds, stocks and shares in India?

2. If yes, do I pay any income tax when I sell these funds, stocks and shares?

3. How is the tax decided? Is it based on a flat rate for the capital gains or calulated differently?

4. What happens if there is a capital loss? Is that claimable against capital gains in the same year or in future years?

(i) As an NRI you are eligible to buy units of mutual funds, stocks and shares in India. For this purpose, you are supposed to take permission from the Reserve Bank of India which is known as PINS permission. Under the scheme you can have one NRE/NRO account designated for the purpose in a specific bank. A demat account will also have to be opened by you. The permission can be obtained by the bank on your behalf. The above permission is not required if you are investing only in mutual funds. In both cases, you will have to obtain a permanent account number.

(ii) The Income-tax will be payable in case the gain arising on the sale of units/shares is taxable in accordance with the provisions of the Act. It may be added that you have to take delivery of shares/units.

(iii) The long-term capital gain arising on the sale of equity shares and units of equity oriented mutual funds is exempt from tax provided that the transaction been subjected to securities transaction tax. The short-term gain is chargeable at the rate of 15 per cent plus applicable cess and surcharge for assessment year 2009-10 (year ending March 31, 2009) provided that the transaction has been subjected to security transaction tax. The long term capital gain arises if the shares and units are held for a period of more than one year. The short term capital gain arises in respect of those shares/units which are held for less than one year.

(iv) The short-term capital loss is adjustable against the short-term capital gain and/or long-term capital gain for the same assessment year. The long term capital loss is adjustable against the long term capital gain only. In case the loss under head capital gain (short-term and long term) is not so set off, the amount of loss not so set off is allowed to be carried forward for a period of eight years for set off against income arising under head capital gain. The short term capital loss can be set off against income arising under head capital gain. However, long-term capital loss can only be set off against long-term capital gain.

If so, can I avail of the tax exemption for the interest paid for the period from April 2007 to March 2008 and also for the interest being paid for further period?

A. An investment up to Rs 1 lakh in the Senior Citizen Saving Scheme qualifies for the Section 80C deduction. However, interest from such scheme is fully taxable. In other words, it is the capital amount invested that qualifies for deduction and not the interest earned.

A. Yes, the interest from the fixed deposit will be clubbed in your hands for tax purposes. A better alternative is investing in PPF. Though there is clubbing there too, since the interest is tax-free, the clubbing loses its teeth. Also, investing in the growth option of a mutual fund scheme can also prove to be useful. By choosing the growth option, the money invested will grow without the need of paying tax. Tax will only be payable at the time of sale.

A. As an NRI or a PIO, you are allowed to invest both in Indian stocks as well as Indian mutual funds. However, for investing in stocks you require what is known as a PINS permission from RBI. Under PINS, you can have only one NRE and/or NRO account linked to your demat account. All your trading activity has to be done through this specific bank and demat account. The PINS permission is acquired on your behalf by the bank in which you choose to have the bank and demat account. Also, as an NRI, you are not allowed to short sell, you have to take delivery and give delivery of buying and selling transactions, respectively.

Investing in mutual funds on the other hand is fairly straightforward in as much as NRIs and PIOs have general permission of RBI to buy and sell units. In other words, for transacting in mutual funds, PINS is not required, you may invest just by filling out the form of the relevant scheme and attaching the cheque therewith.

Note that for both, stocks as well as mutual funds, having a PAN is mandatory

A.   Generally not, unless you can prove that investing in MFs is indeed your business. This can be ascertained by examining the facts of the case -- your past tax returns, whether you have borrowed money to invest in MFs etc. Normally, this is applicable only to share transactions as day trading is possible. In MFs, because of the loads etc. one cannot and should not trade frequently, so treating the loss as business loss may not be feasible.

A. The CGA Scheme provides for drawing the amount for application for purchase or construction of a residential property on a declaration given by the account holder. The amount is bound to be returned at the end of three years, if it is not drawn for the purpose for which it was so deposited. It becomes taxable in the year of withdrawal. It should be possible for a person to withdraw the amount even before the three year period, when he understands that he will not be able to avail himself of the benefit. If he then seeks to close the account, it can be done only with the approval of the assessing officer as provided in Clause 13 of the Scheme on application in Form G available in the annexure to the Scheme. The amount can then be withdrawn on deposit of Form G with the bank with consequent liability for capital gains tax.

Answer
Since the reader has become a resident and ordinary resident from assessment year 2005-06, he is taxable on his foreign income, including capital gains under the domestic law in India in the year of sale.

Double Tax Avoidance Agreement can be invoked, if it spares liability imposed by the domestic law.

As far as capital gains tax is concerned, as the reader points out, capital gains on sale of shares of companies incorporated in Australia is taxable in Australia so that it is not taxable in India.

In fact, it has already been taxed in Australia on a notional basis even before sale under an option provided under Australian law.

A doubt may arise because the word used is `may' in the relevant Article reproduced in the letter.

The Agreement as between India and Australia is on the same model as under UN and OECD models. The argument that the use of the word `may' in the context of a similar agreement between India and Malaysia would enable India to tax the capital gains taxable in Malaysia, was negatived by the Madras High Court in CIT v V.R.R.M. Ramaswamy Chettiar (1995) 211 ITR 368 (Mad) even in the context of Malaysia not having tax on capital gains.

Similar view was taken in CIT v R. M. Muthaiah (1993) 202 ITR 508 (Kar), which has since been specifically approved by the Supreme Court in CIT v P. V. A. L. Kulandagan Chettiar (2004) 267 ITR 654 (SC).

The reader should not be liable to tax on capital gains on the sale of Australian shares.

There is, however, one more angle in the reader's case.

The reader has suffered capital gains tax in 2002, but he proposes to sell the shares in 2008.