22.07.2008

• Mutual fund switch under tax scanner
• A mutual fund switch by itself is not any violation of law. But tax on the profit made out of such switches, if not reported and paid for, is a violation. Profits on switches made within one year to purchase units in another fund, attract short term capital gains tax @15%. Many of such profits on switches are stated to be unreported.
• Hence the IT department is reported to be looking at such transactions.
• Corporate entry into primary education to get government okay
• At present private sector is allowed to invest in primary education with the condition that the profits earned out of the activity have to be ploughed back and utilized for their stated objective of providing education. Hence trusts, charitable institutions and societies have been the preferred form of private intervention in primary education. Profits are not subjected to tax.
• But this is set to change, with the government thinking of allowing profit making private companies to enter the primary education sector. This is with the condition that they have to have a public sector participant on board and also that their profits are subject to tax.
• I am sure some of you may have strong objections to such proposals. I welcome your ideas on this.
• The course of the nuclear deal in the weeks to come
• Even as the Indian government battles it out back home in the Parliament for the nuclear deal and its own survival, some NSG countries are reported to be having reservations. But the Foreign Secretary appears confident of convincing them.
• Once the IAEA board of governors approves the deal in its meeting on August 1, the US will approach Germany (the current Chair of NSG) to call for a meeting of NSG to push for an exemption.
• Have a view on premium SMSes?
• Premium SMSes are messages made to some special numbers which attract hefty charges from customers for each message. Normally we see such numbers being used for contests and promotions etc.
• TRAI is particularly concerned about these premium SMSes, whose tariffs range from Rs 2-10 on three counts.
• First, the tariffs for premium SMSes cannot be multiple times higher than normal text messages since the nature of services offered in both cases were the same.
• Second, while the volume of premium SMSes have witnessed a massive increase in the last two years, telcos have cashed in rather than voluntarily reducing the charges.
• Third, many customers are not fully aware of premium SMS rates as their tariffs are not ‘widely publicised’.
• Service providers say that charges for these premium SMSes are high because revenues earned through them are often shared with the content provider, broadcaster and other stakeholders. But ask any of these stakeholders, they say that what the telcos share is a pittance.
• Latest figures released by sector regulator TRAI reveal that customer preference for texting in India has hit an all-time low. From close to 8-9% of the operators’ revenues at one point, texting now provides GSM players with 4.3% of their total revenues, while for CDMA operators, it is a mere 1.8%.
• What is the difference between a business jet and a micro jet?
• Look at this graphic which gives superb details.
• Speaking of jets, GVHL (Global Vectra Helicorp Ltd) a company that specializes in offshore helicopter services to India’s oil and gas sector, is reported to be toying with the idea of offering shuttle services in major metros where traffic jams are proving to be a headache. The fare is likely to vary from Rs 4,000-5,000 per trip according to the distance.
• Developments on WTO talks – the G20 stand on subsidies and tariffs
• THE powerful G-20 group of developing countries such as India, China and Brazil has stepped up pressure on developed nations like the US to substantially reduce their billions of dollars worth of trade-distorting farm subsidies and make steep duty cuts in products with high tariffs.
• The developed countries, however, are unwilling to place caps on farm tariffs, despite the fact they are pushing for caps on industrial tariffs. G20 champions tariff simplification and wants that all farm tariffs should be converted into ad valorem (tariffs based on the value of the product). Rich nations have been resisting full conversion to ad valorem as they want to retain a large number of specific, compound, mixed and complex tariffs to provide another layer of protection.
• The government is reportedly considering monopoly purchase of costly patented drugs and devices and make them available to patients at a lower price by obtaining bulk discount from the manufacturer.
• This is one measure that is sure to raise the hackles of many. You should be having a view point on this.
• Though many countries do have a negotiated system of purchase for costly drugs, the point is that all these purchases are for the public healthcare systems. However, the Indian government is proposing that it acts as a single window for the entire requirement of the country for a particular drug, including for private hospitals. This is nothing but monopoly, that has the following associated ills:
• Poor availability, diversion, lack of transparency in pricing and a disincentive for competing products.
• Interference with the practice of medicine as monopoly purchases would effectively select one from many therapeutic equivalents available. Since all drugs are not equally effective, by discouraging other therapeutic equivalents the monopoly purchases risk denying appropriate treatment.
• Look at this ET editorial. Worth a read.
• Ever heard of ‘check kiting’?
• Very interesting. Look at this.
• It would be equally interesting to look at the dictionary definitions of a kite in this context.
• A piece of negotiable paper representing a fictitious financial transaction and used temporarily to sustain credit or raise money.
• A bank check drawn on insufficient funds to take advantage of the time interval required for collection.
• A bank check that has been fraudulently altered to show a larger amount.
• Have a better example than this to explain soaring high?
• Yelena Isinbayeva. Pole vaulter from Russia. Has set world records 22 times so far. She will be leading Russia’s charge at Beijing Olympics.