New: Budget 2013-14 - 1. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. CTT applicable on the sale of commodities. Agricultural commodities will be exempted. CTT shall be at the rate of 0.01% on the value of transaction and the tax shall be payable by the seller.2.No change in the normal rates of 12 percent for excise duty and service tax.3. Excise duty on SUVs increased from 27 to 30 percent. Not applicable for SUVs registered as taxis.4.Proposals to levy Service Tax on all air conditioned restaurant.5.Additional deduction of interest upto 1 lakh for a person taking first home loan upto 25 lakh during period 1.4.2013 to 31.3.2014 (Total 2.5 lacs) Budget 2013-14!!!

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Wednesday, June 23, 2010

New Tax Slab with inputs as per People

New tax slabs after receiving inputs from people, says Pranab
Finance Minister Pranab Mukherjee on Friday  said the government will take a view on new tax slabs after receiving inputs from different stakeholders on the revised draft of the Direct Taxes Code (DTC). 

"The government will take a final view (on tax slabs) after receiving all the inputs," he said when asked whether the government was likely to retain the tax slabs suggested in the original DTC draft.

The first DTC draft, released in August, had proposed 10 per cent tax on the income of Rs 1.6 lakh-Rs 10 lakh, 20 per cent on Rs 10 lakh-Rs 25 lakh and 30 per cent beyond Rs 25 lakh in a year.
 
At present, 10 per cent is levied on income between Rs 1.6 lakh-5 lakh, 20 per cent on Rs 5 lakh-8 lakh and 30 per cent over Rs 8 lakh.

The revised draft, on which the Finance Ministry has invited comments from the public till 30th June, is silent on tax slabs.
 
However, it did mention that tax slab and rates proposed in the first draft would be revised.

"The proposal in this Revised Discussion Paper would lead to a reduction in the tax base proposed in the DTC. The indicative tax slabs and tax rates and monetary limits for exemptions and deductions proposed in the DTC will, therefore, be calibrated accordingly while finalising the legislation," the revised draft had said.

Mukherjee declined to give any clear indication about the new tax slabs saying "these are only discussion papers. How will I comment..."

The Minister said the tax structure would be revealed in the legislation to be introduced in Parliament. 

Monday, June 21, 2010

USE - India's Newest Stock Exchange

USE - India's Newest Stock Exchange Receives SEBI's Approval.

United Stock Exchange of India, the newest derivatives exchange received final approval from Securities and Exchange Board of India for commencing operations in the currency derivatives segment.
The approval was received after USE complied with all regulatory norms as specified by SEBI. United Stock Exchange has been given a very enthusiastic response from the market already wherein they received over 100 forms within few days of receiving the final approval. Both the Banking Fraternity and Broking Community have immense faith in United Stock Exchange declaring it a major competition to existing exchanges even before launch.

Source:http://www.useindia.com/

Mergers & Amalgamations


In today’s era Mergers, Amalgamations, Takeovers has become day to day activity. Many mergers and amalgamations are taking place all over the world. When two or more companies are added together to form a new entity, we terms it as merger or amalgamation. But there are many types of corporate restructuring which people combine under the umbrella of words mergers and amalgamation. Let us try to understand the difference between these terms.

The words merger and amalgamation are always interchangeably used. Many interpret mergers and amalgamations as synonyms. Indian Companies Act, 1956 does not differentiate between the words Merger and Amalgamation, however there is slight difference in merger and amalgamation. Merger is combination of two or more companies which can be done either by way of amalgamation or by way of absorption. Amalgamation is the process where two or more companies dissolve their identity to form a new entity. For example, merger of Brooke Bond and Lipton has formed a new entity called Brooke Bond Lipton India Limited.

Absorption, the other type of merger, is nothing but dissolution of a company’s identity into other company’s identity. As the name suggest, in absorption a company absorbs other company to form a new larger entity. Demerger is also a type of corporate restructuring which results in formation of two entities. The entity which undertakes demerger is termed as Demerged Company and the new entity formed is called as Resulting Company.
Companies adopt demerging strategy to sell subsidiaries or to get rid of non-profit making division of company. Demerger takes place in the form of spin off, split off, split up, sale off, etc.

In spin-off, company distributes its shareholding in subsidiary to its shareholders thereby not changing the ownership pattern. For example, Air India formed Air India Engineering Services Limited by spinning off its engineering department. Split-off is the form of demerger where shareholders of existing company form a new company to takeover specific division of existing company. When existing company is dissolved to form few new companies, it is called as Split-up. Sell-off takes place when company sells its non-profit making division.

When financially weak company absorbs financially strong company it is corporate restructuring made in the form of Reverse Merger. Merging of large sized company into small sized company is also form of Reverse Merger. For example ,merger of Corus with Tata. Now-a-days, public companies opt route of reverse merger for merging with private companies to avoid lengthy procedure of merger.

Takeover is another type of restructuring. When a bidder company takeover the management of target company with permission of its Board, it is termed as Friendly takeover. When a company secretly acquires the control over Target Company against wish of their management, it is termed as Hostile takeover.

Joint Venture is an entity formed by two or more companies for a specific period with a specific objective. Joint ventures are useful for a company to enter into new segment of market. Joint venture creates a new entity, however Strategic Alliance allows companies to remain independent while perusing agreed goal.

When a group of people buy the controlling stake in a company through leveraged (borrowed) funds, it is Leveraged Buyout. When such buyout is carried out by management, strategy is termed as Management Buyout. In addition to above methods of restructuring, Buy-back is also used as restructuring strategy so as to increase earning per share of the company. Strategy used to increase market price of share is called as Subdivision of shares, which is also type of corporate restructuring.
Thus the minute differences between various restructuring techniques must be considered while opting best suitable technique of restructuring for a company.