Rupee posts biggest single-day loss in 1-1/2 month

The rupee posted its biggest single-day loss in a month and half on Wednesday, hurt by broad dollar gains against major currencies, while weak local shares bogged down by a Moody's downgrade of the banking system also added to the downward bias.

Traders said demand for dollars by a large corporate and for defence-related payments also weakened the unit.

The partially convertible rupee closed at 50.1750/1850 per dollar after hitting 50.1825, a level last seen on Oct. 21, and 1.4 percent weaker than its previous close of 49.4750/4850.

This is the rupee biggest one-day fall since a 2.5 percent decline on Sept. 21, which was its biggest fall in nearly three years.

"The equity markets turned negative and euro came off pushing the rupee lower," said N.S. Venkatesh, treasurer at state-owned IDBI Bank.

He expects the unit to trade in a range of 49.50 to 50.50 over the next couple of weeks.

The unit moved in the wide range of 49.3950- 50.1825 per dollar in the day, with traders cautious ahead of a market holiday on Thursday.

The main 30-share BSE index ended down 1.18 percent at 17,362.10 points -- its lowest close in two weeks.

Financials led the decline after ratings agency Moody's lowered its outlook on the country's banking system, citing slowing growth and concerns about asset quality.

The euro was at $1.3643, compared with $1.3770 when the rupee closed on Tuesday, while the index of the dollar against six major currencies was at 77.460 points versus 76.948 points.

The euro fell against the safe-haven U.S. dollar and Japanese yen on Wednesday as the euro zone's escalating debt crisis saw investors such as macro funds step up sales of the single currency after Italy's 10-year bond yield hit 7 percent.

"There was steady import-related dollar buying today by corporates, oil companies and defence firms," a dealer with a private bank said.

Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market.

Dealers said the rupee was likely to continue to weaken in the near term with the broad trend towards safe-haven assets including the dollar because of euro zone and trade deficit issues.

"A breach of the 50.20 level would push the rupee down to 50.50 with the next target then being 52.00," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

Trade deficit in October is seen at $19.6 billion, the highest in four years, the country's trade secretary said on Tuesday, citing provisional data. At this rate, the trade deficit for the year could breach $150 billion, Rahul Khullar said.

The one-month onshore forward premium was at 25.25 points from 24.75 points on Tuesday, the three-month was at 65.25 points from 65 and the one-year was at 167.75 points from 178.75.

One-month offshore non-deliverable forward contracts were quoted at 50.17, at par with the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 50.35, on the United Stock Exchange they were at 50.3225, while on the MCX-SX they were at 50.3125. The total volume was at $3.64 billion.

How to calculate Gift Tax

High value gifts were a safe mode to show one's love to others financially. But the tax authorities have made rules to tighten the provisions related to gifts. In fact the rule has become so strict to end the high value gifts people normally used to make to escape from paying tax. The rule thus effectively prevents money laundering in the in the name of high value gifts. Gift tax in India is regulated by the Gift Tax Act which was constituted on April 1, 1958. It came into effect in all parts of the country except Jammu and Kashmir. As per the Gift Act 1958, all gifts in excess of 25,000, in the form of cash, draft, check or others, received from one who doesn't have blood relations with the recipient, were taxable.
The change in the rule related to gifts says that the receiver has to pay tax for receiving any gift valued at Rs 50,000 and more. The 'any gift' clause means that not only cash but all gifts of any value. So if someone receives a gift of a house worth Rs 20 laky, then he/she is automatically in the highest income bracket and has to pay 30% + surcharge on value of the house as tax.
According to the law, individuals can receive gifts from the following sources:
• Relatives or Blood Relatives
• At the time of Marriage
• As inheritance
• In contemplation of death

Gifts Exempted from Tax
There is exemption for gifts received from certain people. The gifts that one receives from relatives on the occasion of marriage, the gifts receives from parents and grandparents, the gift received by a daughter-in-law from her parents-in-law, and gifts received by way of a will and inheritance are exempt. The gifts received by a son-in-law from his parent-in-law will be taxed.
A Non-Resident Indian can gift to his/her parents in India from their NRE (Non-Resident External) account without their parents suffering any tax.
The gifts received in the names of one's minor children will be clubbed with the parents' income for taxation purpose. Also the tax authorities alert in saying that, in case of both parents having income, clubbing will be done with that parent who is earning more. So one cannot hide under the cover of their minor children receiving the gifts.
Not only gifts, but any real estate deal done for values lower than the state governments fixed rates, will also be taxed. Here the tax will be charged on the difference between the state government's rate and purchase price. The tax needs to be paid by the buyer of the property.
Movable properties outside the country, unless the donor
a) Individual: is an Indian citizen, who is originally a resident of India, or
b) No-individuals resident of India during the year of gift
c) Out of balance gift by NRI (Non-Resident Indian) in his Non-resident account.
d) Foreign currency gift of convertible foreign exchange, remitted from overseas by an NRI to a resident relative.
e) Foreign exchange asset gifted by NRI to his/her relatives.
f) Special Bearer Bonds, 1991.
g) Saving certificates issued by the Central Government (notified as exempted).
h) Capital Investment Bonds up to ` 10, 00,000 per year.
i) Relief Bonds gifts by an original subscriber.
j) Gifts of Certain bonds from the NRI to his/her relatives, which are subscribed in foreign currency (specified by the Central Government).
k) Gift to government or any local authority.
l) Gifts to any charitable institutions.
m) Gifts to notified temples, churches, mosques, gurudwaras and other places of worship.
n) Gift to children for educational purpose (Reasonable amount).
o) Gifts by an employer to its employees in the form of bonus, gratuity or pension.
p) Gifts under will.
q) Gifts in contemplation of death.