New guidelines to distinguish stock traders and investors - higher tax likely for FIIs
New Delhi: The government has proposed new guidelines that will try to distinguish stock traders from investors. The government's concerns have deepened over the issue of tax avoidance by foreign institutional investors (FIIs).

Currently, FIIs pay only 10 per cent tax on short-term capital gains, and if treated as traders, will have to shell out 41 per cent tax..

The Central Board of Direct Taxes has invited comments from all the stakeholders before May 25 on the draft guidelines. The draft guidelines give 15 conditions to assessing officers to determine whether one is stock trader or investor.

The CBDT said the following instructions will provide further guidelines — apart from the 1989 guidelines — for determining whether a person is a trader in stocks or an investor in stocks:

i. Whether the purchase and sale of securities was allied to his usual trade or business / was incidental to it or was an occasional independent activity.
ii. Whether the purchase is made solely with the intention of resale at a profit or for long term appreciation and/or for earning dividends and interest.
iii. Whether scale of activity is substantial.
iv. Whether transactions were entered into continuously and regularly during the assessment year.
v. Whether purchases are made out of own funds or borrowings.
vi. The stated objects in the memorandum and articles of association in the case of a corporate assessee.
vii. Typical holding period for securities bought and sold.
viii. Ratio of sales to purchases and holding.
ix. The time devoted to the activity and the extent to which it is the means of livelihood.
x. The characterisation of securities in the books of account and in balance sheet as stock in trade or investments.
xi. Whether the securities purchased or sold are listed or unlisted.
xii. Whether investment is in sister/related concerns or independent companies.
xiii. Whether transaction is by promoters of the company
xiv. Total number of stocks dealt in
xv. Whether money has been paid or received or whether these are only book entries

The CBDT has advised assessing officers that no single criterion listed above should be taken as decisive and the total effect of all these criteria must be considered to determine whether a person is an investor or a trader.

However, FIIs have said new draft rules gave discretionary powers to IT officials.
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Rana Sugars to list GDR issue on Dubai exchange
Abu Dhabi: Rana Sugars Ltd, a sugar refiner, will become the second Indian company to list on the Dubai International Financial Exchange (DIFX) on Thursday, when it lists its GDRs following an $18-million capital-raising exercise.

The company's ordinary shares are listed on the BSE and the NSE.

Nasser Al shaali, COO of the DIFX, said: "We are delighted to welcome Rana Sugars to the exchange. This listing further demonstrates the appeal of the DIFX to companies right across our region. The exchange provides a high international profile and an excellent trading environment."

Rana Sugars manufactures white crystal sugar. The proceeds of the GDR issue will be used to expand its sugar and power generation capacities.

In March 2006, Man Industries, the Indian oil and gas pipeline supplier, listed GDRs worth $35 million on the DIFX.
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Citigroup Global advances schedule for open offer of MphasiS BFL shares
Bangalore: Citigroup Global Markets India Pvt Ltd, acting on behalf of TH Holdings, along with Electronic Data Systems Corporation has advanced the open offer schedule for acquisition of MphasiS BFL Ltd shares from existing shareholders.

The offer, which opened on May 17, will now close on June 5, Mphasis has said in a notice to the BSE on Wednesday.

The original open offer was slated to open on May 22 and close on June 12. EDS has made a conditional offer to acquire 52 per cent stake in Mphasis BFL at Rs204.50 a share in an all cash deal.
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XL Telecom files prospectus for public issue
Hyderabad: XL Telecom Ltd, a Secunderabad-based company, has filed a draft red herring prospectus with SEBI to raise funds for its expansion plans. The company intends to come out with a public issue of 39 lakh shares shortly, and plans to raise funds through a book-building process.

The diversified company manufactures CDMA handsets in a tie up with Kyocera, as also solar photovoltaic systems and ethanol. The former chairman and managing director of Allahabad Bank and Bank of India, Dr R. Srinivasan, is the chairman of the Rs300-crore company.

Anand Rathi Securities and Centrum Capital Ltd will serve as the book running lead manager and Bigshare Services have been engaged as the registrar.
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