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MUMBAI: Rupee is trading at 54.36/38 after rising as high as 54.18 earlier, its strongest since May 17.

That rise had been sparked after Bloomberg-UTV report reported the government may remove the withholding tax on bonds for foreign investors, without citing sources.

"The rupee started rallying after the withholding tax removal talk, though it is only in the proposal stages even now," a senior dealer with a foreign bank said.

Traders add foreign funds were selling dollars and buying rupees via custodian banks as they gear up for the debt limit auction later in the day.

Equity market-related inflows also seen hitting USD/INR, traders say.

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NEW DELHI: Prime Minister Manmohan Singh has dismissed reports of any plan to bring under the service tax ambit foreign remittances by overseas Indians, Kerala chief minister Oommen Chandy said today.

Singh has also sought details from the Finance Ministry on the issue, said Chandy who raised objections before the Prime Minister over the reported move by the Government to levy the tax on the money of Indians working abroad.

"Prime Minister has dismissed reports that the Government is planning to charge 12.36 per cent on all foreign remittances to India," Chandy told reporters after meeting the Prime Minister here.

The Chief Minister took up the matter with the Prime Minister as the annual remittances from NRI population in Kerala is nearly Rs 50,000 crore and such a move by the Centre would hit the economy of the southern state.

"Prime Minister said that no decision has been taken to levy the tax on money sent by the NRIs. He has assured status quo on the service tax issue," Chandy said.

Chandy also asked Prime Minister to take immediate steps to end the delay in securing the safe release of crew including Keralites taken as hostages by Somalian pirates.

He told the Prime Minister that 43 Indian citizens had been taken hostage by Somalian pirates and requested him to "direct the authorities concerned" to take all possible steps to secure their release considering the agony and pain of the relatives of the abducted persons.

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Money exchange companies in the UAE on Sunday said the proposed service tax on the fee for remittances to India is to be paid by them, not by their customers who remit money, through banks allied with them.

The new theory regarding the much debated 12.36 per cent service tax linked to their remittances is likely to bring cheer to the Indian expatriates in the UAE. However, industry sources say that exchange houses may soon pass on this loss, though miniscule per transaction, to their customers.

To be levied from July 1, the proposed tax had created much fuss among the Non Resident Indians (NRIs) in the UAE when initial reports pegging it on remittance amounts were widely circulated on social network sites. When the subsequent reports, including in Khaleej Times, said the tax would be on the service fee for transactions, it was thought to be the Dh15 fee that customers pay to the exchange houses.

However, representatives of at least three leading exchange companies that primarily transfer remittances to India told Khaleej Times that banks tied up with them have clarified that the service fee will be on the charges they pay to the corresponding banks, not the fee that they take from customers.

“That is the information that we have received from our partner banks,” said Promoth Mangad, the Vice-President, Global Operations, UAE Exchange.

“A similar fee was proposed earlier also. But, it was revoked after the exchange companies raised concern,” he said.

Though no official confirmation from the Indian government has been available, similar information has been received by Al Ansari and Al Ahalia exchange companies from their partner banks.

Mohammed Aslam, a senior forex dealer with Al Ansari Exchange, said exchange houses pay about Rs50 to their partner banks for each telex transfer. “The fee may differ from bank to bank depending on the contracts the exchange companies have with the banks. Anyhow, what we have heard is that the tax will be on this fee and no additional amount will be taken from the customers.”

He said there was no information regarding any tax on the profit-sharing formula that exchange companies have with private finance companies and agents through whom instant remittances are made.

Mangad said usually the invoice for the service fee to the banks are issued weekly or monthly basis. “So we don’t know if the banks have already started taking it.”

However, several customers remained confused about the new fee and exchange houses received plethora of enquiries related to it, especially because the news related to this came out at a time salaried Indians send money home.

Pradeep Kumar, Manager of Al Ahalia’s Bur Dubai branch, said customers were still confused if and how they would be “taxed.” “Many customers were asking if they had to add Dh2 to the Dh15 service fee or to the remittance amount. Some were still worried that the tax is on their remittance amount.”

Exchange houses said the Indian government should clear the air by issuing clear-cut rules. They said they will also take up the matter with the Foreign Exchange and Remittance Group (FERG) in the UAE that had unified the service charges of money exchanges at Dh15.

“If this new tax is going to be a continuous loss, exchange companies will have to tackle it by passing it on to the end user, i.e., customers. But, we will have to discuss that through FERG,” said an official who did not want to be named.

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New borewells will not be allowed in the City without permission from the Karnataka Groundwater Authority and a mandatory registration with fees, once a notification to this effect is issued in a week’s time.

To arrest indiscriminate digging of borewells and commercial over-exploitation of Bangalore’s depleting ground water, the State government has finally decided to crack the whip by proposing mandatory registrations and penalties for defaulters.

A gazette notification on the Karnataka Ground Water (Regulation and Control of Development and Management) Act, 2011, will be out in a week’s time.

The rules will make registration mandatory for digging a borewell, be it for domestic, industrial, commercial or entertainment purposes, bringing borewells would be brought under the Groundwater Authority’s radar.

The registration fees, however, are negligible. For a domestic borewell, it is Rs 50, and Rs 500 for every borewell intended to be sunk under the industrial, commercial or entertainment sectors. However, the drilling agency would have to pay a higher Rs 5,000 to register for every borewell. Applicants will have to register within a period of 90 days from the notification date.

A report of the Department of Mines and Geology (DMG) reveals that groundwater exploitation is at an alarming 130 per cent in Bangalore East.

This implies that the area has used 100 per cent of the dynamic ground water, which recharges with rainwater, and 30 per cent of the static water present in the aquifer since thousands of years.

In Bangalore South, it is even worse at 176 per cent, while the exploitation is 135 per cent in Bangalore North. As many as 35 taluks in the State have been notified for over-exploitation.

The new rules require applicants to adopt meters to measure water they draw from underground, with a cap. Flouting the conditions will invite a penalty of Rs 5,000 and six months imprisonment. Implemented, the rules are expected to rein in the private water tanker operators, who are making a killing due to the city’s acute water crisis.

The State Groundwater Authority had recently recommended to the government to notify Bangalore Urban including North, East and Southern areas, which have over-exploited the groundwater beyond its permissible limits. The authority has held two meetings so far.

P N Srinivasachary, Principal Secretary, Minor Irrigation said, “We have decided to have district level committee chaired by the deputy commissioner of the district to monitor the groundwater regulation. In Bangalore City, BWSSB will ensure that provisions of the Act are implemented. It is a very late realisation to monitor groundwater in the State as it has been exploited beyond its limits. But somewhere there is a need for a beginning.”