Stricter prepaid SIM card rules

The Supreme Court today set up an expert panel to examine the feasibility of imposing stricter norms for selling prepaid SIM (subscriber identity module) cards. Two members each from the Telecom Regulatory Authority of India (Trai) and the department of telecom (DoT) will be the members of the committee, which will submit its report in three months, said a bench of Chief Justice S.H. Kapadia. The DoT will then consider the recommendations. In 2010, the department of telecom, in consultation with the home ministry, had issued mobile connection guidelines, which called for strict adherence to the customer acquisition form while issuing SIM cards. However, mobile firms have been unable to adhere to the strict rules, which emphasized on updating the subscriber details in their database and activation of the SIM only by authorized persons. The rules also required companies to revivify subscribers when they changed their tariff plans. Also no customer shall be given more than one prepaid or post-paid connection. If an individual wants more than one connection, the person has to give reasons. Last month, the telecom regulator had argued in favour of easing of the guidelines, pleading before the Supreme Court that the new norms will put “unnecessary burden” on operators as well as subscribers.

Schroder buys 25% of Axis mutual arm

Axis Bank today sealed an agreement to sell a 25 per cent stake in Axis Asset Management Company Ltd (Axis AMC) — its wholly owned subsidiary — to Schroder Singapore Holdings Private Ltd.

Schroder Singapore is a wholly owned subsidiary of global asset management firm Schroders, which had funds worth £187.3 billion under management as of December 2011.

The deal is subject to regulatory approval and is likely to be completed this year.

The deal provides Axis AMC access to Schroders’ global distribution network.

Profit surges

Axis Bank has clocked a 20.3 per cent rise in net profit at Rs 1,277.27 crore for the fourth quarter ended March 31 against Rs 1,020.11 crore in the same quarter last fiscal.

Total income grew to Rs 7,647.94 crore from Rs 5,817.06 crore a year ago.

Interest income improved to Rs 6,060.32 crore from Rs 4,366.6 crore last year.

The bank has proposed a dividend of 160 per cent, or Rs 16 per share, for 2011-12.

For the entire fiscal ended March, net profit grew 25 per cent to Rs 4,242.21 crore from Rs 3,388.4 crore last year.

Tax relief hope for PE funds

The finance ministry seems to have accepted the arguments of private equity funds that they are subject to the same rate of capital gains tax as foreign institutional investors.

Investments of private equity funds in unlisted firms are currently taxed at 20 per cent, while foreign institutional investors pay half of that rate.

It is anticipated that fresh amendments to the finance bill were likely once Parliament takes it up.

India’s proposed general anti-avoidance rules (GAAR), which stop funds from abusing the zero tax status of countries such as Mauritius, while playing on Indian bourses have unnerved the private funds.

GAAR, brought in this year’s finance bill, allows tax authorities to declare any business deal to be an “impermissible avoidance arrangement” if part or whole of the deal has been crafted with the intention of obtaining “tax benefits”.

The move to tax PEs on a par with FIIs was in the works for some time.PE firms, including big names such as Carlyle, Khazanah, Temasek and Warburg Pincus, reportedly sold off shares worth over $1.8 billion in the first three months of 2012, much of it after India announced that it would implement GAAR in the future.

The government would continue to reiterate through policy pronouncements that FIIs who had “substantial commercial interests” in any tax haven would continue to benefit from low or zero tax regimes of these countries as provided by the direct tax avoidance agreements signed with them.

“DTAAs will continue to be valid and are not being sought to be over-ridden,” as per the blog source.

The government will also make it clear that there will be no short- or long-term capital gains taxes for participatory note holders. There were apprehensions that participatory notes would be taxed under the new GAAR rules.

As per the finance ministry, the trading of participatory notes just led to the change of hands of a contract note or a derivative — underlying assets or shares in India do not change hands.

They wanted to set at rest “worries” of participatory holders who have as much as $20 billion of Indian stock assets in their portfolios.

Many investors, who want to test Indian stock markets or who wish to play without the bother of registering themselves with Sebi use these participatory notes, which are certificates with underlying Indian shares.

It’s estimated that FIIs have invested about 10 per cent of their approximately Rs 10,00,000-crore portfolio in India through participatory notes.