Invest in realty through physical or financial mode based on your risk appetite



Real estate has conventionally been a preferred choice for most Indians. For ages, Indian investors have been investing in physical real estate. However, over the years, real estate funds have emerged strongly, but is largely confined to High Net worth Individuals and family offices, considering the minimum ticket size of Rs 1 crore. Soon investors will have an additional avenue to participate in commercial real estate through Real Estate Investment Trust (REITs).

Physical residential real estate

Real estate, as an investment class, has typically delivered consistent returns to investors. But one must undertake adequate research on parameters like project location (including site visits), its proximity to job corridors, access to social and physical infrastructure and whether it is largely driven by end users. Check on developer credentials in terms of quality and timely delivery through the past track record.

Though the industry is now under a new regulatory regime through RERA (Real Estate Regulation and Development Act), it is still work in progress in many states. One should check if the property is registered under RERA. Once implemented effectively, RERA can be a powerful tool for investors.

Ready-to-move-in properties don’t entail possession risk and what you see is what you get – immediately. In any case, due to the sheer quantum of investment and it being illiquid, investment in this asset class has to be a well-calculated decision. In the current market scenario, there is flexibility in pricing as well as payment schemes, but one must check for any hidden costs.

Real estate investments entail a long-time horizon of at least five years and the investor must be clear on the financial implications of stamp duty, registration, GST (in case of under construction properties), prevalent interest rates, tax benefits on interest paid on home loan, tax implications on selling etc.

Real estate funds:

A relatively new mode of investing is through a managed real estate fund. As these funds invest in multiple projects across geographies, the risk can be diversified vis-à-vis a single property. The minimum investment required to invest in these alternate investment funds is Rs 1 crore with a typical lock in of five to seven years. Before zeroing on any fund, one must evaluate credentials of the fund’s promoters and management, its capability in raising, investing, managing and exiting funds at reasonable returns through their past track record. Evaluation of the fund’s strategy on location, developer partners, project segment – affordable/mid segment housing is as critical. One must evaluate fund managers’ role and control in project execution as active participation ensures timely delivery at optimum cost.

Real Estate Investment Trust (Reits)

Reits that invest in income generating properties like commercial/retail spaces are likely to be soon listed in India. They require a minimum investment of Rs 2 lakh per investor. Reits generate regular dividend income as well as capital gains, on transfer of Reit units on exchanges. Reit’s returns hinge on rental yields and price appreciation of the units, which would depend on demand supply trends in commercial/retail real estate industry.

Thus, there are multiple modes available for investing in real estate today and one should decide on the same basis their risk appetite.

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.


Weak LNG prices to lift city gas distribution companies margins



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



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



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



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.


  • $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



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



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



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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JFL’s Hong’s Kitchen to take on Mainland China, 5 Spice, others



Jubilant FoodWorks Ltd’s (JFL) foray into the Chinese eatery space with Hong’s Kitchen is set to create a stir in the market that’s dominated by established players and start-ups. Analysts tracking JFL’s business are of the view that the company’s new eatery brand will be a strong contender in the Chinese cuisine category which is also the second most consumed cuisine in the country.

Abneesh Roy, research analyst and senior vice president- Institutional Equities, Edelweiss Securities Ltd, said that Hong’s Kitchen will potentially be a strong alternative to large organised brands such as Mainland China, Yo! China, 5 Spice. “… as well as for small-format Chinese fast food start-ups such as Wok Express, Swiggy’s The Bowl Company, Faasos’s Mandarin Oak and several others that have cropped up in the country, apart from local restaurants and street-side vendors that serve Indo-Chinese fusion food,” Roy said in the note.

A part of Jubilant Bhartia group, JFL is one of India’s largest food service company that operates the pizza chain Domino’s and quick service restaurant chain Dunkin’ Donuts. Hong’s Kitchen is JFL’s first ‘own brand’ that serves Chinese cuisine. It’s first outlet opened at Eros mall, Gurugram on Wednesday.

According to Shyam S Bhartia, chairman and Hari S Bhartia, co-chairman, JFL, the company’s first indigenous restaurant brand underlines their confidence in the growth potential of the Indian food service market in the coming years. “Hong’s Kitchen will help us venture into the Chinese cuisine space for the first time and hence together with the existing brands of Domino’s and Dunkin’ help build a stronger portfolio,” the duo said in a company statement.

Experts believe that there is a big gap between the pricing and offerings of street vendors and premium fine dining restaurants. What also works for the new brand is the restaurant’s young, international-looking and trendy design that’s inspired by the colours and the hustle of Asian street markets.

JFL’s chief executive officer and whole-time director, Pratik Pota, said, “Hong’s Kitchen, with its fast-casual format, will address the vast, unaddressed market through great-tasting and affordably priced Chinese food that’s customised for Indian tastes.”

The key thing to watch for will be pricing, new store openings, capital expenditure (capex) per store, advertising spends, delivery etc. “In the first few years, any new chain makes losses. However, Jubilant already has huge economies of scale in terms of sourcing and real estate and hopefully will try to occupy gaps between street food and fine dining offerings. This will help in keeping margin hit on the lower side,” Roy said in the note.

Going with its strategy of not relying completely on third-party online food delivery platforms, JFL has not yet made the menu items offered by Hong’s Kitchen available on Zomato, Swiggy and other food delivery applications. Instead, the company has its own app on Google Play and Apple App Store for online food ordering in addition to a hotline for phone orders. The minimum order size for online delivery has been kept at Rs 99 and the company is not charging additional delivery/ packing/ other charges.

The menu includes both vegetarian and non-vegetarian food offered at attractive price points. The pricing starts from Rs 99 to Rs 199 for momos and spring rolls going up to between Rs 199 and Rs 349 for noodles and rice, main dishes, combos and chef’s specials.

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Why only crackers, what about vehicles, asks Supreme Court



After closing down the firecracker industry in the name of curbing pollution, the Supreme Court on Tuesday realised that its priority was misplaced as the real culprit behind the spike in pollution is the automobile industry.

Taking a relook into its order banning the existing firecrackers and introducing green crackers, a bench of Justices SA Bobde and S Abdul Nazeer asked the Centre whether it had done any comparative study by which it could be fairly stated that vehicles pollute more than firecrackers.

There was another reason too for the change of heart. So far, the matter was pending with a bench which had ordered the ban last October. On Tuesday, the case was listed before a new bench that considered the issue afresh.

The judges felt that its order had brought the entire firecracker industry to a grinding halt. This meant that scores of people lost jobs. The Court said that a ban on firecrackers cannot be indefinite as it affects the livelihood of those families living on it.

The Court’s views have given a ray of hope to the cracker manufacturers who have been at odds explaining to the Court that they are minor defaulters compared to the automobile industry. Moreover, the manufacturers claimed that firecrackers is used extensively during certain days of the year while the real contributors to pollution are vehicles, crop burning, dust from construction activity among other sources.

Additional Solicitor General (ASG) ANS Nadkarni told the Court that he will take instructions on whether any comparative study exists on pollution caused by fireworks vis-a-vis vehicles. The bench said, “It seems you are running after firecrackers while the bigger contributor to pollution is perhaps vehicles.”

The bench said that the Court must be mindful of citizens’ right to life which includes right to employment, right to carry out trade as well. “We do not want to generate unemployment. This trade (firework manufacturing) is not illegal as it is a licensed business. How can it be stopped? At best, it can be regulated.”

Referring to its own orders, the SC bench said, “Nobody has tested this case in relation to Article 19(1)(g) giving citizens right to practise any profession, occupation, trade or business. We cannot leave people unemployed.”

Meanwhile, ASG Nadkarni informed the Court that the Petroleum and Explosives Safety Organisation (PESO) along with environment experts of NEERI are expected to meet this week to finalize the chemical formulation of ‘green crackers’ which are low on light and smoke emission. The product approval for improved firecrackers will be released by March 21.

The petitioners represented by advocate Gopal Shankarnaraynan told the Court that pollution caused by fireworks accounted for 2.5 per cent of Delhi’s pollution and the very idea of Court banning crackers was to replace production of polluting crackers with green and improved ones. The matter will now be heard next on April 3.

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Indians come together for CRPF bravehearts, donate Rs 47 crore via Paytm




To express solidarity with the CRPF bravehearts, Indian Paytm users donated Rs 47 crore to CRPF Wives Welfare Association. According to Paytm, the company today handed over a cheque of Rs 47 Crores to Manu Bhatnagar, President of CRPF Wives Welfare Association. This money was collected through contributions for the CRPF Bravehearts. The fundraising efforts began on the platform following the ghastly attack on CRPF jawans on February 14.

From February 15 to March 10, more than 20 lakh Paytm users came forward and contributed to the cause to express their solidarity with the forces.

Paytm had collaborated with CRPF Wives Welfare Association (CWA) to collect the fund and allowed patrons to contribute money through the Paytm mobile app and website, that would go to the corpus fund of the CWA. The patrons were only required to enter their name and PAN card number to avail tax benefits under Section 80G. All donations made via the app were exempted from transaction fees.

Kiran Vasireddy, COO Paytm said, “Our prayers are with the jawans and the families affected by this attack. Our hearts go out to those who have suffered an unimaginable loss due to this. We, at Paytm, are committed to assist the families of our jawans in this hour of need by giving them a helping hand. We would like to thank our users who came forward and helped contribute Rs 47 Crores for this cause.”

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