OPINION, P8 COMPANIES, P6 DISINVESTMENT IIP may have gone up because of one-off factors Abolish dividend tax—it will lower effective corporate tax rate, cheer markets TECH INVESTMENT Air India to be split into four parts ahead of sale, says Sinha EDITORIAL INTERNATIONAL, P16 Son-led SoftBank considers $18-bn share sale of mobile biz MUMBAI, TUESDAY, JANUARY 16, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 258, 18 PAGES, `6.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,843.51▲ 251.12 NIFTY: 10,741.55 ▲ 60.30 NIKKEI 225: 23,714.88 ▲ 61.06 HANG SENG: 31,338.87 ▼ 73.67 `/$: 63.49 ▲ 0.15 `/€: 77.86 ▼ 0.70 BRENT: $69.69 ▼ $0.18 GOLD: `29,838.00 < > `0.00 — JSW arm, two others to buy BRPL THE PROJECT management arm of Sajjan Jindal-led JSW Group and two other firms will acquire Brahmani River Pellets, after Tata Steel’s deal to buy the prominent Odisha-based pellet maker collapsed in October last year, reports Banikinkar Pattanayak in New Delhi. Union Budget set to offer more I-T relief Deduction under Section 80C may be raised to `2 lakh; likely to raise exemption by `50,000 to `3 lakh SUMIT JHA New Delhi, January 15 IN WHAT IS widely expected to be a populist Budget, the government is likely to offer taxpayers some relief by levying personal income tax (PIT) only for those earning incomes above `3 lakh per annum.Currently,the exemption limit is lower at `2.5 lakh per annum. Government officials said theUnionBudgetfor2018-19, to be presented on February 1, may also enhance the limit for tax-free investments and expenses undersection 80C of Current personal income-tax structure Annual income (` lakh) Tax rate (%) Up to 2.5 Nil 2.5-5 5 5-10 20 >10 30 *Surcharge: 10% of income tax for income of `50lakh-1 crore; 15% for income> `1 crore *Cess: 3% on total of income tax + surcharge. Infy doles out 95% of variable pay to staff INFOSYS HAS doled out 95% of variable pay to its staff for the third quarter of this fiscal, its highest in the last nine quarters, reports fe Bureau in Bengaluru. Infosys on average used to pay 70-75% of its variable pay to staff, but this time it has risen. Continued on Page 2 LOAN PRICING ● CALM AFTER STORM Banks reluctant to switch to external benchmark SHAYAN GHOSH Mumbai, January 15 APPREHENSIVE THAT PRICING loans to an external benchmark, rather than to their cost of funds, may affect their margins, lenders have expressed their reluctance at usingthesetopricetheirloans. In communications to the Reserve Bank of India (RBI), several banks have said the external benchmarks suggested by the central bank would not be suitable for pricing loans. The central bank has, over the past couple of years, been trying to coax banks to lower lending rates. However, banks have been slow to do so citing the high cost of funds. SinceJanuary2015,theRBI has trimmed the repo rate by about 200 basis points bringing it down to the current 6%. However, while the MCLR of the Income Tax Act to `2 lakh from `1.5 lakh. These investments include those made in provident fund (PF) and public provident fund (PPF) schemes, life insurance premiums, equitylinked savings schemes and five-year bank deposits. The expenses include tuition fees and the principal repayment on home loans. Thereisataxbreakforupto `50,000 for investments made in the National Pension System (NPS) under section 80CCD, but that quota is unlikely to be increased, sources said. However, there is a chance that withdrawals from the NPS on maturity may not be taxed to the extent that they are now.Currently,40% of the corpus on maturity is taxexempt while 20% is taxed at the marginal rate. For the remaining corpus of 40%, individuals need to buy annuities from life insurers. In the Union Budget for 2017-18, finance minister Arun Jaitley had left the income slabs unchanged but had provided marginal relief to the small taxpayer by reducing the rate to 5% from 10% for individuals with an annual income of between `2.5 lakh and `5 lakh. marginal cost of funds-based lending rate has been lowered periodically, banks were slow to drop the base rates to which most loans were pegged. In recent months, though, loan rates have trended down consequenttodepositrateshaving been cut. “Linking lending rate to any of the external bench- INDIAN BANKS' ASSOCIATION Banks would prefer to continue with the MCLR... The transmission under MCLR system has been substantial. It would be unrealistic to expect 100% transmission immediately as about 35-40% of the deposit base (CASA) is insensitive to repo rate changes. Special Features The ‘grey’ area of marketing: Does it pay to stay away? Millennials might bring in repeat purchases for brands, but it is the older generation that has heavier wallets and higher brand loyalty. Then why do marketers often give the elderly a miss? QuickPicks December WPI inflation eases to three-month low of 3.58% WHOLESALE PRICE-BASED Inflation (WPI) eased to a three-month low of 3.58% in December 2017 as food prices softened, prompting industry to seek measures in the Budget to strengthen the agriculture supply chain, reports PTI. Wholesale Price Indexbased inflation was 3.93% in November 2017 and 2.10% in December 2016. PAGE 2 Situation normal again at SC marks as suggested by the internal study group (ISG) will addtovolatilityinmarginsand will place banks having vast branch networks, ATMs, business correspondents,at a competitive disadvantage,” State Bank of India (SBI) wrote in its letter. For instance, the dependence of banks on repo funds was only marginal, the bank noted. Moreover, the rates on T-bills were a function of the government’s borrowing requirement and, therefore, highly sensitive to external environment/fiscalpolicies.As such, they did not represent banks’marginal cost of funds. Also, the interest rates on certificates of deposit (CDs), the lender said, was not an active benchmark and besides, banks were not always raising resources via the CD route. IT WAS BACK to business as usual on Monday in the first five courts presided by Chief Justice of India Dipak Misra andfourseniorjudgeswhohad publicly hurled accusations against the former on assignment of cases and other issues last week. According to sources, the CJI and all other judges had an informalmeetinginthemorning prior to starting theirwork and discussed the accusations levelled by the four senior judges led by justice J Chelameswar on allocation of work/cases in the SC. Though details ofwhatwas discussed in the closed-door meeting were not available, sources said that the crisis has been resolved. Continued on Page 2 Continued on Page 2 FE BUREAU New Delhi, January 15 SLASHED ITR Trai’s move to hit incumbent telcos FE BUREAU New Delhi, January 15 WITH THE TELECOM Regulatory Authority of India (Trai) slashing the international termination rate (ITR) by 43% to 30 paise a minute from February1,telcosstandtolosearound `2,000croreinrevenuesannually and the maximum brunt would be borne by incumbents likeBhartiAirtel,VodafoneIndia and Idea Cellular. According to a Kotak InstitutionalEquities(KIE)analysis, Bharti’s annualwireless Ebitda would be hit by 2.5-3% and the same would be higher at 4.5-5% on the combined IdeaVodafone entity. But unlike the case of a cut NEW WRINKLE ■ ITR cut by 43% to 30 paise/minute ■ Industry's annual revenue hit at `2,000 cr ■ Bharti, Voda, Idea to bear maximum brunt in domestic termination rate, the incumbents’ loss would not be a gain forReliance Jio as international termination rates are paid by overseas operators to local ones each time an overseas callercalls an Indian subscriber. Continued on Page 2 LOOKING UP Stocks continue record run Sensex, Nifty come off lifetime highs at the close; financial sector stocks the main drivers S&P BSE SENSEX Intra-day, January 15 34,970 Previous close 34,592.39 10,800 34,890 10,775 34,810 FE BUREAU Mumbai, January 15 34,650 10,741.55 10,725 34,687.21 Open Previous close 10,681.25 10,750 34,843.51 34,730 BENCHMARK INDICES HIT record highs again on Monday. The Sensex hit a new high of 34,963.69 points, while the Nifty scaled to its record of 10,782.65 during the session. Nifty 50 Intra-day, January 15 10,700 Close 10,718.5 Open Close banking indices gaining the mostandalsohittingnewhighs. Bothindicesgaveupsomegains before close. Driving the surge on Monday were financial sector stocks,with the finance and Continued on Page 2 Crude shock FE BUREAU Trade deficit widens in December A surge in global crude oil prices helped drive up merchandise imports by 21.1% in December, while export growth slowed sequentially to 12.4%, widening trade deficit to a three-year high. Goods trade deficit ($bn) Exports (rhs, % Change, y-o-y) Imports (rhs,% Change, y-o-y) 16 12 8 4 0 5.7 0.5 Dec 2016 Source: Ministry of commerce 60 14.9 DIESEL PRICES have touched a record high of `61.74 per litre and petrol prices have crossed `71 as international oil rates continue to rally, reports PTI. Petrol price rose to `71.18 per litre in Delhi on Monday, the highest since August 2014, according to daily fuel price list of stateowned oil firms. Diesel prices soared to their highest level of `61.74 per litre in Delhi. It is being sold at `65.74 in Mumbai, where local sales tax or VAT rates are higher. COMFORT FACTOR 10.36 IN THE NEWS Diesel prices at record `61.74 per litre 21.1 40 20 12.4 0 -20 Dec 2017 ● AUTHENTICATION UIDAI allows facial recognition technology PRESS TRUST OF INDIA New Delhi, January 15 AADHAAR WILL INCLUDE face recognition alongside iris or fingerprint scan as a means of verifying users, helping those who face issues in biometric authentication or have worn-out fingerprints, the authority in charge of the national identity card system said today. The face authentication will be enabled by July to help people facing difficulty in biometric authentication due to old age, hard work or worn-out fingerprints, the Unique Identification Authority of India (UIDAI) said in a statement. UIDAI said that face authentication would be allowed “only in fusion mode”, meaning along with either fingerprint or iris or OTP to verify the details of the Aadhaar holder. Aadhaar,the 12-digit identifier,is being used foridentity authentication across banks, telecom companies,the public distribution system and income tax department, among others. Continued on Page 2
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