Taxation of house property decoded!

Taxation of house property

If you are an owner of a house property, you are required to offer for tax, the rent which you receive or which you are reasonably expected to receive. This is known as “Annual value” in income tax parlance. The head “Income from house property” covers residential as well as commercial property except the property you are using for your business or profession.

For residential house properties, the taxation laws treat one house property as self-occupied in case the same is not let-out and is used by you for your residence or remains vacant due to your stay in any house not owned by you at any other place. In case, the single property is actually let out, you have to offer the rent received on such property for taxation. In case you are using more than one house property for self-occupation, you have to choose one of such property as self-occupied and offer notional rentals in respect of other property/ies for taxation.  

Deductions from Annual Value
For calculating the income taxable under the house property head, the taxation laws allow you two deductions. The first deduction is standard deduction in respect of repairs etc. at the flat rate of 30% of the annual value calculated as above. The amount of deduction in respect of repairs is available whether you have actually incurred any expenditure on repairs or not. Since the annual value of one self-occupied house property is taken at nil, no deduction is naturally available for repairs in respect of such property.

The other deduction available is in respect of interest on loan taken to purchase or construct a house property, or even for repair or reconstruction of your existing property. This benefit of interest deduction is available for all properties whether residential or commercial. It may be interesting to note that even processing fee or prepayment fee paid in respect of home loan is also treated as interest and thus can be claimed as deduction. The loan can be taken from any body including your friends and relatives and not necessarily from banks and financial institutions. 

For one self-occupied property, the deduction is restricted to Rs. 2 Lakhs per year and for let-out property or any additional self-occupied property which is treated as deemed to have been let out, you can claim the full interest payable. So in cases where more than one property is self-occupied, it is always advisable to treat the property on which interest is lower as self-occupied, in case the interest payable on any or all of the property is more than Rs. 2 Lakhs.

For under construction property, you can claim the interest from the year in which construction is complete and possession is taken. In respect of interest paid for the years prior to taking possession, you can claim aggregate of such interest in five equal installments from the year in which construction is completed within the overall limit of Rs. 2 Lakhs in case the same is self-occupied.

Deduction available under Section 80 C for Principal repayment of home loan:

An Individual and an HUF can claim principal repayment component of a home loan taken from specified institutions along with other eligible items like Life Insurance Premium, NSCs, EPF, ELSS and stamp duty and registration charges etc. The overall deduction is restricted to Rs. 1.5 lakhs from current year. This deduction is available only for residential house property. Moreover it is only available for purchase or construction of a house and not for renovation, additions or repairs of any existing house property.

In case you decide to sell the residential house acquired with home loan, within five years from the end of the year in which possession of the house was taken, all the deduction allowed for Principal repayment in earlier years shall be treated as income of the year in which this property is sold. Moreover no deduction under Section 80 C shall be allowed for principal repayment made during the year.

What if you missed your tax filing deadline

If you missed the due date for filing income tax returns, you haven't missed the bus entirely. How? The last date for filing returns for salaried individuals and companies was July 31.

The Income Tax Department will still allow you to file your return of income for the assessment year ended March 31. So if you missed the due date for filing, you can still do it by March 31, 2015, without any penalty.

However, you may lose claim to tax refunds when you file it after the due date. For example, if you made some tax saving investment during the assessment year and it does not reflect in your Form 16 because you could not submit proof of the investment to your office in time, you are likely to lose out on the refund you were eligible for from the tax department.

"Deductions under section 80C like life insurance, PPF (public provident fund), tuition fees (for full-time education of children) etc.  are not available in case returns are filed after the due date," Omshila Karki, a tax consultant said.

Also when you claim refunds after the due date, it takes longer to process and hence you get the refund that much later, she said.

You need to be extra careful while filing tax returns after the due date, because filings post the deadline cannot be altered. So, there is no margin for error, unlike when filing within the due date, when you can make changes to your tax returns as many times as required.

In case you owe some money to the taxmen from 'Income from other sources', a one per cent penalty will be charged on the outstanding amount of unpaid tax for every month of delay, when you file your returns after the due date.

If you miss the March 31, 2015 deadline as well, the taxmen can levy a fine of Rs 5,000.

Income tax returns for the assessment year 2013-14 have to be compulsorily filed by everyone whose income is over Rs 2 lakh. If one has a taxable income of over Rs 5 lakh, one has to compulsorily file the returns online

Banks' merger plan on the anvil; SBI and SBP first in queue

The government has asked IDBI Bank and United Bank of India to prepare a consolidation plan. A daily newspaper has reported that the government will first begin merger process between State Bank of India and State Bank of Patiala.

It may be recalled that talks have been going on for long for merging SBI’s subsidiaries with the parent bank. SBI first merged its State Bank of Saurashtra with itself in 2008. Two years later in 2010, State Bank of Indore was merged with SBI. 

The country’s largest lender has five associate banks—State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed entities.

Finance Minister Arun Jaitley in his Budget speech had said, "There have been some suggestions for consolidation of Public Sector Banks. Government, in principle, agrees to consider these suggestions."

Jaitley, speaking to reporters after the Budget, had said that the consolidation could be between a big bank and its subsidiaries.

Union Budget 2014-15 highlights

The following are the Union Budget 2014-15 highlights

For individuals

* Tax slab on personal income remains unchanged

* Income tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh

* Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.

* Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh

* Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.

* Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched

* Long term capial gain tax for mutual funds doubled to 20 pc; lock-in period increased to 3 years

* Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000

* Minimum pension increased to Rs 1,000 per month

* LCD, LED TV become cheaper

* Cigarettes, pan masala, tobacco, aerated drinks become costlier

Budget 2014: Why Arun Jaitley Should Cut Income Tax

Here are the reasons why Mr Jaitley should rationalize income tax structure in India.

1) India's tax system is lopsided with an estimated 4 lakh people paying over 60 per cent of income tax collected in the country. Salaried Indians pay more income tax than high earners in US and China according to a survey. However, many millionaire farmers do not have to pay taxes as agricultural income is exempt from income tax.

2) Many of the current tax provisions were formulated more than a decade ago and need to be upgraded. For example, the tax benefit on housing loan interest (for self-occupied property) has not changed since 2001 even though property prices have gone up by 2-3 times during the same period.

3) Persistent high inflation has ruined household budgets and impacted savings. Consumer price or retail inflation in India was at 8.59 per cent in April year-on-year after running near or above 10 per cent for almost two years through the end of 2013.

4) Tax laws in India continue to be complex and lead to many disputes. According to an Assocham survey of 3,000 assesses, the tax administration's sole aim remains maximization the collections from a small group of people. Tax policies and administration are opaque while the refund process is fraught with complications, the survey noted.

5) A cut in income tax will leave more disposable income in the hands of individuals. It will enhance the spending power and will help drive certain sections of the economy that are dependent on discretionary spend such as autos.

According to the Assocham survey, the government must consider the following five changes to rationalize taxes and provide relief to taxpayers in India.

1) The government should increase income tax exemption limit (currently set at Rs 2 lakh) to factor in high inflation. This will lead to more disposable income in the hands of tax payers.

2) The government should raise the savings rebate (under section 80C) beyond Rs 1 lakh. The tax rebate schemes under Section 80C was introduced by the Finance Act 2005 and is considered to be grossly inadequate under the prevailing macroeconomic scenario. Raising this rebate will encourage domestic savings, which has come down from 25.2 per cent in 2009-10 to 21.9 per cent in 2012-13.

3) The limit of interest paid on home loans needs to be revised upwards from the current Rs 1.5 lakh. This would not only lead to lower tax burden, but also provide impetus to labour intensive housing sector.

4) Medical and education cost of at least Rs. 1 lakh per annum should be made tax exempt. The minimum threshold limit should be determined based on the number of dependents for an individual.

5) The limit on premium paid on medical insurance under section 80D was fixed in 1998-99 and must be revised as they have not kept pace with the changed ground realities. Currently, individuals can claim Rs 15,000 towards mediclaim payment, while for senior citizens the cap is Rs 20,000.

Singapore Govt picks up 1.06% in Muthoot Finance

The Government of Singapore has picked up a 1.06 per cent stake in gold loan company Muthoot Finance Ltd (MFL). This share purchase transaction was part of the recent institutional placement programme by the company raising ₹418 crore.

The stake purchase has been done through GIC, which is the fund manager of the sovereign wealth fund set up by the Singapore Government in 1981, sources close to the development said.

The Government of Singapore now owns 42.06 lakh shares of Muthoot Finance, the latest filing by the company with the BSE showed.

The other investors under the public category who hold investments of more than 1 per cent are Birla Mutual Fund, Wellcome Trust London, Baring India Private Equity Fund, Allard Growth Fund and Matrix Partners India.

http://www.thehindubusinessline.com/markets/stock-markets/singapore-govt-picks-up-106-in-muthoot-finance/article6075525.ece?ref=wl_markets

Form 15 G & 15 H

1. When can the bank deduct tax at source?

The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 10,000 in a financial year. This limit of Rs. 10,000 is applicable for each branch of a bank and not for all the branches of a bank taken together.

2. Who can submit form No. 15G?

First and foremost only a person who is resident in India can submit form No. 15G. So an NRI cannot submit this form.  Any person other than a Company can submit form No. 15 G. So any Individual and HUF can submit form No. 15G.

However it is not that every Individual or HUF can submit form No. 15G. Only the individual or HUF, whose tax on the estimated income for the year is nil and the amount of interest income from all the sources does not exceed the minimum exemption limit, can submit this form.

So for being eligible for you to submit this form, you need to satisfy both the above conditions.

In a situation where due to various deductions the tax payable on total income may be nil but if the total amount of interest income is expected to exceed Rs. 2 lacs you cannot submit this form.

3. Who can submit form No. 15H?

Any resident Individual who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H provided his tax liability on the basis of his estimated income is nil for the financial year though the total amount of interest from all sources may exceed Rs. 2.50 lacs, the minimum amount liable for tax.

So only senior citizens can submit this form.

4. What precautions to be taken while submitting form no. 15G and 15H?

Please ensure to submit your PAN details to the bank while submitting the form No. 15G or 15 H. In case you fail to provide your PAN number to the bank, the bank will deduct TDS @ 20 percent against the applicable rate of 10 percent even if you have submitted form no. 15G and 15H.

RBI eases forward forex contracts norms for importers

Providing importers with greater flexibility in hedging, Reserve Bank on Tuesday allowed them book forward foreign exchange contracts up to 50 per cent of the eligible limit.

"...it has been decided to allow importers to book forward contracts, under the past performance route, up to 50 per cent of the eligible limit," the RBI said in a notification.

This, the RBI said, has been done after a review of the evolving market conditions and with a view to providing importers with greater flexibility in hedging facility.

It further said importers who have already booked contracts up to previous limit of 25 per cent in the current financial year, will be eligible for difference arising out of the enhanced limits.

Under the extant guidelines relating to hedging of currency risk of probable exposures based on past performance, importers are allowed to book contracts up to 25 per cent of the eligible limit.

The eligible limit is computed as the average of the previous three financial years? import turnover or the previous year's actual import turnover, whichever is higher.

SBI exploring ways to declare Vijay Mallya 'wilful defaulter'

State Bank of India, which has an exposure of Rs 1,600 crore to grounded airline Kingfisher, today said it is exploring ways to declare the carrier's promoter Vijay Mallya as a 'wilful defaulter'.

"We are looking at various ways to declare Vijay Mallya a wilful defaulter and trying build a strong case in that regard," an SBI source said.

The source said that as per RBI guidelines, it would have to be proven that the borrower had diverted funds which he taken from the bank and not paying up despite having the ability to pay.

"If we are sure on these two points, then the bank will declare Mallya a wilful defaulter," the source said.

Read More... 

http://www.financialexpress.com/news/sbi-exploring-ways-to-declare-vijay-mallya-wilful-defaulter/1253716

RBI to banks: Make all new ATMs talking machines from July

All new ATMs to be installed by commercial banks from July 2014 onwards would provide audible instructions and Braille keypads to customers, RBI said today.

The RBI's directive today came on its prior advice to banks in 2009 to make bank branches and ATMs accessible to people with disabilities and make at least one-third of the new ATMs installed as talking ATMs with Braille keypads.

"It is, therefore, reiterated that banks should make all new ATMs installed from July 1, 2014, as talking ATMs with Braille keypads," RBI said in a notification.

"Banks should lay down a road map for converting all existing ATMs as talking ATMs with Braille keypads and the same may be reviewed from time to time," it said.

RBI also asked banks to make necessary arrangements to provide all existing ATMs/future ATMs with ramps so that wheel chair users/persons with disabilities can easily access them.

"Care may also be taken to make arrangements in such a way that the height of the ATMs do not create an impediment in their use by wheelchair users," RBI said.

However, RBI said this requirement may be dispensed with in cases it is impracticable to provide ramps.

Further, RBI also asked banks to provide the facilities of magnifying glasses at all bank branches for the use of persons with low vision.

The branches should display at a prominent place notice about the availability of magnifying glasses and other facilities available for persons with disabilities, it added.

To ensure compliance of new directives, RBI also asked banks to report the progress made in this regard periodically to their customer service committee.

Public sector bankers plan to ask Finance Ministry for 5-day week

http://www.thehindubusinessline.com/companies/public-sector-bankers-plan-to-ask-finance-ministry-for-5day-week/article5926262.ece

Executives from State-owned banks seem determined to prove to the Finance Ministry that a five-day work week is feasible in the banking sector.

While the ministry turned down bankers’ earlier feelers to this end, this time round, the bankers intend to knock on its doors with a cost-benefit analysis for a five-day week.

The ministry has contended in the past that the cause of financial inclusion would suffer with a shorter week, but bankers feel that in this age of modern technology, a bank is accessible to customers 24/7 via alternative delivery channels such as ATMs, the internet, mobile commerce and business correspondents. Financial Inclusion refers to mainstream banks ensuring all sections of society, in general, and vulnerable groups, in particular, have access to financial products and services at an affordable cost, in a fair, transparent manner.

According to a top public sector bank official, the Indian Banks’ Association will carry out a cost-benefit analysis of the five-day work week pattern and the same will be placed before the ministry for its consideration.

A trade union official wondered why bank employees should be denied the benefits of a five-day week when Central Government employees have been enjoying them for nearly three decades.

To increase efficiency in administration, the Union Government had introduced the five-day week in 1985, increasing daily working hours during the five days by an hour.

According to RBI data, there were 11,75,149 employees working in 169 scheduled commercial banks in the country as of March 2012.

ATMs that retaliate when attacked coming soon !!

Fancy an Automated Teller Machine (ATM) that punches the burglar in the nose if he tries to break it open?

Well, not a punch exactly, but ATMs would soon be armed with a mechanism that would spray hot foam in the face of the attacker if he tries to force it open.

Researchers at ETH University in Zurich have developed a special film that triggers an intense reaction when destroyed.

"This could be used anywhere you find things that shouldn't be touched," said Wendelin Jan Stark, a professor at ETH's department of chemistry and applied biosciences.

Stark and his team developed a self-defending surface composed of several sandwich-like layers of plastic. If the surface is damaged, hot foam is sprayed in the face of the attacker.

The researchers used plastic films with a honeycomb structure for their self-defending surface. The hollow spaces are separately filled with two chemicals: hydrogen peroxide or manganese dioxide.

The two separate films are then stuck on top of each another. A layer of clear lacquer separates the two films filled with the different chemicals. When subjected to an impact, the interlayer is destroyed, causing the hydrogen peroxide and manganese dioxide to mix.

This triggers a violent reaction that produces water vapour, oxygen and heat. The temperature of the foam reaches 80 degrees.

The newly developed film may be particularly well suited to protecting ATMs or cash transports, said the researchers.

The number of attacks on ATMs has increased in recent years.

Ministry considering proposal for fixed term for public sector bank chiefs: report

The Finance Ministry is contemplating giving a fixed tenure to chairmen and managing directors of state-owned banks in order to ensure stability in operations, according to a senior official.

"The government is examining a proposal for having a fixed tenure for CMDs of public sector banks," the Finance Ministry official said.

It has been pointed at many occasions that top executives are appointed for a short tenure that hampers implementation of medium or long-term strategies of banks, the official said.

Therefore, the government is looking at correlating the the tenure with job-related performance, the official added. At present, the retirement age for top executive is 60 years irrespective of his or her performance.
So, generally the term of CMDs varies between one year and five years.

Recently, the Finance Ministry turned down the Reserve Bank's proposal to bifurcate the post of chairman and managing director in public sector banks saying this position does not enjoy absolute powers as is being claimed by some international experts.

The ministry said this in response to the RBI's contention that CMDs of public sector banks enjoy absolute power along with boards. It said the board is a collective decision making organ through which major decisions of the organisation are implemented and to say that CMD enjoys absolute power and disregards the decision of the board of the bank is not factual.

CMDs of public sector banks are thorough professionals, having long career in the banking sector and they are well aware of the issues to be tackled in this segment.

It can be noted that in PSBs, the top executive is designated as chairman and managing director, with the exception of the largest lender State Bank of India, where the top honcho is the chairman and there are four managing directors with clearly defined executive roles under her/him.

The posts of chairman and managing director in the private sector are held separately.

The apex bank had set up a committee under the chairmanship of A S Ganguly in 2004-05 to study the issue of bifurcation of the post of chairman and managing director in banks. The panel had recommended such a bifurcation.

Private sector banks in 2007 implemented these recommendations.

Metro Bank founder to set up UK's first digital-only bank

The founder of Metro Bank is setting up what according to him, would be the UK's first digital-only bank.

In a bold initiative aimed at leveraging the growth of mobile banking, the digital-only bank would have no bank branches and also no telephone banking services available for customers who would manage a full range of personal and business banking products through the internet and mobile apps.

There would be a free helpline number which customers experiencing difficulties would call but they would not be able to move money and perform normal banking functions by phone.

According to Anthony Thomson, who would be the first chairman of the new bank, called Atom, the company's aim was to make it so simple to operate online that would be faster than the time it took to call someone.

Atom would offer a "full range" of personal and business banking products when it opened for business in 2015 including current and savings accounts, as also loan products and credit cards.

Mark Mullen, who ran First Direct since 2011, an online bank operated by HSBC, would become the chief executive of the new bank.

The bank would be based in the north east of England.

Metro became the first new UK consumer bank in over a century with its opening in July 2010. It was attempting to win clients from the UK's biggest banks by opening longer and offering better service than competitors.

Bloomberg quoted Thomson as saying in a telephone interview that there was a significant market for a new bank.

He added people did not like the existing incumbent banks. He said people were asking why they needed to pay for branches that they probably would not ever use adding Metro could deliver better service and better value digitally.

Indian banks may not be able to cope with unexpected losses, says International Monetary Fund

The International Monetary Fund (IMF) has warned that Indian banks don't have enough of a buffer to absorb unanticipated losses, and may have to dip into capital if credit quality deteriorates. In its global Global Financial Stability Report (GFSR) released on Wednesday, the IMF said Indian banks have not set aside enough money from profits to cover bad assets compared with others.

"Relative to regional peers, loan loss provisioning appears low in Hungary, India, Indonesia,  Malaysia, and South Africa, suggesting that any potential credit quality deterioration may need to be absorbed by equity capital,"the report said. While most countries now meet the Basel III minimum Tier 1 capital requirement of 6%, the relative provisioning has created differences in loss-absorbing capacity.

"Hungary and India have the lowest loss-absorbing buffers, followed by Chile and Russia, although buffers in these last two countries meet Basel III requirements,"the report said. Indian company earnings are exposed to exchange-rate and foreign-currency risk, implying that if the domestic currency depreciates sharply, as happens in most emerging markets,
they could face significant stress.

 "Currency depreciation in an environment of rising global uncertainties could lead to higher payments of principal and interest on foreign currency debts and thus to a further erosion of profitability,"the report said, adding that losses could be most in cases where risks are covered largely through natural hedges. "Where foreign currency liabilities are largely hedged through natural hedges, foreign exchange losses could amount to 20-30 per cent of earnings in India, Indonesia, and Turkey,"it warned, calling for assessing the effectiveness of natural hedges as well.

Banking licence for corporate houses will be a retrograde step: AIBEA

Nearly two dozen corporate houses and business enterprises in the country have been waiting for more than six months to obtain permission from the Reserve Bank of India (RBI) to start their own banks. In turn, the RBI has approached the Election Commission to permit them to issue the new banking license.

Terming the present move of RBI as ‘unfair’ as the Parliamentary elections were on, the All India Bank Employees’ Association (AIBEA) general secretary C.H. Venkatachalam said allowing private sector to open banks would lead to ‘profiteering’ and there were chances of public money being diverted by the corporate and business houses to run their ventures without any hindrance.

Substantiating his statement, he said: “Any industry house with Rs.500 crore can open a bank. Thereafter they would become the absolute owner of the bank and can have access to huge cash deposits of public. The funds can be transferred between the bank and their firms swiftly. Accounts can be fudged easily. We don’t want such a thing to happen.”

As per the proposed list, Aditya Birla, IDFC Ltd, IFCI, India Bulls, India Post, India Infoline, LIC Housing Finance, L&T Finance Holding, Muthoot Finance, Reliance Capital, Religare Enterprises, Shriram Capital, SREI Infrastructure, Tourism Finance Corporation and UAE Exchange India others have applied for the banking license.

“Prior to nationalisation of the banks in 1969, most of the banks were owned by one or the other industrial or business house. Their mismanagement and abuse of people’s money resulted in nationalisation of banks. Hence, handing over banking licenses to the corporate and business house is a clear retrograde step. Particularly, when the country is moving towards general elections to elect a new Parliament, RBI’s hurry in this regard overlooking the political views of the Parliament would be unfair,” he said.On Monday, AIBEA sent a letter seeking the intervention of Chief Election Commissioner, V.S. Sampath not to approve such a move stating that would result in conflict of interest and banking institutions cannot be left to the corporate whims.

It may be recalled that AIBEA has been openly criticising corporate houses for being wilful defaulters that led to banks setting aside a large portion of its profits to write off bad debts.

Mr. Venkatachalam quoted the report of Parliamentary Standing Committee on Finance which said: “Banking being a highly leveraged business involving public money and public welfare, the Committee are of the considered opinion that it will be more in the fitness of things to keep banking and industry separate. The Committee therefore desires the Government and RBI to review the licensing guidelines accordingly.”

Microsoft says many ATMs in India yet to be upgraded from Windows XP

As Microsoft ends support for its Windows XP operating system next month, the software giant said a number of ATMs in India are yet to upgraded.

The number of ATMs using Windows XP is higher compared to 16 per cent PCs which need upgradation.

Last month, the US-based firm had said its PC install base for large enterprises in India is about 4 million units, of which around 84 per cent had migrated from Windows XP.

Windows XP, which was launched in October 2001, is three generations behind the latest operating system, Windows 8, which was launched in October 2012.

The current XP version is called Windows XP Service Pack 3 and Microsoft will stop support service to 'Windows XP' OS from April 8.

"The number of ATMs left on Windows XP are higher than PCs as a percentage. Many more ATMs, probably higher than the 35 per cent computers in banks and financial institutions that are still to be upgraded and these (ATMs) are not included in those 4 million computers," Microsoft India GM (Windows business) Amrish Goyal told PTI.

There are roughly about 100,000 ATMs in India and many of them are running Windows XP. They have the same support policy and will be out of support, something which the Reserve Bank of India (RBI) guidelines have also called out, he added.

Indian Banks Association (IBA) chief executive M V Tanksale, however, said only old ATMs may face some problem as all the newer machines run on newer platforms.

He said he does not have the data of such machines which are still running on Windows XP.

Asking banks to take immediate steps, the Reserve Bank of India (RBI) last week warned that banking operations, including ATM services, may be hit as support from Microsoft for Windows XP operating system will end from April 8.

"The probability of attacks on such a system may increase and it may be difficult to defend such attacks in the absence of Microsoft support," the apex bank had said in a circular to banks.

Banks and financial institutions are facing higher risk compared to other sectors, Mr Goyal of Microsoft said.

"Banks and financial institutions are slow in upgrading from Windows XP. Private banks a little bit better. They are more equal to the average of the industry that is around 84 per cent. It is public sector banks and financial institutions that are still lagging," he said.

Of the total computers in the banks and financial institutions that use Windows XP, only 65 per cent have so far upgraded from the OS, he added.

"Banks are definitely well prepared and the industry is seized of the matter. I am very sure that you will not see a problem where ATMs or bank counters are shut because of this," Mr Tanksale said.

According to IBA, there are over 1.40 lakh operational ATMs across the country at present and the number is only going up given the low penetration of the machines.

E-filing of returns: Taxpayers to get digital signatures

http://www.hindustantimes.com/business-news/e-filing-of-returns-taxpayers-to-get-digital-signatures/article1-1199134.aspx

In order to weed out the hassle of sending by post a hard copy of e-filed return, the Income Tax department has decided to bring in the facility of electronic signatures for taxpayers to endorse their bonafides.

The Central Board of Direct Taxes (CBDT), the apex office to formulate policies for the Income Tax department, has decided to implement the new mechanism by the end of the next financial year in March, 2015.

Official sources privy to the development told PTI that the CBDT will get in touch with the Union Ministries of Law and Communications and Information Technology to establish the legal position and technology requirements respectively before it operationalises the new protocols for the e-returns called 'ITRV'.

"It has to be seen what will be the procedure to obtain electronic or digital signature by the taxpayers. There should not be an additional cost or procedural burden for the taxpayer who opts to file his or her I-T return online," a senior official said.

In case of digital signatures (used by corporate entities as of now), a bonafide statement that verifies the identity of the sender, it is required to be created by paying a fee and this requires regular renewal, which is why this is being seen as a burden on salaried class and other categories of small taxpayers.

The department, within the same time-frame, is also desirous of enabling the e-filing of Tax Deducted at Source (TDS) statements through its official web portal which is used by taxpayers currently to file their electronic returns.

As per the norms in force at present, a taxpayer who files an e-return has to mandatorily send a copy of the same by post to the I-T department's Central Processing Centre (CPC) in Bengaluru.

However, in many cases the post would not reach the CPC and hence the tax department categorised the taxpayers return as null and void.

The department, sources said, wants to promote e-filing of I-T returns and it desires that e-filing should be "hassle free and sans any glitches", which will prompt more number of people to file their tax returns by this way.

The I-T department is also bolstered by the fact that more and more number of people are opting to file their returns online.

As per existing rules, the CPC, on receipt of the posted 'ITRV', sends an electronic acknowledgement to the tax return filer.

The problem arises when the document sent by post does not reach the CPC because of lapses on the part of the taxpayer or some other reason.

Banks told to remit TDS by month-end

http://www.thehindubusinessline.com/economy/deficit-worry-banks-told-to-remit-tds-by-monthend/article5801625.ece?homepage=true

In a controversial move, the Finance Ministry has advised banks to remit the tax deducted at source (TDS) on salary, rent and credit of interest on deposits to the Government account by March-end, almost a month ahead of the designated due date.

Bankers say this advisory contradicts Income Tax Rules, which allow banks time up to April 30 to deposit TDS when the income or amount liable for TDS is credited or paid during the month of March. Moreover, it could raise the hackles of bankers and minority shareholders.

Desperate move?

According to market experts, this could be a desperate move by the Ministry to ensure that the “red line” Finance Minister P Chidambaram has drawn on the fiscal deficit is not crossed. Chidambaram had said the deficit would not exceed 4.8 per cent of GDP.

The TDS advisory, coupled with the Finance Minister’s request to public sector bank chiefs in October to ensure that dividend payable to the Government in 2013-14 is not less than the ₹6,803 crore paid in 2012-13, could be aimed at shoring up Government finances.

State Bank of India, Bank of Baroda, Bank of India and Punjab National Bank had declared handsome interim dividends after announcing their third-quarter results. The Central Government, as the majority shareholder in these banks, is the main beneficiary of the dividends.

Late February, the Secretary to the Department of Financial Services had requested the Indian Banks’ Association to issue directions to all its member-banks to ensure that apart from remitting TDS on salary and rent within the current financial year, the TDS on credit of interest may be remitted to the Government account in March itself, ‘in accordance with the law.’

‘Not in line with tax rules’

Bankers point out that the Ministry’s advisory is not in accordance with Income Tax Rules.

Last week, IBA, at the Ministry’s behest, issued an advisory on TDS to its member banks for implementation.

TDS aims at collection of revenue at the very source of income. It is the amount deducted from payments of various kinds such as salary, interest, contract payment, commission, etc.

The tax amount deducted at source can be adjusted against the depositor’s tax due. The TDS rate varies from one per cent to 30 per cent depending on the nature of payment.

Float money

If banks remit TDS in March itself they will not be able to utilise the float money (which could run into a few thousand crore rupees) that is otherwise available to them (to earn returns) before actually remitting the TDS amount to the Government.

According to Shravan Sharma, Chartered Accountant: “This advisory short-changes minority shareholders of banks, especially public sector banks. Banks are losing an opportunity to earn returns and create value for their shareholders.

“One month has been given to TDS deductors such as banks under Income Tax rules to remit TDS to the Government so that they don’t make mistakes in calculation. If a bank makes excess TDS payment it will not get refund but in case of underpayment it is slapped with a penalty.”

A senior public sector bank official said that while Government-owned banks will implement the advisory, it remains to be seen if private sector and foreign banks will bite the bullet.

RBI may not hike rates in April policy review

The Reserve Bank is likely to hit the pause button in its next monetary policy review on April 1, as the decline in inflation may give the central Bank "room to pause monetary tightening," says a BNP Paribas report.

According to the financial services major, the recent decline in inflation, driven largely by food prices, gives the RBI room to pause monetary tightening.

"As per RBI guidance, we do not expect it to increase rates in April, and expect just one more 25 bps (0.25 per cent) rate hike from the RBI this policy cycle," BNP Paribas said in a research note.

Wholesale inflation eased to a seven-month low of 5.05 per cent in January, on decline in the rate of price rise in food articles, mainly vegetables.

This is the second straight month of decline in wholesale price based inflation. The WPI was at 6.16 per cent in December.

On Indian equity markets, the report said that "with external sectors looking much better and inflation under control, we believe that the next catalyst for the Indian market will be the election results (May 2014)".
According to the global brokerage firm, India's earnings environment has also improved and this coupled with a better macro outlook leads us to upgrade India to an "overweight" along with Hong Kong, Taiwan, Indonesia and Philippines.

The report further noted that actions of policymakers since September 2013 have helped the Indian currency regain investor credibility, and tight curbs on gold imports coupled with improved merchandise and service exports sharply reduced the current account deficit.

Moreover, RBI's mobilisation of forex reserves via non- resident deposits also had a salutary effect on India's external risk metrics, the report said.

Rush to spend old notes spawns new exchange business

http://www.mumbaimirror.com/mumbai/cover-story/Rush-to-spend-old-notes-spawns-new-exchange-business/articleshow/29319590.cms

 

Trust enterprising Mumbaiites to turn an adversity into a business opportunity. 

The Reserve Bank of India's decision to withdraw pre-2005 currency notes has spawned a new exchange trade in the city, involving replacement of old notes with new ones for a commission of 2 per cent. 

Despite the RBI's clarification that pre-2005 notes will remain legal tender post March 31, the central bank's deadline for withdrawing these notes from circulation, the decision has set off panic in the city and small businesses have begun reporting receiving large number of these notes. 

While the RBI has made it clear that anybody can walk into a bank and exchange pre-2005 currency notes for new ones, not many Mumbaiites took up the offer on Thursday and Friday, fearing it could set the Income Tax department after them. 

Though the RBI has not mentioned any date beyond which pre-2005 currency notes will become worthless, people believe this will happen sooner than later. 

Sauji Bachhu Patel, manager-cum-cashier at Daily Needs, a super market on Palm Beach Road, Nerul, said he asked his staff to start separating pre-2005 currency notes in the store's daily collection on Thursday. "I was surprised by the amount of pre-2005 notes in the day's collection. It's clear that people have started dumping old notes at retail outlets," he said. 

Narendra Singh, owner of Blue Star Wines, Santa Cruz, too received a large number of pre-2005 notes on Thursday and the trend continued on Friday. "I am sure it's going to become a deluge by Monday," he said. 

The buzz in the exchange trade on Friday was that the commission for exchanging pre-2005 notes could double by next month to 4 per cent and touch 10 per cent in March. 

RBI Governor Raghuram Rajan at a lecture in New Delhi on Thursday said there are security factors attached to the decision, which had nothing to do with the elections. According to RBI sources, the pre-2005 notes have fewer security features and thus their copies are easier to produce. 

While currently one can walk into a bank and exchange any amount of pre-2005 notes, from July 1, to exchange more than 10 pieces of Rs 500 and 1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which the exchange will take place. 

SBI launches Youtube channel; Twitter is next

http://www.thehindubusinessline.com/companies/sbi-launches-youtube-channel-twitter-is-next/article5609936.ece

Nation’s largest lender State Bank of India on Thursday strengthened its social media presence with the launch of its channel on popular video sharing website Youtube and said it will also be launching its handle on the micro-logging site Twitter soon.

“The YouTube channel is another platform that will enable us to connect with our customers. SBI will continue to spread its footprint on social media through the launch of platforms like Twitter, shortly,” Chairperson Arundhati Bhattacharya said in a statement.

The YouTube channel, which follows a dedicated Facebook page launch in November, will initially have information about the bank’s products and services and its legacy to begin with and will gradually include philanthropic initiatives, it said in a statement.

SBI, has over 200 years of history. It has over 15,000 branches and over 43,000 ATMs.

The bank statement said the Youtube channel will help it connect with the young and technologically savvy customers.

9,000% dividend! Record payout from TMB

http://www.thehindubusinessline.com/industry-and-economy/banking/9000-dividend-record-payout-from-tmb/article5602547.ece

Tamilnad Mercantile Bank (TMB) has declared an interim dividend of 9,000 per cent. 

That’s actually Rs 900 per share of Rs 10 each, for the fiscal ending March 2014.

The board of this Tuticorin-headquartered bank took a decision to this effect at a meeting held on January 18.

Bank sources said this would translate into an outgo of Rs 25.6 crore (unchanged from last year).

The 9,000 per cent interim dividend is said to be the highest in the banking industry and this is the second year in a row that the bank has declared such a high dividend. It may be recalled that the bank’s board had approved a dividend of Rs 750 per share for 2008-09 and Rs 1,000 per share the following year, but could not make the payment as the annual general meetings for 2009-10 and 2010-11 were not held due to legal issues.

Bank sources said TMB’s shares continue to trade at between Rs 60,000 and Rs 65,000 a share in the informal market.

Banknotes issued prior to 2005 to be withdrawn: RBI Advisory

The Reserve Bank of India has today advised that after March 31, 2014, it will completely withdraw from circulation all banknotes issued prior to 2005. 

From April 1, 2014, the public will be required to approach banks for exchanging these notes. Banks will provide exchange facility for these notes until further communication. 

The Reserve Bank further stated that public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have on them the year of printing on the reverse side.

The Reserve Bank has also clarified that the notes issued before 2005 will continue to be legal tender. 

This would mean that banks are required to exchange the notes for their customers as well as for non-customers. From July 01, 2014, however,  to exchange more than 10 pieces of `500 and `1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes.

The Reserve Bank has appealed to the public not to panic. They are requested to actively co-operate in the withdrawal process.