 |
Monday,
January 28, 2002, Chandigarh, India  
|
A Guide to Personal Finance
Air carriers' liability for lost baggage is limited
Profits are under downward pressure |
|
||||||||||||||||||||||||||||||||||||||
Experience first, unit later
Bank officers decide to reduce NPAs
|
|
A Guide to Personal Finance As the end of the financial year is drawing nearer, tension among taxpayers is increasing day by day, particularly the salaried class people who during this time of the year are planning to save their income tax to the maximum possible extent. Even as the investment avenues of bringing down your taxable income remain the same as during the past few years, taxpayers are thinking afresh on their investment decision because of fall in the rates of interests. Which have come down steeply during the current fiscal year. Besides this, there is a sea change in the policies of the government on small savings schemes. It has also forced people to think and review their tax planning exercise. Mobilising funds to invest in the schemes offering tax rebate is not only a complex exercise but also requires good planning. At the time when stock markets were showering returns on the investors, tax-savings schemes linked to stock markets were the favourite investment avenues among the people. However, at present due to various reasons stocks are showing negative growth, therefore it is not wise to block your money in stocks. We have studied some of the schemes offering comparatively good returns, particularly those available for reduction of tax liability. While selecting a scheme one should also keep his future needs in view. One should always remember that “tax evasion” is a crime, but “tax saving” is not. It is an accepted principle of taxation throughout the world. Coming to the rebates one can get a rebate of 20 per cent on investments of up to Rs 80,000 in tax-saving instruments such as PPF, NSCs and the National Savings Scheme (NSS), provided one can invest at least Rs 20,000 out of Rs 80,000 in infrastructure bonds, floated by specified institutions like ICICI, and IDBI etc. Those who are in specified vocations will get 25 per cent rebate instead of 20 per cent. The maximum amount of eligible investment will be limited to Rs 70,000 of which Rs 60,000 can be parked in instruments like PPF and NSCs, and 10,000 can be put in infrastructure bonds. In addition to this, an individual can also save tax upto Rs 3000 under Section 80-D by subscribing to an Health Insurance plan (Medi-claim policy) of GIC. Besides the above expenditure incurred towards medical treatment towards training, nursing and rehabilitation of a permanently disabled defendant, is also a valid deduction up to Rs 40,000. Similarly repayment of loans towards higher education, is also a valid deduction up to Rs 40,000. Entire payment made towards donations to approved funds and charitable institutions included in Sec 10(23) or 80G(2)(a) is also a valid deduction.
Benefits for women and senior citizen In case of senior citizens, the saving can be as high as Rs 4500. However, the premium paid under such plans are in the form of expenditure and not investment. A person who is 65 or above can avail Rs 15,000 as tax benefit. Women are entitled to a host of other benefits. The special benefits available for women under section 88-C is a newly introduced section from the year 2000-2001. This benefit is available only for women who are less than 65 years. The rebate amount is Rs 5000 for example if you have a tax liability of Rs 8000, on this you avail a benefit of Rs 5000.
Slab for standard deduction Standard deduction is available as under Rs 20,000 or 1/3rd of the gross salary whichever is lower, if the gross salary is below 1,00,000. Rs 20,000 if the gross salary is between 1,00,000 and 5,00,000. Nil if the gross salary is above 5,00,000. Fixed income schemes like Post-Office monthly scheme, Bima Nivesh scheme offered by the Life Insurance Corporation (LIC) and RBI Relief Bonds are a few which are still investment worthy (See chart), compared to the returns and risk involved. The post office also offers various schemes, which offers tax planning, besides decent returns. The post office instruments are having certain lock-in period but are liquid with the passage of time. The king among them is Public Provident Fund (PPF) with the fall in the raise loan up to the extent of 25 per cent of the balance, and the loan can be repaid within 36 instalments and the interest payable on such a loan is 1 per cent higher than the PPF interest rate. Besides the interest, which is accumulated in PPF account and paid annually to the subscriber is totally exempt from income tax. The PPF account cannot be attached by any Court order. This is another best advantage to the investor. Among the other schemes offered by the post office, the National Savings Certificate (NSC) are the second best. (see chart). Another unique feature of the scheme is that the interest accrued until the fifth year is deemed to be reinvested in the scheme, in other words, an investor can contribute lesser amounts in later years and yet claim the full tax rebate under Sec. 88 since the amount reinvested also qualifies for the rebate. They are also liquid as banks and post offices can grant loans keeping NSC as security. Similarly, National Savings Scheme (NSS) also offers tax rebate. The tenure of the term is 6 years and the rate of interest in 9 per cent. The interest accrued can be withdrawn any time during the tenure of the scheme. The interest accrued cannot qualify for any tax benefit, the account holder has to open a separate account to avail the full rebate and to withdraw the interest for each financial year. The Bima Nivesh also offers “term assurance”, on a payment of a little extra premium. Term assurance assures the nominee to get the full death benefits (sum assured) on the policyholder’s death. But if the policyholders survive then he is not entitled to any survival benefit. To illustrate, a policy holder of Rs 2.5 lakh under Bima Nivesh with term assurance rider, can double the insurance cover on payment of extra premium of Rs 3,838. In case of his death during the currency of the policy, the nominee will get Rs 5,00,000 as death benefit. But if he survive the term of the policy then the policyholders gets only Rs 2.5 lakh with guaranteed additions. The new Bima Nivesh scheme of LIC is also a good scheme, which offers double benefit. Unfortunately the LIC has decided to close the scheme from December 15, 2001, due to steep fall in the interest rates, and the scheme is promises fixed return to the investors, based on high interest rates. The Corporation has felt that it cannot offer to pay handsome returns to the investors in these days, as interest rates are falling day after day. Another attractive feature of the scheme is its liquidity. LIC allows the policyholder to withdraw from the scheme anytime after a year. He is entitled to get back his investment along with accrued guaranteed additions. The surrender value of a 10-year policy after one year is Rs 44,075 and that of 5 year policy is 49,181 only. With many advantages this was certainly a good investment option during these critical days. ICICI Prudential single premium bond and OM Kotak Mahindra insurance bond are most similar schemes to the new Bima Nivesh in terms of the features. The premium rates are lower, but coming to the other benefits guaranteed returns, Schemes are silent. For example the ICICI Prudential single Payment Bond offers Rs 45 as guaranteed addition, the OM Kotak assures that the maturity amount at 22.2 per cent of the amount invested as premium over 10 years. |
co
Air carriers' liability for lost baggage is limited It’s time air passengers around the world demanded a more realistic compensation from air carriers for any loss of baggage entrusted to their care. As per an international agreement (Warsaw convention of 1929 and later the Hague Protocol of 1955 to which India is a signatory) governing the liability of air carriers in respect of international carriage of passengers, baggage and cargo by air, the liability of airlines in case of registered baggage loss is restricted to 250 francs per kg or equivalent of $20 per kg. Thus, if your baggage entrusted to the care of an airline is lost during transit, the airline will not make good the loss suffered by you on the basis of the actual value of the contents and the suitcase, but on the weight of the baggage. Suppose it weighed 20 kg, then you will get compensation equivalent to $ 400, never mind how valuable the contents of the baggage are. It’s for this reason that disputes have arisen between passengers and international air carriers over the quantum of compensation offered by airlines in lieu of loss of baggage. Cases have also been filed before the consumer courts constituted under the Consumer Protection Act, but without much success. That’s because the Carriage by Air Act which give effect to the international agreement on the liability of air carriers, is a special law and since a special law prevails over a general law, courts have held that the limitation on liability fixed under the Carriage by Air Act will apply. In other words, under the Carriage by Air Act, the liability of air carriers in respect of lost baggage is limited. Unless of course, the passenger or the complainant before the court proves that the loss or damage was caused as a result of wilful misconduct on the part of the airline or its staff. Or that the damage resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with the knowledge that damage would probably result. If the passenger can prove any of these, then the liability would not be limited to the specified amount.. But proving that is extremely difficult. Take the case of Mrs Helen Wallia vs Cathay Pacific Airways , decided in December 2001 by the National Consumer Disputes Redressal Commission . Here, the passenger’s contention was that the amount of $ 640 being offered by the airline in lieu of her lost baggage was totally inadequate to make good the loss suffered by her. The airline’s contention on the other hand was that the liability of the air carrier was limited to $ 20 per kg of the weight of the lost baggage. Since passengers
travelling on a transpacific route were allowed a maximum of 32 kg for each piece of checked baggage, the airline was offering $ 640 towards the lost baggage. The Commission, after examining the case, pointed out that the limit of $ 20 per kg of registered baggage provided under the Carriage by Air Act, 1972 would apply as the complainant had not proved wilful misconduct or any intentional act on the part of the airline to cause damage. It therefore dismissed the complaint. So here are a few things to remember : (a) keep all cash, jewellery and other valuables in your cabin baggage and not in your check-in baggage. (b) If your check-in baggage contains some very expensive items which you cannot carry as cabin-baggage, then make a special declaration of its value at the time of handing over the baggage and if necessary, pay any supplementary charge that may be required. This way, if your baggage is lost, you will be entitled to the declared value of the baggage from the airline. (c) At the time of travel when your baggage is being weighed, make sure that the correct weight is specified on the baggage ticket. Remember, the weight of the baggage determines the compensation amount and there have been cases where the weight is disputed. In the case of Gulf Air vs Niranjan Singh, for example, the airline said the bag weighed 14 kg, while the passenger said 34 kg. The consumer court eventually ordered that the compensation be calculated on 34 kg. (d) These days credit cards and certain insurance policies for travellers too cover baggage loss. It’s worth looking at those options too.
|
|||||
sti
Profits are under downward pressure Most of the top companies have already announced their third quarter results. Some sectors like that of Software and Pharmaceutical have done well. Some sectors like that of FMCG have just maintained their profitability but the automobile sector, manufacturing motor cars and heavy commercial vehicles, like Telco and Ashok Leyland are still suffering heavy losses, though to a lower extent. Speciality Chemical companies have generally maintained their profitability. Fertilizer companies like
GNFC, Zuari Agro and Tata Chemicals have suffered losses. Some companies like Moser Baer have performed very well. Aksh Opti Fibre is under immense pressure due to fall in the price level of its products. In spite of some good results announced by top companies the market indices have not responded well. The Sensex had closed at 3246 points of January 1,2002; Last last week it closed at 3332.30 points, registering a gain of 86 points. The reason is obvious. Due to recession, the margins are under pressure. The fourth quarter results are expected to be lower than the third quarter quarter results. A majority of analysts expects a fall in the market indices during the next two weeks and later. If the monsoon rains are good, the gain my start reviving, though there is some evidence that the El Nino phenomenon may disturb the climatic conditions once again. The cement companies, as a whole, have done well, Gujarat Ambuja, ACC and Larsen & Toubro have done well. ACC’s third quarter results indicate that its net profit is up by 15.6 per cent. Larsen & Tourbo’s net result is up by 63.7 per cent for the nine-month period (April - December 2001). L&T had posted a 247 per cent increase in net profit of Rs. 160.04 crore as against Rs. 64.66 crore in the corresponding period last year. Apart of the increase in the profitability is due to cost-control measures and lower interest outgo. L&T share is quoting around Rs. 193/- at present. It is bound to move up in the recent weeks. Another share which has done very well is that of Mose Baer, which also is likely to appreciate in the coming years. It has earned a net profit of Rs. 601.49 million for third quarter as against Rs. 370.23 million during the corresponding period last year. Its nine months’ net profit stands at Rs. 1596.61 million with an annualised EPS of Rs. 51.40 for its Rs. 10 face value share. Its Executive Director has stated in an interview that the company is the largest and biggest player in the domestic market with a market share of 32/40 per cent. Its paid up equity capital is Rs. 468.06 million with reserves (excluding revaluation reserves) of Rs. 6207.72 million). The Speciality Chemical sector is also under pressure. While Vanavil Dyes has posted lower net profit for the third quarter of Rs. 16.23 lakh (as against Rs. 1.37 crore in the corresponding period of previous year). Colour
Chem, Clariant and BASF have done well. BASF’s net profit for the third quarter is higher at Rs. 8.07 crore (as against Rs. 9.97 crore). For the nine months ended December 31, 2001 its net profit is higher by 60 per cent at Rs. 30.92 crore (as against Rs. 19.24 crore). Clariant’s net profit for the third quarter stands at Rs. 5.09 crore (as against Rs. 4.77
crore). GTL Limited third quarter results indicate a sharp decline in the net profit at Rs. 28.77 crore (as against Rs. 58.39 crore). Its net profit for nine months’ period is Rs. 72.44 crore as against Rs. 159.60 crore last year. The company expects a net profit for the full financial year 2001-2002 in the range of Rs. 90 crore-Rs. 110 crore. Almost all the information technology companies have reported sharp decline in revenues and
profitability in the Internet and related business. Even the Software business is under pressure and is facing severe competition. The measures in Information Technology may be able to maintain their growth level but smaller companies are surely likely to face severe fall in revenues and profitability.
|
cr
Experience first, unit later Ludhiana How did I start my career? Our family hails from Ambala city, where I did my matriculation. Later, our family shifted to Ludhiana, where I passed my CA in 1974, but after a few months of practice, I felt that my heart lies somewhere else. I joined as a trainee in the small trading firm of my elder brother. During that period, I got good exposure in marketing and learnt some practical lessons in business. Later I set up a small manufacturing unit with a small loan, taken from the State Bank of India.
Turning point In 1983, I visited an international exhibition on textile machinery, held in Italy, which proved to be a turning point in my life. My outlook towards industrial working and the coming events entirely changed. Since I had an opportunity to see the latest version of machinery, and much more people’s approach to quality products at a right price, it helped me visualise the changes and events in the industrial world. It was a time of quota regime, obsolete technology in the closed Indian economy. I came to know the knitted garments had wider market abroad as compared to the domestic market. So we introduced blended T-shirts, by integrating with the spinning mills and introduced cotton T-shirts, blended with viscose, polyester and other yarns.
Key to success I firmly believe that the youth who enter the family business, the second generation entrepreneurs or who want to set up their own units, should acquire professional knowledge through accountancy, management or engineering degree. Later they should work in established units to study and understand the nuances of the market, and to find an opportunity, where they can enter as an entrepreneurs. In the current scenario, there is no major problem of finance and technology, but the risks for small scale units have also increase manifold. However, there is still scope for ancillary units or in the niche areas. The quality of the product, marketing and right pricing are the deciding factors to get the customers’ favour.
Experience with IT Dept I could have become a small time tax saving consultant, but as we believe in honest dealings and no ‘Number Two’ business. I have tried to instill that feeling in our group that we would behave as a socially responsible group, and would not indulge in any underhand methods to expand our business. No doubt some times one may be demoralised or feel exhausted when dealing with the government agencies, but our established name, and honest dealings have saved us from number of problems, that are often faced by the businessmen.
Tips to young entrepreneurs Do not start own unit without proper understanding of the market and personal experience in the line. It is always better to plan and remain up to date in one’s area of
work. The self employment units have lot of scope, but one should also give adequate time to the family and health as well. (As told to Manoj Kumar — TNS)
|
|||||
|
Bank officers decide to reduce NPAs
Chandigarh, January 27 Mr B.K. Bajaj, Regional Chairman, Officers Association , Canara Bank; Mr Harish Walia, Assistant Secretary officers Association SBP and Mr G.S. Khera addressed the gathering and showed the concern for the need to check swelling NPAs and attributed this to high level advances and political interference. The following were elected office-bearers for three years at the meeting. Mr A.P.S. Mann — chairman; Mr G.S. Khera — president; Mr V.K. Gupta — general secretary and Mr Punit Singh — secretary.
TNS
|
bb
Inflation plunges Essel Group SBP gesture
|
 |
| Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Editorial | | Business | Sport | World | Mailbag | In Spotlight | Chandigarh Tribune | Ludhiana Tribune 50 years of Independence | Tercentenary Celebrations | | 121 Years of Trust | Calendar | Weather | Archive | Subscribe | Suggestion | E-mail | |
