• Service tax,excise duty slashed 2%
• IT SEZs Sector gets tax breather, to enjoy full benefits
• GoM clears amendments to R&R, land acquisition policies
• Guidelines for preferential share issues relaxed
• Bill to change money laundering law passed
• CBEC breather adds to exporters’ cheer
• Unitech sells off Gurgaon Hotel for Rs 230 crore
• DLF slashes rates by up to Rs 13 lakh in Chennai
• S&P lowers India outlook to negative
• Govt has announced the third fiscal stimulus package in the form of Rs 30,000 crore worth of cuts in service tax, excise duty and countervailing duty on imports which is likely to result in cheaper housing, TV sets, phone bills etc. This package is likely to be followed up with interest rate cuts by RBI. Products that attracted 10% excise duty will now be taxed at 8% while service tax has been reduced 2% across the board to 10%. The Customs duty exemption on naphtha imports for power generation has also been extended beyond March 31, 2009. These rate cuts, as well as the 4% excise duty cut announced in December, will continue beyond March 31, as well. (ET)
• Govt has assured the IT companies that the income tax law that prevented their subsidiaries in SEZs from getting full tax benefits was discriminatory and needed to be removed. However, the IT companies will have to wait for the new govt to bring about the change through an amendment to the Income Tax Act in the budget. (ET)
• The Group of Ministers (GoM) headed by the Union Agriculture Minister have cleared the proposed amendments to the Land Acquisition Act and the Rehabilitation and Resettlement Policy. According to sources, the GoM has accepted the rural development ministry’s demand to stick to the 70:30 formula for land acquisition for industry, which means that a state can acquire only up to 30 % of the total land required for a project with the remaining being acquired by the private party concerned. The new Resettlement and Rehabilitation Policy moots rehabilitation before eviction of the people affected by an industrial project. The amendments will, however, not be binding on states as they are free to formulate own policies. (BS)
• SEBI has amended its Disclosure and Investor Protection Guidelines (DIP guidelines) relaxing norms for preferential issue of shares to those target companies whose boards have been superseded by government and which have already been exempted from strict compliance of certain provisions of SEBI’s takeover regulations. Other amendments to the regulations include:-
o lowering timelines for completion of bonus issue of shares from six months to 15 days in cases where no shareholder approval is required;
o raising of upfront payment in case of preferential issue of warrants to promoters to 25 % from 10 %;
o extension of validity of SEBI’s observations to a public issue to 12 months from the earlier 3 months;
o price band for an IPO can now be announced up to two working days before its date of opening. The company has to supply financial justification for the upper and lower bands. (BL)
• The Prevention of Money Laundering (Amendment) Bill, 2009 aimed at effectively combating money-laundering, terror financing and cross-border economic offences, passed by the Rajya Sabha last week, has now been passed by Parliament with the Lok Sabha approving the same. The Bill seeks to ensure a legal framework to check money-laundering crimes and use of black money for financing terror activities. Financial intermediaries like full-fledged money changer, money transfer service providers such as Western Union and International Payment gateways, including VISA and MasterCard have also been brought under the ambit of The Prevention of Money-Laundering Act. Consequently, these intermediaries, as also casinos, will be brought under the reporting regime of the enforcement authorities. It would also check the misuse of promissory notes by FIIs, who would now be required to furnish all details of their source. (FE)
• Central Board of Excise and Customs (CBEC) has clarified that the meaning of the term “used outside India” should be taken in the context of the nature of the service and has classified such services into three categories. Services such as those of architects and general insurance would be deemed as export if they are in relation to immovable property. For services where the place of performance of the export can be established, like in the case of market research agencies and storage and warehousing, the CBEC has clarified that such services would be considered as “exports” even if they were partly performed outside the country. For knowledge- and technique-based services, the CBEC has said if they were provided in relation to business or commerce to recipients outside the country, they would be considered as exports. The clarification will help speed up the process of service tax refunds for exporters which were delayed because of the ambiguity over the term. (FE)
• According to sources, country’s second largest real estate firm, Unitech has sold its 200 room budget hotel – Courtyard by Marriott – in Gurgaon to a Delhi-based high net worth individual (HNI) Roop Madan, for around Rs 230 crore. The agreement is learnt to have already been signed and a formal announcement can be expected in the next couple of days. Unitech has also learnt to have withdrawn its proposal to raise Rs 5,000 crore through issues in overseas markets for which it had applied to FIPB. Unitech is also known to be in discussion with a group of HNIs to divest 225,000 sq ft of office space in South Delhi for around Rs 500 crore. (BS)
• India’s largest property developer DLF has announced a reduction of up to Rs 13 lakh in the prices of flats at its new residential project in Chennai. Gurgaon, Panchkula and Kochin may also see similar project launches from DLF in the coming days. The decision is in line with the company’s recent announcement, which said it was strengthening its focus on the “affordable housing” segment in select cities. The DLF move is expected to compel other players also to revise their prices for existing and new projects. (BS)
• Standard & Poor’s have lowered the outlook for India’s credit rating from stable to negative, indicating higher possibility of a downgrade. The revision has increased expectations of a rate cut aimed at boosting sentiment thus raising prospects of a downgrade in future, which could raise borrowing costs and hurt the flow of investments into India. S&P’s revised outlook comes less than three weeks after it said that India will the second-fastest growing economy after China. It stated that India has a strong growth potential, but economy prospects and fiscal position are separate issues. (ET)
