Finance

Cashless treatment is most sought after insurance benefit

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The demand for health insurance is increasing on account of the rise in lifestyle diseases and the growing health care cost, said a study by GOQii, a tech-enabled healthcare platform.
According to the GOQii IndiFit Report 2019, titled “Insurance: An Investment in Health’, 85% of people believe they should get health insurance before the age of 30. Of those surveyed, 90% of people believe healthier people should get a lower insurance premium and 70% are willing to share health data with insurance companies to get a discount on premiums.
“Overall trust in the healthcare system has deteriorated further with 96.5% of people not trusting the system, with 67.8% of Indians not trusting hospitals. To add to this, the rising cost of healthcare has prompted Indians to focus more on health insurance. 62.8% of Indians believe having a health insurance policy is an absolute necessity and approximately,’’ the report said.
The report is a year-long study of more than 7 lakh GQii users. According to the report, despite increasing awareness about the importance and need for an insurance policy, 20% of the respondents don’t own an insurance policy. “The common notion that continues to prevail is that insurance is confusing to understand, a prime reason that discourages people from buying one. The high cost of insurance also deters them,’’ the report said.
Respondents strongly believed cashless hospitalisation (87.9%) is the most sought-after health insurance benefit followed by medical bills reimbursement facility (67.7%) and better treatment in best hospitals (59.0%), the report said.
Among the reasons people look at while buying a particular health insurance policy were good quality hospital network – 42.3% and easy claim procedures – 41.9%. Low cost, good coverage and benefits, simple terms and conditions are some of the other convincing factors for people to buy health insurance.
The report also said that 38.3% people between the age group of 20-45 years suffer from at least one lifestyle disease ranging from diabetes, blood pressure, cardiac issues to thyroid, and acidity.
There has been an increase of lifestyle diseases in the last two years. Cases of cholesterol among people have increased from 10.1% to 14.1%, high blood pressure has increased from 9% to 12%, the GOQii report said.

Nisha Shiwani has worked in many companies in various capacities and in her free time loves to express herself through her articles. She is based out of the pink city Jaipur.

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Centre likely to miss direct tax collection target by Rs 50,000 cr

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The central government is unlikely to meet its direct tax collection targetThe central government is unlikely to meet its direct tax collection target for the financial year 2018-19, given the subdued revenue mop-up so far. As on March 15, the Income-Tax Department had collected Rs 9.23 lakh crore out of the revised direct tax collection target of Rs 12 lakh crore for the current fiscal.

“The direct tax revenue growth is at 13.4% so far against the revised target of 19.8% for the full year,” a finance ministry official said.

“The net direct tax collection for the current fiscal year until March 15 was at Rs 9.23 lakh crore against Rs 8.14 lakh crore collected during the same period last year. Corporate tax collection during this period stood at Rs 5.24 lakh crore while income tax collection was at Rs 3.87 lakh crore,” a source said.

The finance ministry officials said that Central Board of Direct Taxes (CBDT), the apex body of the I-T Department, is expecting around Rs 2 lakh crore more collection, mainly from advance tax payments. The last date for payment of the fourth quarter advance tax installment was March 15.

“It takes a couple of days for the payments to show. Apart from advance tax collections, the tax department is focusing on the tax deducted at source (TDS), self-assessment and regular assessment collections. The collections normally increase as March ends,” the official said.

“It appears that the CBDT won’t be able to meet the revised target of 19.8% growth for direct taxes. The focus is now on achieving at least the original budgeted target of Rs 11.50 lakh crore or get closer to it,” another official said, adding that 14.6% growth in direct taxes may be achieved for the full year.

The finance ministry had revised its direct tax collection target to Rs 12 lakh crore in the revised estimate in the interim Budget from the earlier budgeted target of Rs 11.5 lakh crore.

“The revised direct tax revenue target of 19.8% was overambitious. The growth rate in the direct tax revenues is likely to be around 14%. This looks reasonable given that the nominal Gross Domestic Product (GDP) growth rate for the current year may be around 11% plus, implying tax buoyancy of 1.2%,” said D K Srivasatava, chief policy advisor, EY.

In 2017-18, direct tax collection was Rs 10.02 lakh crore, which exceeded the then revised budgeted target of Rs 9.8 lakh crore. for the financial year 2018-19, given the subdued revenue mop-up so far. As on March 15, the Income-Tax Department had collected Rs 9.23 lakh crore out of the revised direct tax collection target of Rs 12 lakh crore for the current fiscal.

“The direct tax revenue growth is at 13.4% so far against the revised target of 19.8% for the full year,” a finance ministry official said.

“The net direct tax collection for the current fiscal year until March 15 was at Rs 9.23 lakh crore against Rs 8.14 lakh crore collected during the same period last year. Corporate tax collection during this period stood at Rs 5.24 lakh crore while income tax collection was at Rs 3.87 lakh crore,” a source said.

The finance ministry officials said that Central Board of Direct Taxes (CBDT), the apex body of the I-T Department, is expecting around Rs 2 lakh crore more collection, mainly from advance tax payments. The last date for payment of the fourth quarter advance tax installment was March 15.

“It takes a couple of days for the payments to show. Apart from advance tax collections, the tax department is focusing on the tax deducted at source (TDS), self-assessment and regular assessment collections. The collections normally increase as March ends,” the official said.

“It appears that the CBDT won’t be able to meet the revised target of 19.8% growth for direct taxes. The focus is now on achieving at least the original budgeted target of Rs 11.50 lakh crore or get closer to it,” another official said, adding that 14.6% growth in direct taxes may be achieved for the full year.

The central government is unlikely to meet its direct tax collection target for the financial year 2018-19, given the subdued revenue mop-up so far. As on March 15, the Income-Tax Department had collected Rs 9.23 lakh crore out of the revised direct tax collection target of Rs 12 lakh crore for the current fiscal.

“The direct tax revenue growth is at 13.4% so far against the revised target of 19.8% for the full year,” a finance ministry official said.

“The net direct tax collection for the current fiscal year until March 15 was at Rs 9.23 lakh crore against Rs 8.14 lakh crore collected during the same period last year. Corporate tax collection during this period stood at Rs 5.24 lakh crore while income tax collection was at Rs 3.87 lakh crore,” a source said.

The finance ministry officials said that Central Board of Direct Taxes (CBDT), the apex body of the I-T Department, is expecting around Rs 2 lakh crore more collection, mainly from advance tax payments. The last date for payment of the fourth quarter advance tax installment was March 15.

“It takes a couple of days for the payments to show. Apart from advance tax collections, the tax department is focusing on the tax deducted at source (TDS), self-assessment and regular assessment collections. The collections normally increase as March ends,” the official said.

“It appears that the CBDT won’t be able to meet the revised target of 19.8% growth for direct taxes. The focus is now on achieving at least the original budgeted target of Rs 11.50 lakh crore or get closer to it,” another official said, adding that 14.6% growth in direct taxes may be achieved for the full year.

The finance ministry had revised its direct tax collection target to Rs 12 lakh crore in the revised estimate in the interim Budget from the earlier budgeted target of Rs 11.5 lakh crore.

“The revised direct tax revenue target of 19.8% was overambitious. The growth rate in the direct tax revenues is likely to be around 14%. This looks reasonable given that the nominal Gross Domestic Product (GDP) growth rate for the current year may be around 11% plus, implying tax buoyancy of 1.2%,” said D K Srivasatava, chief policy advisor, EY.

In 2017-18, direct tax collection was Rs 10.02 lakh crore, which exceeded theThe central government is unlikely to meet its direct tax collection target for the financial year 2018-19, given the subdued revenue mop-up so far. As on March 15, the Income-Tax Department had collected Rs 9.23 lakh crore out of the revised direct tax collection target of Rs 12 lakh crore for the current fiscal.

“The direct tax revenue growth is at 13.4% so far against the revised target of 19.8% for the full year,” a finance ministry official said.

“The net direct tax collection for the current fiscal year until March 15 was at Rs 9.23 lakh crore against Rs 8.14 lakh crore collected during the same period last year. Corporate tax collection during this period stood at Rs 5.24 lakh crore while income tax collection was at Rs 3.87 lakh crore,” a source said.

The finance ministry officials said that Central Board of Direct Taxes (CBDT), the apex body of the I-T Department, is expecting around Rs 2 lakh crore more collection, mainly from advance tax payments. The last date for payment of the fourth quarter advance tax installment was March 15.

“It takes a couple of days for the payments to show. Apart from advance tax collections, the tax department is focusing on the tax deducted at source (TDS), self-assessment and regular assessment collections. The collections normally increase as March ends,” the official said.

“It appears that the CBDT won’t be able to meet the revised target of 19.8% growth for direct taxes. The focus is now on achieving at least the original budgeted target of Rs 11.50 lakh crore or get closer to it,” another official said, adding that 14.6% growth in direct taxes may be achieved for the full year.
The central government is unlikely to meet its direct tax collection target for the financial year 2018-19, given the subdued revenue mop-up so far. As on March 15, the Income-Tax Department had collected Rs 9.23 lakh crore out of the revised direct tax collection target of Rs 12 lakh crore for the current fiscal.

“The direct tax revenue growth is at 13.4% so far against the revised target of 19.8% for the full year,” a finance ministry official said.

“The net direct tax collection for the current fiscal year until March 15 was at Rs 9.23 lakh crore against Rs 8.14 lakh crore collected during the same period last year. Corporate tax collection during this period stood at Rs 5.24 lakh crore while income tax collection was at Rs 3.87 lakh crore,” a source said.

The finance ministry officials said that Central Board of Direct Taxes (CBDT), the apex body of the I-T Department, is expecting around Rs 2 lakh crore more collection, mainly from advance tax payments. The last date for payment of the fourth quarter advance tax installment was March 15.

“It takes a couple of days for the payments to show. Apart from advance tax collections, the tax department is focusing on the tax deducted at source (TDS), self-assessment and regular assessment collections. The collections normally increase as March ends,” the official said.

“It appears that the CBDT won’t be able to meet the revised target of 19.8% growth for direct taxes. The focus is now on achieving at least the original budgeted target of Rs 11.50 lakh crore or get closer to it,” another official said, adding that 14.6% growth in direct taxes may be achieved for the full year.

The finance ministry had revised its direct tax collection target to Rs 12 lakh crore in the revised estimate in the interim Budget from the earlier budgeted target of Rs 11.5 lakh crore.

“The revised direct tax revenue target of 19.8% was overambitious. The growth rate in the direct tax revenues is likely to be around 14%. This looks reasonable given that the nominal Gross Domestic Product (GDP) growth rate for the current year may be around 11% plus, implying tax buoyancy of 1.2%,” said D K Srivasatava, chief policy advisor, EY.

In 2017-18, direct tax collection was Rs 10.02 lakh crore, which exceeded the then revised budgeted target of Rs 9.8 lakh crore.

The finance ministry had revised its direct tax collection target to Rs 12 lakh crore in the revised estimate in the interim Budget from the earlier budgeted target of Rs 11.5 lakh crore.

“The revised direct tax revenue target of 19.8% was overambitious. The growth rate in the direct tax revenues is likely to be around 14%. This looks reasonable given that the nominal Gross Domestic Product (GDP) growth rate for the current year may be around 11% plus, implying tax buoyancy of 1.2%,” said D K Srivasatava, chief policy advisor, EY.

In 2017-18, direct tax collection was Rs 10.02 lakh crore, which exceeded the then revised budgeted target of Rs 9.8 lakh crore. then revised budgeted target of Rs 9.8 lakh crore.
The finance ministry had revised its direct tax collection target to Rs 12 lakh crore in the revised estimate in the interim Budget from the earlier budgeted target of Rs 11.5 lakh crore.

“The revised direct tax revenue target of 19.8% was overambitious. The growth rate in the direct tax revenues is likely to be around 14%. This looks reasonable given that the nominal Gross Domestic Product (GDP) growth rate for the current year may be around 11% plus, implying tax buoyancy of 1.2%,” said D K Srivasatava, chief policy advisor, EY.

In 2017-18, direct tax collection was Rs 10.02 lakh crore, which exceeded the then revised budgeted target of Rs 9.8 lakh crore.

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INVESTMENT: Robo-advisor better for younger investors

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I believe, as most of you would agree, that each one of us needs an advisor to help us take the right financial decisions. Now with technological advancements, the shape, size and form of a financial advisor has undergone a change and what we call the robo-advisor is gaining lot of momentum.

This will make you think whether to use your old known trusted financial advisor or go for a robo-advisor? But to answer this question you need to first assess your situation and financial goals, because each has its own pros and cons and it works both positively and negatively under different circumstances. It is also driven by an individual’s behaviour plus investment pattern.

The job of a robo-advisor is to use algos in doing your investment planning and to come out with the best asset allocation suiting an individual’s risk profile. It works on the foundation which is passive in nature but the same will change with constant machine learning. Whereas your financial advisor’s job is to look at your investments in depth and arrive at timely calls for generating greater returns and always aim to outperform.

The main factor we need to consider in this entire debate is the level of wisdom as against the algos. The robo-advisor will work on algorithms and does complicated calculations to dish out various analytical solutions and patterns, but it only works on the basis of the inputs that are fed into the system. What this input needs to be requires wisdom, and that can come from experience. This is not to say that robo-advisor will not learn or evolve. In fact, that is called machine learning and with time these algos will learn and become more robust.

What the robo-advisor lacks is tackling emotions that drive an investor. This is one of the critical roles for an advisor, because investing has to do more with behavior than science. For instance, what would a person do if they win a lottery or get a salary bonus? More often than not many of us would go on splurging this sudden cash than making additional investments.

Robo-advisory will work well when your financial goals and the priorities are clearly laid out as against the customised planning when you should seek the help of a financial advisor.

Ideally, robo-advisors will suit young investors because they are new to the investing world. The lower cost of this model too will suite them better. They will also be more at ease using this model. So, while starting your journey towards investing, robo-advisor will work best and the moment your investment needs more customised handling, a financial advisor will work better. An advisor who brings the required expertise and experience in helping you achieve your desired goals. The best part is you can make them accountable for their work and secure your financial future.

With time, robo-advisors will also establish the required credibility and will also carry the inherent knowledge as required to give you customised advice. But until then just be aware about the pros and cons of both the options. After all, it’s your hard earned money, so stay smart, stay careful when it comes to deciding which one to choose.

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Don’t ignore fixed income while building retirement portfolio

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Retirement planning is still a developing field in India. In the older days, retirement planning was not a big concern on two accounts – first many organised jobs offered pensions post retirement, which de-risked individuals from planning themselves and secondly the presence of the family safety net. However, both these are gradually fading in importance and, hence, for individuals who are currently working, there is a pressing need to start thinking about planning for funding their post-retirement expenses.

A retirement portfolio is a function of two life stages – wealth accumulation and spending phase. During the wealth accumulation phase, active earnings (earnings from employment or business) take care of expenses and a portion of this income should be saved to build a retirement pool. The earning years are the accumulating years and proactive planning is key to harnessing the power of compounding. Given the longevity of this stage and the risk-taking ability of the individual, equities make for an ideal investment tool. However, the need for debt cannot be understated given the inherent market volatility of equities.

How debt funds help in retirement portfolio

Apart from being a relatively new field, retirement planning in India also suffers from not having a single, clearly earmarked retirement planning product that can take care of individual needs. Hence, investors need to get their hands dirty to set up their own investment policies that can take them through this stage. Given that backdrop, it is important for investors to look at all the tools available for them. Now, the role of equity as a long term investment is well understood. So its role in retirement planning becomes obvious. However, what is less obvious is the role of debt funds in a retirement portfolio.

Aggressive hybrid funds offer a one stop allocation tool for investors looking for a simplified approach to allocating between equities and debt. Since these funds are treated as equity funds for the purpose of taxation, they offer stability of debt all while maintaining tax efficiency.

Life-stage approach to asset allocation

A life-stage approach to asset allocation is a universally accepted model for retirement corpus as it caters to changing needs of investors as they progress. Retirement funds offered by Mutual Funds today offer solutions catered specifically to retirement planning. The exit load structure also aims to dissuade investors from redeeming such funds till retirement, furthering their appeal for temperamental investors. A retirement fund typically has multiple plans which vary the equity and debt component thus allowing seamless transitioning between plans as investor risk profile changes.

Suitable for pensioners with limited risk appetite

The spending phase is retirement. Passive earnings (income from your investments – that is, capital appreciation, interest and dividends) take a front seat. Some would say this is the phase where one would now enjoy the utility of the wealth they have created. Risk tolerance tends to be significantly lower as asset fluctuations are less desirable. With longer life expectancy, income generation or passive earnings have become imperative to sustain the retirement pool, to meet monthly expenses and other ancillary expenses. Passive earnings also help manage the effects of inflation to some extent. Given high real rates in India, debt funds today offer a material hedge to inflation in the current environment and hence offer an attractive investment opportunity for pensioners with limited risk appetite.

Diverse debt strategies

MF offer a diverse set of debt strategies for investors on the basis of the type of instruments they invest in and the maturity profile of funds. For investors looking for an equity kicker, conservative hybrid funds (80% debt and 20% equity) offer potential investment opportunities for capital appreciation while maintaining a predominantly stable debt portfolio. Another tool especially during the drawdown phase could be the use of an SWP (Systematic Withdrawal Plan). Just like an SIP, an SWP offers the ease of convenience for withdrawals.

Though every investor has different needs, goals and responsibilities, one should look at a long-term perspective towards their investments, as you need this money at the time of retirement. Time in the market is more important than timing the market, to get maximum benefit of compounding.

Markets do not generate wealth, responsible investing does. Be a responsible investor.

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Weak LNG prices to lift city gas distribution companies margins

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Also, an increase in piped natural gas and compressed natural gas consumption should also drive up the operating profit margins of gas distribution firms, said a Crisil report
22-25% – Decline in liquefied natural gas prices since January
5-7% – Expected rise in piped natural gas consumption

Up to 7% likely increase in compressed natural gas consumption
250-300 basis points – Expected rise in profit margins of city gas distribution firms in first half of fiscal 2020
$6.5-7 per mmBtu – estimated spot LNG prices in first half of next fiscal

The margin improvement would be more pronounced for CGD entities with higher share of industrial consumers of PNG,” — Prasad Koparkar, senior director, Crisil Research

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PERSONAL TAX: No penalty on change of income head in ITR

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A taxpayer, engaged commodities trading, filed his return of income for the year ended March 31, 2014 declaring a total income of Rs 1.61 lakh. In the return, the taxpayer claimed that the transactions relating to mutual funds constituted a part of his business and therefore loss arising out of the transaction in the mutual fund units should be treated as business loss.

During the course of assessment, the tax officer did not agree with the taxpayer’s claim and held that the transaction in the MFs did not constitute the taxpayer’s business transaction. Accordingly, the tax officer treated the loss as short-term capital loss of the taxpayer. Consequently, the assessment order was passed determining the total income of the taxpayer at Rs 3.5 lakh. The taxpayer did not prefer to file an appeal against this assessment order. However, simultaneously the tax officer also initiated penalty proceedings on the ground that the taxpayer had furnished inaccurate particulars of his income. After giving the taxpayer an opportunity of being heard on this matter, the tax officer imposed a penalty of Rs 44,500.

The taxpayer was not happy with the penalty order and filed the first level of appeal with the Commissioner of Appeals. The first level appellate authority, on the basis of representations made, dismissed the taxpayer’s appeal and agreed with the levy of penalty.

Before the second-level appellate authority, the taxpayer argued that the claim for treating the loss from mutual fund units as a business loss was a bona fide claim and the same was presented with documentary evidence before the tax officer. The taxpayer contended that there was no malafide intention on his part while raising this claim in the return of income.

On the basis of the facts of the case, the Honourable Mumbai Tribunal observed that the taxpayer had duly disclosed the loss in his return of income. The tribunal relied upon a Supreme Court decision wherein it was held that any disallowance made by the tax officer in the assessment order, only on account of a different view taken on the same set of facts, could be at the most termed as a difference of opinion and would not amount to furnishing of inaccurate particulars of such income by the taxpayer. Hence, no penalty is leviable.

The tribunal also placed reliance upon a Bombay High Court decision wherein it was held that if a taxpayer makes a purported wrong claim in the return of income, but as the same is disclosed in the return of income, penalty is not leviable.

While deciding this case, the tribunal was of the opinion that a mere change of head of income by the tax officer during the course of assessment should not result in an automatic levy of penalty. In the present case, details about the ‘business loss’ or ‘short-term capital loss’ were available on record. Therefore, it cannot be said that the taxpayer has filed inaccurate particulars of income. A difference of opinion between the tax officer and the taxpayer about the head of income under which particular income has to be assessed may remain as a point of disagreement between the two parties, but such differences should not result in invoking penalty provisions under the Income Tax Act.

The Mumbai Tribunal accordingly ordered for deletion of the penalty in this case and thus ruled in favour of the taxpayer.

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Kumar Birla distances himself from debt-hit Kesoram Industries

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As the health of Kesoram Industries, the flagship of Basant Kumar Birla’s empire, deteriorates, his grandson Kumar Mangalam Birla is fast distancing himself from the entity.

As the cement and tyre maker veers close to default risk with mounting losses of its tyre division, K M Birla, the head of Aditya Birla Group and B K Birla’s male heir, has taken additional steps to physically move away from the company.

After resigning from the Board of Pilani Investment and Industries Corp, the holding company for several Birla group companies including Kesoram, in August last year, K M Birla has now asked the market regulator Securities Exhange Board of India to remove him from the list of promoters of Kesoram because of his miniscule holdings.

K M Birla’s move comes at a time of deteriorating financial health of Kesoram, which has just suffered a rating downgrade on Friday implying default risk.

With a debt burden of Rs 900 crore, Kesoram, despite having a profitable cement business, now has “moderate risk of default” due to mounting losses of its ailing tyre business.

“In nine months of FY19, the loss before interest and tax from the tyre division increased to Rs 71.22 crore as against expectation of improvement. The ratings remain constrained by the leveraged capital structure and continued cash losses, tyre segment exposed to risk of volatility in raw material prices & high competition and cyclicality of the cement industry,” rating agency CARE has said while downgrading long-term debt from “moderate degree of safety” of BBB to “moderate risk of default” under BB+.

The rating might get revised once the impact of proposed demerger of the tyre business pans out, CARE said.

Rapid fall in the fortunes of the company along with K M Birla, head of one of India’s largest industrial conglomerate distancing himself from the empire of his grandfather has forced B K Birla, who is 98 years of age now, to continue as the chairman of the company.

As per his grandfather’s earlier wish, K M Birla was supposed to take over as chairman which he had turned down, forcing B K Birla to elevate his daughter Manjushree to vice chairmanship.

Despite distancing himself, K M Birla wrested control over Kesoram with his group investment company Manav Investment and Trading Co now owning 23.82% stake.

On Sunday, Manav Investment disclosed to the exchanges that it has made an additional pledge of 3.03% shares of Kesoram with IndusInd Bank, raising its pledged portion to 16.64%.

Kesoram, as of December end had 21.38% of its shares held by the promoters pledged with the banks.

Rise in pledged component of shares indicates rise in indebtedness, which touched Rs 3,520.41 crore as on December end.

“The debt coverage indicators remained weak and the company met its obligations timely through infusion of funds by the promoters,” the rating agency noted.

“To support the company in view of the losses, the promoters infused equity of Rs 312 crore in March 2018 through preferential allotment and warrants and Rs.23.73 crore was infused as an unsecured loan. In the first half of FY19 also, Rs 150 crore was advanced to Kesoram through promoter group entities,” it said.

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SpiceJet may have to shell out more for leasing aircraft

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SpiceJet, which grounded 13 Boeing Max 737 planes, may have to shell out more for leasing aircraft as rentals have shot through the roof.

The grounding of over 300 of Boeing 737 Max 8 planes across the globe, following two crashes, has sent aircraft lease rentals soaring, according to airline insiders.

Two senior executives of different domestic airlines, who spoke to DNA Money anonymously, said post the decision by most carriers around the globe to not fly the Max 8 planes till the fault in its software was fixed has led to a scarcity of Boeing planes in the market.

One of them said this crunch in availability of Boeings has bloated aircraft rental costs.

Following two air crashes, which involved Boeing 737 Max 8, in less than five months aviation authorities of many countries – India, China, Australia, UK, Germany, Indonesia and others – have ordered grounding of the Max 8.

One of the airline executives DNA Money spoke to, said all the carriers, which have grounded Max 8 aircraft would be looking to lease planes to continue their flight services.

Even SpiceJet is reportedly considering hiring planes to operate the flights for which it has already sold tickets.

“SpiceJet will reach out to airlines and lessors for available capacity,” he said.

Airlines mostly do not own aircraft. They order them from an aerospace company and then sell and lease back the planes from lessors like B&B Air Acquisition, BOC Aviation and others.

According to reports, SpiceJet may wet lease planes to continue its services. Acquiring planes on wet lease means getting the aircraft along with crew (both pilots and cabin crew) and is usually from an airline. Dry lease involves only aircraft.

According to the an executive, the rentals for aircraft aged five years or more were currently “roughly” starting from “$350,000-$400,000 per month”. This, he said, was higher than the rentals for similarly aged planes before the grounding of Max 8s.

A second executive said last year the average rentals for planes above five years was around $200,000-$250,000 per month.

“Depending on the age of the aircraft, it (lease rentals) should not be more than $400,000 a month. Older aircraft of 5-6 years old would be $200,000-$250,000 per month. If it is starting from $350,000-$400,000 per month, it is on the higher side,” he said.

“One thing is certain, aircraft leasing cost has increased due to the shortage of aircraft in the market after countries have stopped flying of Max 8s in their airspaces,” said a senior official of local airline.

Executive of another airline echoed; “If you ask me, I would say there is a shortage for Boeing because around 350 Boeing 737 Max 8s have been grounded around the world. Obviously, there will be some shortage. There is no doubt about it”.

He, however, could not confirm whether aircraft leases had gone northwards due to the shortage.

Budget carrier SpiceJet has grounded 13 Max 8. As of early this month, its fleet size was 78 aircraft. Jet Airways, which has grounded around 50 aircraft, had five Boeing 737 Max 8 in service.

Globally, the Seattle-based aerospace company had more than 300 Boeing 737 Max 8 in services and several of them were to be delivered in the current year.

According to an estimate of Wall Street firms Melius Research and Jefferies, if the Max 8 were to be grounded for three months, then the cost to the manufacturer of the Boeing planes would reportedly be between $1 billion and $5 billion.

The airline executive expects Boeing to put Max 8 back in the air in a few months after addressing its software issue. The US-based aerospace firm has orders for more than 5,000 of these planes.

In a similar incident that occurred in 2013, Boeing had grounded its entire fleet of 787 Dreamliner, which was in service, till it found a solution to the problem of batteries catching fire. However, the cost borne by it was not much then as only 50 Dreamliners were in service in 2013.

“Boeing will take months to fix the problem (of Max 8). Meanwhile, all its airline customers will also demand compensation for losses due to the grounding of the aircraft,” said the airline executive.

MID-AIR SCARE

  • $400,000 per month – rental for aircraft aged five years or more
  • Over 300 – Number of grounded Boeing Max 737 planes globally

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Jet Airways grounds four more aircraft due to non-payment of amounts to lessors

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Beleaguered carrier Jet Airways said on Monday it has grounded four more aircraft due to non-payment of amounts outstanding to lessors under their respective lease agreements.

Facing the worst financial crisis of its 25-year existence, the airline has grounded about half its fleet, cancelled flights, delayed salaries and defaulted on loan and other payments.

“Further to our letter on March 13, we now write to inform you that an additional four aircraft have been grounded due to non-payment of amounts outstanding to lessors under their respective lease agreements,” Kuldeep Sharma,Jet Airways‘ Vice President for Global Compliance and Company Secretary, informed stock exchanges in regulatory filings.

The company is actively engaged with all its aircraft lessors and regularly provides them with updates on the efforts undertaken to improve its liquidity, he said adding aircraft lessors have been supportive of the company’s efforts in this regard.

Jet said it is also making all efforts to minimise disruption to its network and proactively informing and re-accommodating its passengers. The Company also continues to provide required and periodic updates to the Directorate General of Civil Aviation (DGCA) in this regard.

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I-T department to kickstart faceless verification of returns

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In a major step towards income-tax proceedings becoming completely faceless, the Income Tax Department under the finance ministry will launch a new mechanism to verify taxpayers’ returns shortly.

A notification in this regard was issued by the finance ministry on Wednesday.

A Central Vigilance Commission (CVC) has been set up by the department to carry out e-verification of the ‘red-flagged’ cases of income-tax returns. The new facility will verify income-tax returns of individuals as well as companies.

The system will red-flag returns filed by taxpayers on the basis of around 200 odd risk assessment parameters set by the department. These cases will be taken up for e-verification by taxman.

Currently, while a large number of returns may have discrepancies, only about 0.5% of the total returns filed are picked up for a random scrutiny. The manual verification of all the returns, however, is not possible.

“Now with the new e-verification system, all the income-tax returns filed by taxpayers will be matched with the financial data available with the department, which it gets from various sources. If any discrepancy is found, the system-generated e-mail notices will be sent to taxpayers seeking responses. The entire process will be faceless without involving any human interaction,” said a senior official privy to the developments.

The new system of online verification will have the system-generated questionnaires with multiple choice questions. The replies of assessees would be in the machine-readable XML format, eliminating the need for manual reading of the responses.

The department had been working on the plan to make the entire process of verification as well as scrutiny completely faceless. While presenting the Budget on February 1, interim finance minister Piyush Goyal had said that within the next two years, almost all verification and assessment of returns selected for scrutiny will be done electronically through anonymised back office, manned by tax experts and officials, without any personal interface between taxpayers and tax officers.

“With the e-verification process kicking in, the verification process will become faster, crisper, transparent and efficient. This will also help in taxpayers filing their income details correctly,” said Aditya Vikram, member (I-T), Central Board of Direct Taxes (CBDT). CBDT is the apex policy making body of the I-T department.

The e-verification notices will be sent under section 133C of the Income-Tax Act, 1961. The cases where the reply of the assessee is found to be satisfactory will be closed and wouldn’t be pursued by the department. The other cases where the reply is not satisfactory will be sent to the assessing officer for scrutiny, which is a long-drawn statutory process under section 143 of the I-T Act.

The CVC, located in Ghaziabad in the National Capital Region, will have powers to call for any information from banks or any other financial institution. It will be headed by an I-T commissioner.

The next step will be to make the scrutiny process fully automated and completely faceless where the assessee wouldn’t know who is the assessing officer.

This will be a part of the next generation of Central Processing Centre (CPC) to come up at Bengaluru. The centre will allow faster processing of income-tax returns. The finance ministry’s revenue department plans to put in place a mechanism in the next two years to ensure that income tax returns are processed and refunds are issued 24 hours.

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Cube Highways to acquire RInfra’s Delhi-Agra Toll Road for Rs 3,600 cr

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Singapore-based Cube Highways and Infrastructure III Pte Ltd is set to acquire Delhi-Agra Toll Road from Reliance Infrastructure (RInfra) at an enterprise value of Rs 3,609 crore and both have entered into a definitive binding agreement for the same.

Cube Highways and Infrastructure III Pte Ltd has been formed by global infrastructure fund I Squared Capital and a wholly-owned subsidiary of Abu Dhabi Investment Authority (ADIA).

“The total deal enterprise value is over Rs 3,600 crore. In addition, National Highways Authority of India (NHAI) claims of Rs 1,200 crore to be filed by DA (Delhi-Agra) Toll Road Pvt Ltd will flow directly to Reliance Infrastructure,” RInfra said in a regulatory filing on Thursday.

The enterprise value includes equity interests of approximately Rs 1,689 crore.

This transaction of selling 100% stake in the special purpose vehicle road project is as per Anil Ambani-promoted company’s strategic plan to monetise non-core businesses. Almost a year ago, RInfra had announced its plans to focus on engineering, procurement and construction (EPC) business.

The proceeds from the sale of this 180 kilometre-long Delhi Agra Toll Road will be utilised to partially repay company’s debt. “Debt of RInfra will reduce by over 25% to only less than Rs 5,000 crore against the net worth of around Rs 23,700 crore,” RInfra’s statement said.

This is not the first business that the company has sold to pare its debt. In August 2018, Adani Transmission Ltd (ATL) acquired Mumbai power generation, transmission and distribution business from RInfra for Rs 18,800 crore. Post that transaction, RInfra reduced its debt liabilities by Rs 13,800 crore.

RInfra has eleven road projects worth Rs 11,430 crore with a cumulative length of 968 km, according to the company’s website. Seven of the projects are operational, while four (including Delhi-Agra) are under construction. Though this six-lane Delhi Agra Toll Road is still being built, the tolling operation had commenced in October 2012 and witnesses heavy traffic flow. As per the concession agreement inked with NHAI, the concession period is till 2038.

The divestment will be undertaken after the commercial operation date for the Delhi-Agra Toll Road is achieved.

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