The Hindu Business Line : Settlement doors not open forever

Instead, its portals would be open only once in one's lifetime. Second, the commission cannot give immunity from all the central laws as hitherto — it can give immunity from prosecution only under the income and wealth tax laws.

Third, no one can scupper an appeal by going to the Commission while the appeal is pending — hereafter one can go the Commission only when the matter is before the assessing officer in original assessment.

And, fourth, the entry to the Commission would be granted only if one has at least Rs 3 lakh to offer by way of tax as against the existing limit of Rs 1 lakh.

Surcharge abolished

With the 10 per cent surcharge abolished for firms and domestic companies with total income below Rs 1 crore, will there be an all-round craving for smallness?

Mustafa Salaluddin, Chennai

The listed companies aiming for honours and laurels beyond tax savings will not seek smallness as you have so picturesquely put it. But others might. Firms of professionals would most certainly split and splinter amoeba like. Because for them a saving thus made is nothing to scoff at. There would be attempts at multiple companies and firms a la multiple taxable units at the individual level.

In a way the Finance Minister has unwittingly introduced the slab or progressive system of taxation for firms and companies as well. But his heart is at the right place — to spare SMEs from severe taxation.

Excise on cement

Will the dual rates of excise for cement hold the price line after all?

Namita Deshmukh, Ahmednagar

The Finance Minister said Rs 190 per 50kg bag should give sufficient profits to the cement industry as a whole, which he implicitly accused of cartelisation in increasing the price mindlessly.

But the medicine he has prescribed — lower duty per tonne for those sticking to the MRP of Rs 190 with a higher specific rate for those breaching the price line drawn by him — mistakenly assumes that the industry treats excise as a cost.

The truth is excise in this country has always been perceived to be a pass-through burden, especially in a sellers' market, which is the case with cement, thanks to cartelisation.

Therefore, once again the Finance Minister whose heart is at the right place is naïve in believing that the industry can be thus disciplined.

Exchangeable bonds

What exactly are exchangeable bonds referred to in the Budget?

Cedric Pereira, Thiruvananthapuram

It is essentially meant for holding companies and investment companies, especially in the family-controlled segment of the corporate sector. Tata Sons, which was constrained to offload a huge chunk of its investments in Tata Consultancy to mobilise funds for the Chorus takeover, would have lapped up the exchangeable bond (EB) option instead. EB enables a holding company to issue bonds that are convertible into shares of the subsidiary.

It is like a convertible debenture except that unlike the CD, EB provides for conversion into shares of another company. This gives the holding company best of both the worlds — immediate funds sans loss of control for the time being.

For the investor, it provides an opportunity to acquire shares of a blue chip company at an attractive price, which incidentally is also one of the pluses of a CD.

(ASK! Send in your queries to ask@thehindu.co.in.)

http://MentorQA.blogspot.com

S. Murlidharan

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