Blog posts of '2024' 'August'

Stock name: Bombay Burmah Trading Corporation Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

After a downward trend since September 2018, the stock recently recovered and surpassed its 2018 levels, forming a rounding bottom pattern on the monthly chart from September 2018 to June 2024. The stock broke out of this pattern in June 2024 with significant volume and has continued to rise. However, the current RSI level indicates the stock is in the overbought zone, which may lead to a retest. According to technical analysis, if the stock maintains its momentum, it might continue to move higher.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Chambal Fertilizers & Chemicals Ltd.

Pattern: Flag and pole pattern

Time frame: Daily

Observation:

The stock experienced a sharp rise in June 2024, followed by consolidation in July and August 2024, forming a flag and pole pattern on the daily chart. Although it hasn’t broken out yet, the stock is nearing the breakout line. The MACD indicator is close to signalling a bullish trend, and the RSI levels are favourable. Technical analysis suggests that if the stock breaks out with strong momentum, it may continue to rise.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Thirteen years after their breakup, Honda Motorcycle & Scooter India (HMSI) has overtaken Hero MotoCorp in wholesale dispatches, recording 18.53 lakh units from April to July, compared to Hero's 18.31 lakh units. This shift is attributed to strong urban demand for scooters and mid-to-premium motorcycles, coupled with an incomplete recovery in rural areas. Despite this, Hero remains ahead in retail sales. The competition between the two brands is expected to intensify with the approaching festive season, as Honda's market share continues to rise while Hero's declines.
  
  
• Foxconn has started trial production of Apple's iPhone 16 Pro and Pro Max models at its Chennai facility, aiming to begin mass production by the end of the fiscal year. This move is part of Apple's strategy to reduce reliance on Chinese manufacturing amid geopolitical tensions. Small batches of components, including printed circuit boards, display assemblies, and camera modules, have been imported, signalling the ongoing pilot phase. Foxconn is also conducting pilot runs for the base models, with plans to meet the global launch timeline set for September.
  
  
• Grasim Industries has made a record capital expenditure of nearly ₹20,000 crore in fiscal year 2023-24, its largest investment to date, according to Chairman Kumar Mangalam Birla. Over the past five years, the company has invested around ₹50,000 crore, with over 75% focused on growth initiatives. Birla expressed optimism about the company's building materials segment, anticipating significant growth in India's booming housing and infrastructure sectors, particularly in cement and decorative paints.

Stock name: IDFC Ltd.

Pattern: Double top pattern and retest

Time frame: Weekly

Observation:

After the COVID market crash, the stock has been on an upward trajectory. From July 2023 to July 2024, it formed a double top pattern on its weekly chart, with a breakout occurring in late July 2024. This breakout was supported by above-average trading volume and a bearish MACD indicator. However, the stock is still near the pattern's neckline, suggesting that further confirmation of the downward momentum is needed. The RSI is currently around 40, and as per technical analysis, if the stock gains momentum in line with the breakout, it may see further decline.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: KPIT Technologies Ltd.

Pattern: Cup and handle pattern

Time frame: Daily

Observation:

Since its listing, the stock has maintained an upward trend. Between February and August 2024, it consolidated, forming a cup and handle pattern on the daily chart. The stock has yet to break out from this pattern, with the trendline acting as resistance. A bullish MACD indicator and favourable RSI levels are present. According to technical analysis, if the stock breaks out with strong momentum, it may see further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• The Shapoorji Pallonji Group has created a new holding company, Shapoorji Pallonji Real Estate (SPRE), to consolidate and monetize its $6 billion real estate assets across key Indian cities. SPRE plans to go public within two years, aiming to raise up to $2 billion. The restructuring focuses on streamlining operations, reducing debt, and expanding its middle-income housing projects under Joyville Shapoorji.
  
  
• Banks in Mumbai saw their borrowings surpass ₹9 lakh crore by July 26, driven by credit growth outpacing deposits. Despite some improvement in deposits, liquidity shortages persisted, leading banks to rely heavily on short-term funding methods, such as interbank repos and infrastructure bonds. Borrowings increased by 20% since April, reaching ₹9.32 lakh crore. The Reserve Bank of India highlighted concerns over potential liquidity issues due to the growing gap between credit and deposit growth, with banks turning to market borrowings to meet the rising credit demand.
  
  
• Mukesh Ambani is enlisting the help of Chinese fashion giant Shein to compete with Tata Group's Trent Ltd. in India's fast-fashion market. Despite substantial investments, Reliance Retail has struggled to match Trent's success, particularly with its Zudio brand, which has rapidly expanded across India. Ambani's Reliance Retail aims to dominate the market ahead of a planned IPO, but faces stiff competition as Trent continues to grow its market share. The partnership with Shein is seen as a key move for Ambani to close the gap, but challenges remain.

In today’s globalized economy, individuals and businesses often find themselves engaging in transactions across international borders. While this presents numerous opportunities, it also introduces complexities, particularly when it comes to taxes. Since, different countries have different tax laws, they levy taxes according to their domestic tax laws and in some cases, the taxpayer ends up paying double tax on the same income, once in their home jurisdiction and once in foreign jurisdiction.

In order to mitigate such situations, these countries enter into Double tax avoidance agreements (DTAA) with each other (India has DTAA with 90+ countries). Additionally, if there is no DTAA in India and another county they can claim FTC as per Indian Income tax Act. These agreements facilitate the taxpayer by allowing them to pay tax on certain incomes in only one country. This is done by way of Foreign Tax Credit (FTC), a mechanism designed to alleviate double taxation for those subject to taxes in both their home country and a foreign jurisdiction.

So, what exactly is a Foreign Tax Credit?

The Foreign Tax Credit is a provision in tax law that allows taxpayers to offset the taxes they have paid to foreign governments against their domestic tax liabilities. In essence, it prevents the same income from being taxed twice, once by the country where it was earned and again by the taxpayer's home country. This credit is available to both individuals and businesses having incomes in countries which have mutual DTAA allowing availment of tax credit.

Let us understand this case with the help of an example, Suppose Mr. Akshay is employed in U.S from Apr’21 to Jun’23 and in Jul’23, he relocates to India where he got a new job. Now, for financial year 23-24, he has stayed in India for 9 months implying him a resident status in India for FY 23-24.

Now, for FY 23-24, his global income will be taxable in India including his U.S Salary. Since, this salary is earned in U.S, he has to pay tax on this salary in U.S as well. In such cases, in order to avoid double tax, he can claim foreign tax credit of the taxes paid on salary in U.S with Indian tax authorities.

In such cases, residents can claim credit for the amount of tax deducted in the foreign state by filing Form 67 with the income tax department. Residents must submit Form 67 before the due date of Income Tax Returns (ITR) filing to claim credit for such taxes.

By understanding how the credit works and implementing effective tax planning strategies, taxpayers can minimize their overall tax liabilities and maximize their returns on global investments.

Understanding FTC in India from legal point of view:

Sections 90 (India has DTAA with 90+ countries) and section 91 (an individual is eligible to claim tax relief if a DTAA is absent between India and another country) of Income Tax Act, under these sections, if the taxpayer is a resident of India, and he has paid taxes outside India, he can claim a credit of such foreign taxes paid against his tax payable in India.

Rules for claiming FTC have been notified, which have helped clear out ambiguity around claiming of FTC, some of which have been briefly captured here under:

1. FTC is allowed in the year in which the income corresponding to such tax has been offered or assessed to tax in India;
2. FTC shall be lower of, tax payable on such income under the Indian tax laws and the foreign tax paid;
3. FTC shall be available against the amount of tax, surcharge and cess payable under the Indian tax laws but not against interest, fee or penalty;
4. FTC shall not be available if the foreign tax is a disputed one;
5. FTC is available even on tax payable under Section 115JD (Alternate Minimum Tax);
6. FTC shall be the aggregate of the amounts of credit computed separately for each source of income arising from a particular country;
7. FTC shall be determined by conversion of the currency of payment of the foreign tax at a specified rate

Documents required to claim FTC

In order to claim FTC, the taxpayer is required to furnish the following documents on or before the due date of filing of return:

1. A statement of foreign income offered to tax & foreign tax deducted or paid on such income – This is mostly available in the tax return of the foreign country
2. Salary Slips of the foreign employer
3. Proof of payment of taxes outside India (Something like Form 1042S (Withholding certificate if from U.S)

स्टॉकचे नाव: स्टर्लिंग आणि विल्सन रिन्यूएबल एनर्जी लि.

पॅटर्न: डबल टॉप पॅटर्न आणि रिटेस्ट 

वेळ फ्रेम: दररोज

निरीक्षण:

ऑक्टोबर 2023 पासून हा स्टॉक वरच्या दिशेने ट्रेंड करत आहे. मे ते जुलै 2024 या कालावधीत, त्याने त्याच्या दैनंदिन चार्टवर दुहेरी टॉप पॅटर्न तयार केला आणि 19 जुलै 2024 च्या पॅटर्नमधून सरासरीपेक्षा जास्त ट्रेडिंग व्हॉल्यूमसह बाहेर पडला. ब्रेकआऊटनंतर, स्टॉकने ब्रेकआउट पातळीची पुन्हा चाचणी केली आणि नंतर दुसऱ्या रीटेस्टपूर्वी त्याची खालची हालचाल पुन्हा सुरू केली. सध्या, तो पुन्हा ब्रेकआउट पातळीच्या खाली बंद झाला आहे. तांत्रिक विश्लेषणानुसार, जर समभागाने खालच्या दिशेने गती घेतली तर त्यात आणखी घसरण दिसू शकते, तरीही अतिरिक्त पुष्टीकरण आवश्यक आहे.

पुढील किंमत क्रिया समजून घेण्यासाठी तुम्ही हे तुमच्या वॉच लिस्टमध्ये जोडू शकता.

अस्वीकरण: हे विश्लेषण पूर्णपणे शैक्षणिक हेतूसाठी आहे आणि त्यात कोणतीही शिफारस नाही. कोणताही आर्थिक निर्णय घेण्यापूर्वी कृपया तुमच्या आर्थिक सल्लागाराचा सल्ला घ्या.

स्टॉकचे नाव: क्रिसिल लि.

पॅटर्न: डबल बॉटम पॅटर्न

वेळ फ्रेम: दररोज

निरीक्षण:

एप्रिल ते ऑगस्ट 2024 पर्यंतच्या दैनिक चार्टवर दुहेरी तळाचा पॅटर्न तयार करून त्याच्या ATH वरून स्टॉक खाली आला आहे. तो अद्याप पॅटर्नमधून बाहेर पडला नसला तरी, तो ब्रेकआउट लाइनच्या जवळ आहे, जो प्रतिकार म्हणून काम करू शकतो. स्टॉकने अलीकडेच तेजीचा MACD सिग्नल दर्शविला आणि तो 50 RSI पातळीच्या वर आहे. तांत्रिक विश्लेषणानुसार, मजबूत गतीसह ब्रेकआउटमुळे पुढील वरच्या दिशेने हालचाल होऊ शकते.

पुढील किंमत क्रिया समजून घेण्यासाठी तुम्ही हे तुमच्या वॉच लिस्टमध्ये जोडू शकता.

अस्वीकरण: हे विश्लेषण पूर्णपणे शैक्षणिक हेतूसाठी आहे आणि त्यात कोणतीही शिफारस नाही. कोणताही आर्थिक निर्णय घेण्यापूर्वी कृपया तुमच्या आर्थिक सल्लागाराचा सल्ला घ्या.

दिवसाच्या बातम्या:

1) कर्नाटक सरकारने आपल्या सर्व विभागांना आणि संस्थांना स्टेट बँक ऑफ इंडिया (SBI) आणि पंजाब नॅशनल बँक (PNB) मधून 20 सप्टेंबर 2024 पर्यंत व्यवहार थांबवण्याचे आणि ठेवी काढून घेण्याचे आदेश दिले आहेत, ₹ 22 कोटींच्या पूर्ततेच्या वादानंतर. बँक कर्मचाऱ्यांसह घोटाळे. SBI आणि PNB दोघेही या समस्येचे सौहार्दपूर्ण निराकरण करण्यासाठी राज्याशी चर्चा करत आहेत, परंतु हे प्रकरण सध्या न्यायप्रविष्ट आहे. सरकारचे निर्देश बँकांसाठी आश्चर्यचकित करणारे आहेत, विशेषतः बँकिंग क्षेत्राला ठेवींच्या वाढीशी संबंधित आव्हानांचा सामना करावा लागत आहे.

2) जुलैमध्ये, भारतातील वस्त्र आणि वस्त्र निर्यात 4.73% ने वाढून USD 2,937.56 दशलक्ष झाली, जी परिधानांच्या मागणीमुळे चालते. कापड निर्यात USD 1,660.36 दशलक्ष वर स्थिर राहिली, तर वस्त्रांची निर्यात 11.84% ने वाढून USD 1,277.20 दशलक्ष झाली. वाढीचे श्रेय यूएस, ईयू आणि यूके सारख्या प्रमुख क्षेत्रांमध्ये वाढलेल्या बाजारपेठेला दिले जाते. भारतीय वस्त्रोद्योग परिसंघ (CITI) भविष्यातील निर्यात ऑर्डरबद्दल आशावादी आहे, विशेषत: ऑस्ट्रेलिया आणि UAE सह अलीकडील मुक्त व्यापार करार (FTAs) च्या समर्थनासह, ज्यामुळे निर्यातीला आणखी चालना मिळण्याची अपेक्षा आहे.

3) वेदांत लि.च्या बोर्डाने हिंदुस्तान झिंक लिमिटेड (एचझेडएल) मधील 3.31% स्टेक विकण्यास मान्यता दिली, ज्यातून 8,000 कोटी रुपयांपेक्षा जास्त उभारणी अपेक्षित आहे. ही रक्कम कर्ज परतफेड आणि भांडवली खर्चासाठी वापरली जाईल, ज्याला वेदांत रिसोर्सेस लिमिटेडच्या कर्जदारांसाठी क्रेडिट-सकारात्मक चाल म्हणून पाहिले जाते. तथापि, या विक्रीमुळे HZL मधील वेदांताचा हिस्सा 61.61% पर्यंत कमी होतो, ज्यामुळे HZL कडून भविष्यातील लाभांश कमी होऊ शकतो, जो समूहासाठी एक प्रमुख रोख जनरेटर आहे. भागविक्री असूनही, वेदांत कर्ज कमी करण्यावर आणि व्याजाचा बोजा व्यवस्थापित करण्यावर लक्ष केंद्रित करत आहे, जरी त्यांनी आपला स्टील व्यवसाय विकण्याची योजना रद्द केली आहे.

Stock name: Sterling and Wilson Renewable Energy Ltd.

Pattern: Double top pattern and retest

Time frame: Daily

Observation:

The stock has been trending upward since October 2023. Between May and July 2024, it formed a double top pattern on its daily chart and broke out from the pattern on July 19, 2024, with above-average trading volume. After the breakout, the stock retested the breakout level and then resumed its downward movement before a second retest. Currently, it has closed below the breakout level again. According to technical analysis, if the stock gains downward momentum, it may see further decline, though additional confirmation is needed.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: CRISIL Ltd.

Pattern: Double bottom pattern

Time frame: Daily

Observation:

The stock has cooled down from its ATH forming a double bottom pattern on its daily chart from April to August 2024. While it hasn’t broken out from the pattern yet, it is nearing the breakout line, which could act as resistance. The stock recently showed a bullish MACD signal and is above the 50 RSI level. According to technical analysis, a breakout with strong momentum could lead to further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• The Karnataka government has ordered all its departments and entities to cease transactions and withdraw deposits from State Bank of India (SBI) and Punjab National Bank (PNB) by September 20, 2024, following disputes over the redemption of ₹22 crore linked to scams involving bank employees. Both SBI and PNB are in discussions with the state to resolve the issue amicably, but the matter is currently sub judice. The government's directive has come as a surprise to the banks, particularly as the banking sector faces challenges related to deposit growth.
  
  
• In July, India's textiles and apparel exports rose by 4.73% to USD 2,937.56 million, driven by strong demand for apparel. While textile exports remained stable at USD 1,660.36 million, apparel shipments surged by 11.84% to USD 1,277.20 million. The growth is attributed to increased market share in key regions like the US, EU, and UK. The Confederation of Indian Textile Industry (CITI) is optimistic about future export orders, especially with the support of recent Free Trade Agreements (FTAs) with Australia and the UAE, which are expected to boost export momentum further.
  
  
• Vedanta Ltd's board approved the sale of a 3.31% stake in Hindustan Zinc Ltd (HZL), expected to raise over Rs 8,000 crore. The proceeds will be used for debt repayment and capital expenditure, which is seen as a credit-positive move for Vedanta Resources Ltd's creditors. However, the sale reduces Vedanta's stake in HZL to 61.61%, potentially lowering future dividends from HZL, a key cash generator for the group. Despite the stake sale, Vedanta remains focused on debt reduction and managing its interest burden, although it has shelved plans to sell its steel business.

Stock name: Tata Steel Ltd.

Pattern: Head and shoulders pattern

Time frame: Daily

Observation:

Since July 2022, the stock has been trending upward. From April 2024 to August 2024, it formed a head and shoulders pattern on its daily chart. The stock broke out of this pattern on August 5, 2024, with above-average trading volume and a bearish MACD indicator. Following the breakout, the stock has been moving downward. However, the current RSI is very low, which may indicate a potential retest. According to technical analysis, if the stock maintains its current momentum, it could continue to decline further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Apollo Hospitals Enterprise Ltd.

Pattern: Cup and handle pattern

Time frame: Daily

Observation:

Since May 2022, the stock has been trending upward. Recently, between February 2024 and August 2024, it has stabilized, forming a cup and handle pattern on its daily chart. The stock has not yet broken out from this pattern. Currently, the RSI levels are in a favourable zone. According to technical analysis, if the stock breaks out with strong momentum, it might see a continuation in the upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• The Supreme Court has permitted states to collect past mining royalties from April 1, 2005, with payments spread over 12 years starting April 1, 2026. This decision led to declines in stock prices for Hindustan Zinc, NMDC, Coal India, Tata Steel, and SAIL. The ruling follows a July 25 verdict affirming states' power to tax mineral resources, overturning a 1989 judgment. The retrospective application has sparked debate, with concerns over financial impacts on companies and the Centre.
  
  
• The Enforcement Directorate (ED) has summoned Dabur India Chairman Mohit Burman and three Care Health Insurance directors over a money laundering probe related to the Burman family's open offer for Religare Enterprises. The investigation, sparked by REL shareholder Vaibhav Gawli’s complaints, is examining alleged misuse of funds from Religare Finvest. The Burman family supports the probe, claiming their offer complied with regulations. The Economic Offences Wing (EOW) of Mumbai police is also investigating and has sought SEBI's input on the allegations.
  
  
• Muthoot Finance's loan assets under management (AUM) rose 28% year-over-year to ₹98,048 crore in Q1 FY25. The company's gold loan AUM grew 25% to ₹84,324 crore. Muthoot Homefin saw a 47% increase in loan AUM, reaching ₹2,199 crore, and a 103% rise in loan disbursements to ₹221 crore. Profit after tax for Muthoot Finance increased 11% to ₹1,079 crore, while subsidiary Belstar Microfinance's AUM grew 42% to ₹9,952 crore, with a 73% rise in profit. Other subsidiaries also showed notable growth, with Muthoot Money's loan portfolio increasing 234% year-over-year.

Stock name: Hindalco Industries Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

The stock has been trending upwards since June 2022, but from May to August 2024, it stabilized and formed a double top pattern on its daily chart. On August 5, 2024, the stock broke out of this pattern, supported by above-average trading volume and low RSI levels. However, after the breakout, the stock has lingered around the breakout line without significant downward momentum. This suggests a possible retest of the breakout level. According to technical analysis, if the stock gains downward momentum, it may decline further.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Bharat Petroleum Corporation Ltd.

Pattern: Rounding bottom pattern

Time frame: Monthly

Observation:

The stock experienced a downward trend from October 2017 but began recovering in 2023. It has now surpassed the highs of 2017 and formed a rounding bottom pattern on its monthly chart between October 2017 and February 2024. In February 2024, the stock registered a breakout with high trading volumes and has since moved upward. Currently, the stock has stabilized, with RSI levels cooling off from the overbought zone. According to technical analysis, if the stock regains upward momentum, it may continue to rise.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Bajaj Finance Ltd., India's largest shadow bank, is seeking up to $500 million in offshore loans due to stricter RBI regulations limiting domestic borrowing options. The company is negotiating with at least four foreign banks for a loan tied to the Secured Overnight Financing Rate. This follows a trend of Indian shadow financiers turning to global credit markets after new rules made it harder to secure local bank loans.
  
  
• The Andhra Pradesh government has offered three sites—Machilipatnam, Ramayapatnam, and Mulapeta—for Bharat Petroleum Corporation Ltd. (BPCL) to build a proposed refinery-cum-petrochemicals complex. BPCL is considering an integrated complex with a capacity of 9-12 million tonnes per annum (mtpa), requiring 800-1,000 acres of land for a 9 mtpa capacity. The state, under N Chandrababu Naidu, is pushing for the project to boost economic activity and job creation. BPCL is evaluating the land options and may soon finalize a location.
  
  
• Inox Wind has secured a 51 MW equipment supply order from Everrenew Energy Private Ltd for its latest 3 MW Wind Turbine Generators. Inox Wind will also provide multi-year operations and maintenance services after commissioning. The project will be executed in Tamil Nadu, reflecting Everrenew's commitment to sustainable renewable energy. The financial details of the order were not disclosed. Both companies aim to establish a long-term partnership through this collaboration.

Stock name: Astral Ltd.

Pattern: Double top pattern

Time frame: Daily

Observation:

Since March 2023, the stock has shown an overall upward trend. However, between April and August 2024, it formed a double top pattern on its daily chart. In today’s session, the stock is trading below the breakout line of this pattern, with significantly high trading volume. The RSI is at an extremely low level, indicating a possible retest. According to technical analysis, if the stock closes below the breakout level and maintains downward momentum, it may decline further. However, given the RSI is deep in the oversold zone, additional confirmations are necessary.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

Stock name: Reliance Industries Ltd.

Pattern: Flag and pole pattern and retest

Time frame: Weekly

Observation:

From October 2023 to February 2024, the stock steadily rose. Between February and June, it stabilized, forming a flag and pole pattern on the weekly chart. In late June, the stock broke out with strong volume and a bullish MACD but soon formed an evening star candlestick pattern, leading to a retest of the breakout. The stock has now closed below the breakout line, although the RSI remains around the 50 mark. According to technical analysis, a strong rebound and additional confirmations are required to see if the stock may have further upward movement.

You may add this to your watch list to understand further price action.

Disclaimer: This analysis is purely for educational purpose and does not contain any recommendation. Please consult your financial advisor before taking any financial decision.

News for the day:

• Godrej Properties, the real estate arm of Godrej Industries, has acquired a 90-acre land parcel in Khalapur, Raigad district, Maharashtra. Located near Karjat Khopoli Road, the land offers approximately 1.7 million sq ft of saleable area, primarily for residential plotted development. Khalapur is considered a promising area for such projects, especially with its proximity to Mumbai and the upcoming Navi Mumbai International Airport, which is expected to improve access to the region.
  
  
• Adani Group stocks dropped by up to 7% following renewed controversy related to the Adani vs. Hindenburg dispute, leading to a market loss of approximately Rs 53,000 crore. The decline in share prices was triggered by allegations against Sebi chief Madhabi Buch, accusing her of potential conflicts of interest. Adani Green Energy suffered the most, falling 7%, while Adani Total Gas, Adani Power, and others also saw significant declines. Despite the controversy, market analysts downplayed its impact, and Sebi reassured investors of ongoing investigations and urged caution.
  
  
• Amara Raja Batteries has signed a Memorandum of Understanding (MoU) with Piaggio India, a subsidiary of the Italian motor vehicle manufacturer, to develop and supply Lithium Iron Phosphate (LFP) lithium-ion cells and chargers for electric vehicles, specifically targeting Piaggio's 3-Wheeler EVs. The collaboration will also focus on creating battery packs for Piaggio's upcoming 2-Wheeler offerings, with production taking place locally in India. This partnership is part of Amara Raja's broader efforts to support India's energy transition and strengthen its position in the EV market.

What is Lower Deduction Certificate?

A Lower Deduction Certificate (LDC) is a document that certifies to the tax authorities that a taxpayer is eligible for a reduced rate of tax deduction at source (TDS).

The LDC helps taxpayers avoid getting higher TDS deducted than their actual tax liability. It eliminates the unnecessary blockage of funds caused by TDS deduction, even if the recipient has no earnings liable to tax for the year, which can only be claimed as a refund by filing an income tax return. Essentially, it helps you keep more of your money upfront instead of waiting for a tax refund later.

When Should You Consider Applying for a Lower Tax Deduction Certificate?

The TDS rates for non-residents are comparatively higher than residents and hence non-residents do face the brunt of higher TDS deduction even when the income generated out of that transaction is below the basic exemption limit or the tax liability on that income is pretty less. A non-resident can choose to apply for a LDC with the Income tax department before entering into such transactions.

Now, let us understand the use cases for LDC by way of a case study:

Case 1:

An Indian citizen working in India gets an opportunity to go overseas and work there, after working there for a few years, he decided to settle down there and sell his house in India. He had purchased this property several years ago for INR 1.20 crores. He started to scout for a buyer and finally he found one and the deal was finalised at INR 1.8 crores.

The Inflation adjusted cost of this property comes out to INR 1.60 crores (this is the amount considered as purchase price under Income tax laws). He made a taxable gain of INR 20 lacs on this transaction. On this gain, he is supposed to pay tax @ 20% + applicable surcharge and cess i,e INR 4.16 lacs. (Here, we assume surcharge to be 0% and cess @ 4%)

Now, as per Indian Income tax laws, when a non-resident sells property in India, the buyer is required to deduct TDS at a rate of 20.8% (Here, we assume surcharge to be 0% and cess @ 4%) on the amount of sale consideration before making payment to the property seller. This amount comes out to a whopping INR 37.44 lacs.

The seller will file his ITR and offer a tax of INR 4.16 lacs and claim the balance refund of INR 33.28 lacs.

Now, instead he can choose to apply for LDC with a TDS rate of say 2.50%, in this case the buyer will deduct TDS only at 2.50% which will amount INR 4.50 lacs only. In this way, he can unblock an amount of INR 32.94 lacs. This is how a LDC can be utilised for better fund management.

Case 2:

Similarly, if he wishes not to sell this property in India but to rent it, he found a tenant and agreed the monthly rent of INR 25,000 per month (INR 3.00 lacs p.a) in this case the tenant will have to deduct TDS at 30% (TDS rate for rent payments to non-residents is 30%) + cess and surcharge. Assuming, he has no other income in India, the total income from rental will be INR 2.10 lacs (Rent of INR 3.00 lacs and a standard deduction of INR 0.9 lacs), now this amount is even below the basic exemption limit of income for tax in India. Since, he will not have any tax liability at the end of the year, he can choose to apply for LDC with TDS rate of 0% and save the blocking of funds.

Although, in both the cases, he will be eligible for a tax refund of the TDS amount after adjusting his tax liability but the funds will be blocked till the time he files his ITR.

How can you obtain this LDC?

For making an application for LDC, an applicant needs to prepare and arrange various supporting documents like computation of income, proof of residential status etc. These documents need to be submitted along with the application to the Income tax department.