Government to issue FBT guidelines on employee stock options soon
Mumbai: The government will soon issue guidelines on determining fair market value of stock options given by companies to their employees for calculating fringe benefit tax, finance minister P Chidambaram said.

Chidambaram had earlier said the fringe benefit tax on ESOPs would be calculated at the time of vesting the options to the employees and not at the time of allotment as was originally proposed in the budget.

It had proposed to include any specified security or sweat equity shares allotted by a company to its existing or former employees within the ambit of FBT.

However, this proposal was changed when the Finance Bill was passed in Parliament. The fair market value would now be determined when the company entitles an employee to get ESOPs at any later date.

This could bring relief to employers in a rising stock market, as value at the time of vesting is generally lower than the value at the time of allotment. But in a volatile or falling market, the FBT amount would increase. (Read More)
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India, Malaysia open more airports to each other's airlines
India and Malaysia have agreed to allow airlines from each other's countries to fly to more destinations in each country.

A two-day meeting between Malaysian and Indian civil aviation officials resulted in an MoU allowing airlines to fly to 18 destinations between India and Malaysia, apart from an open sky policy on air cargo services.

The agreement will pave way for growth in air operations between India and Malaysia. Air India Express is likely to start operating on the India Malaysia route very soon. (Read More)
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US, India N-talks drag on as Brazil, South Africa back New Delhi
Mumbai: Six weeks after India and the US started a fresh round of talks in New Delhi aimed at a consensus on the terms of a proposed nuclear accord, both sides have agreed to hold negotiations until 10 July in Washington.

Technical experts from both sides met earlier in the day to narrow differences over India getting an enduring supply of nuclear fuel from the US, reprocessing spent fuel and retaining the right to conduct tests. If the accord doesn't give consent to reprocessing rights, talks can't proceed.

The accord will also allow US companies such as Fairfield, Connecticut- based General Electric Co. and Monroeville, Pennsylvania-based Westinghouse Electric Co. to sell equipment, fuel and reactors to Indian power utilities.

Meanwhile, an expert attached with a leading American think tank has ruled out the possibility of an India-US nuclear deal, in spite of several rounds of negotiations.

However, India's quest for global civil nuclear cooperation got a fillip with Brazil and South Africa showing a willingness to back New Delhi in the Nuclear Suppliers Group (NSG).

Both Brazil and South Africa are important members of NSG. (Read More)
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Bombay HC refuses stay on RIL gas order, allows government to fix price
Mumbai: The Bombay High Court has refused to stay an interim order barring Reliance Industries from selling gas from its KG basin fields to any other entity except the Anil Ambani group and NTPC but allowed the government to go ahead with fixing the gas price.

A division bench adjourned hearing on RIL's appeal for eight weeks to allow a single bench court to complete hearing on the plea filed by Anil Ambani's RNRL that sought to prevent the Mukesh Ambani firm from creating third-party interest on RIL's gas assets.

The single judge bench had in an interim order in May barred RIL from selling 40 million standard cubic meters per day (mmscmd) of gas, half of the projected output from KG fields, to anyone other than RNRL and NTPC.

However, after reports of RIL inviting price bids from customers emerged, RNRL again approached the court and the single bench in June barred RIL from creating third party interest on the entire volume.

The division bench refused relief to RIL on the interim order said "we do not find anything in the impugned (previous) orders which prevent central government from going ahead in the matter of price fixation under the production sharing contract between the central government and the appellant (RIL)".

RNRL has alleged that due to lack of commitment to supply the gas on RIL's part its 7480 MW Dadri power project could not be set up.
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Indian cellular services market to exceed $25 billion by 2011: Gartner
Bangalore: Gartner Inc, has announced that Indian cellular services revenues were $8.95 billion in 2006 and are projected to grow at a compound annual growth rate (CAGR) of 18.4 per cent from 2007 to 2011 to reach $25.617 billion. Data revenues will outpace growth of voice revenues and contribute 22 per cent of revenue in 2011 from 9.6 per cent in 2006.

India will continue to be the fastest growing country in APAC in terms of mobile telephony after China and promises to become more dynamic with the entry of Vodafone.

Mobile penetration in the rural market is low at 2 per cent, but this represents an immense opportunity for the cellular service providers. Handset manufacturers are therefore concentrating on launching sub $25 mobile handsets. The market is forecast to grow 23 per cent CAGR during the five-year forecast period, growing to more than 462 million connections.

The Indian market is driven by prepaid connections, which accounted for more than 84 per cent in 2006 and expected to grow to more than 93 per cent of the connection base by 2011.

The revenues from data services will significantly contribute to the growth of overall cellular services revenues in India, with a CAGR of 36.8 per cent in the forecast period.

Prepaid subscribers are expected to adopt data services faster than the post-paid segment. Data revenues for the prepaid segment are projected to grow at 46 per cent CAGR during the forecast period as compared to 22 per cent for the post-paid subscribers during the same period.

The bulk of the revenues will continue to come from voice services and customers with low disposable incomes will form a significant proportion of the base.
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GST to be around 20 per cent; working group to submit report soon
Mumbai: The goods and services tax (GST), to be introduced from April 2010, could be in a weighted average in the range of 20 per cent, although it is planned to be revenue neutral, a senior government official said.

The tax structure should be such that it captures the buoyancy in the economy, K Mohandas, additional secretary (revenue) in the ministry of finance told a Ficci workshop.

While a joint working group (JWG) set up by the empowered committee of state finance ministers is preparing a strategy for GST implementation, the roadmap, rate and other regulatory issues are yet to emerge, he said.

Officials say GST would be a much better tax than all the existing taxes put together. It would be simple, transparent and efficient. It would be friendly to tax collectors and consumers, he added. (Read More)
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