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New Delhi, May 2 The enlargement of the European Union (EU) with the joining of 10 new member countries yesterday on the historically-important May Day, has opened new opportunities for the Indian exporters, especially for the textile, IT, pharmaceutical and engineering sectors. Deposit $120 m, Mumbai HC orders Motorola Mumbai, May 2 In a significant order, the Mumbai High Court has directed US telecommunication giant Motorola Inc to deposit with the prothonotory of the court $120.49 million, (Rs 550 crore, approx), claimed by Iridium India Telecom Ltd, a consortium of Indian financial institutions.
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Hotels garnish
profits with outsourcing Petronet
twin-bond issue in June Petronet LNG Ltd, the country’s first liquified natural gas importer, is likely to launch twin bond issues of Rs 525 crore each next month to prepay high cost debt and fund expansion of its Dahej terminal in Gujarat.
Stable govt must for steady market Our country needs a stable government at the Centre, not only for maintaining law and order in the country but also for sustained economic growth and promotion of socio-economic reforms. Many exit polls, done after the second phase of the Lok Sabha elections held on April 26, have cast doubts on the possibility of political stability at the Centre in the post-election India.
Salary arrears taxable in year of receipt
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Exporters upbeat over inclusion of new members in EU Manoj Kumar Tribune News Service New Delhi, May 2 The new member countries to the 15-member EU are Estonia, Czech Republic, Hungary, Slovak Republic, Malta, Cyprus, Poland, Lithonia, Latvia and Slovenia. It is pertinent to note that Bulgaria, Slovenia, Romania and Turkey have also applied for EU membership. Mr M. Rafeeque Ahmed, president, Federation of Indian Export Organisations (FIEO) said: “ A single tariff mechanism, uniform trade rules and new administrative set-up should boost Indian exports to these countries, as it would bring down transaction costs.” He added the average tariff in these 10 countries would come down from around 9 per cent to the EU level of 3.5 per cent, resulting in a substantial increase in Indian exports. However, he said, “in case of products where EU duties are higher, it would be a setback to the Indian exporters exporting to these countries. Further, India may face anti-dumping duties in certain cases where EU has alleged Indian companies of dumping products there.” India’s main exports to the 10 new EU members include textiles, agriculture commodities like tea, coffee, tobacco, gem and jewellery, drugs and pharmaceuticals, plastics, leather products, electronic goods, organic and inorganic chemicals, machinery and instruments and other engineering goods. The major imports from these countries are leather and readymade garments, medicinal and pharmaceutical products, fertiliser, electronic goods, rubber, chemicals, industrial machinery and metal scrap. A large number of textile exporters from Ludhiana are already exporting readymade garments to these countries. According to Engineering Export Promotion Council, the entry of new members in the EU will offer new opportunities to the engineering exporters and even bicycle and bicycle parts exporters from the state to explore the expanded market with lower marketing and transaction costs. According to a preliminary study undertaken by the Federation of Indian Chambers of Commerce and Industry (FICCI), it would offer an expanded market with a population of more than 455 million and a gross domestic product (GDP) of around 10 trillion euro. The new Europe will also represent 20 per cent of the total world trade, 26 per cent of inbound foreign direct investment (FDI) and 46 per cent of the total outbound investments. In fact, EU will become the largest trading block in the world. FICCI says that EU enlargement will also result in harmonisation of the rules and regulations in line with the EU regulations leading to greater circulation of goods and services. However, the Indian companies will face competition in the EU market from these countries, as the average wages in these countries are lower than other countries of the EU. The exporters admitted that since bilateral trade between India and these 10 countries was still in India’s favour, they would benefit from an integration of these countries with EU. They said though the enlargement of EU will not result immediately into extension of Euro to these countries, yet it was just a question of time before Euro became legal tender in all these countries as well. Indian companies will then realise the benefits associated with the use of a single currency in an expanded market. According to Ministry of Commerce, the estimated GDP of the enlarged EU would be around € 9,712 billion (1 € = Rs 53.50, approximately), and will enable Indian goods to reach EU markets from other entry points as bulk of trade to Europe from India happens through Rotterdam at present. The Ministry has called upon the Indian companies to re-position themselves, especially in Eastern and Central Europe, keeping in mind that EU standards are often higher than the global standards and once the acceding countries integrate themselves with EU they will have similar high standards. Regarding the potential increase in trade between Indian and expanded EU, the industrial chambers have also highlighted the untapped potential in the areas such as power generation, transmission and distribution - where state monopolies are being deregulated and domestic private enterprises are looking for joint venture partners - European companies can look for newer opportunities for investment. According to FIEO, port management, construction and
maintenance of roads, privatisation of airports, agro processing,
insurance and banking, and medicare are some of the key areas where
collaborations between Indian and EU companies can be mutually
beneficial. On the issue of business process outsourcing, Mr Ahmed
pointed out that offshoring would result in a huge gain to EU companies
and to their national economies. |
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W ith unofficial and smuggled exports from India to Pakistan estimated at $ 1 billion annually, a study has forecast “handsome” rewards for both countries in the event of Islamabad opening up its trade for India.While India-Pakistan trade in 1991 was approximately 30 per cent
of total trade between SAARC partners, the proportion of trade between
the two countries has remained stagnant even though total trade between
SAARC countries had increased by 2.7 times in subsequent years, says the
study by India Development Foundation released by FICCI. — PTI
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Deposit $120 m, Mumbai HC orders Motorola
Mumbai, May 2 The order was recently delivered by Justice H L Gokhale and Justice R S Mohite on a notice of motion taken out by Iridium India Telecom Ltd in a suit filed against Motorola claiming refund of $ 90 million investment made by them along with $ 30 million interest in a project that failed. The Division Bench also set aside the order of Justice Sharad Bobade delivered on August 8, 2003, refusing to grant interim relief to Iridium India Telecom Ltd. The Division Bench also ordered the prothonotory to keep in fixed deposits with State Bank of India the amount deposited by Motorola for 30 months initially and then keep on extending the period as and when required. Motorola asked for a 12-week stay on the High Court order. The matter will be heard on May 5 on the point of granting stay. Motorola’s counsel Aspi Chinoy said he would produce documents in support of the stay. Iridium India, comprising IDBI, ICICI, HDFC and IL&FS alleged that Motorola had procured in 1992 investments from them based on fraud and misrepresentation. It also alleged that Motorola had concealed vital information from them, which led to failure of the project “Iridium System.” The court has ordered Motorola not to repatriate any funds it receives in India until it deposits $120.49 million with the prothonotory of the court. Motorola has no representative office, bank account or assets in India but has to recover dues from BPL Mobile, Bharati Cellular, Idea Cellular, BSNL and several other Indian organisations. Disposing off the notice of motion, the Division Bench ruled that $ 90 million invested in Motorola’s “Iridium System” between 1992 and 1997 by Iridium India appeared to have been procured on fraud and misrepresentation. “Iridium System,” a commercial failure, was supposed to be the world’s first commercial wireless communication system using satellites and digital technology developed by Motorola. As the project failed to come through, Iridium India filed for refund of its entire investment in 1999. In its defence, Motorola argued that there was no fraud or misrepresentation and that the investments were made by Iridium India with “eyes open and the investors had complete knowledge of the risks involved”. Arguing that the Bench had no jurisdiction to hear the appeal, Motorola said it was not a fly-by-night company and was doing business worth hundreds of millions of dollars in India. Motorola argued that it had been developing the
Iridium System since 1988 and had spent $ 75 million on research and
development. Cellular technology advanced faster than expected leading
to commercial viability of the digital system on which Iridium was
based. Therefore losses should be shared. — PTI |
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Hotels garnish profits with outsourcing
New Delhi, May 2 According to the latest survey by Federation of Hotel and Restaurant
Associations of India (FHRAI), a whopping 70 per cent of hotels
outsource LCD projectors and over 40 per cent outsource high-speed
Internet and mobile phone renting service. These figures hold true for
five-star, five-star deluxe, four-star and three-star hotels surveyed by
FHRAI. “Earlier the margins from such IT services used to be as high
as 700 per cent, but revenues for these services accounted up to five
per cent of the total turnover,” FHRAI assistant secretary general
(research) Pooran Chandra Pandey told PTI here. Outsourcing of IT
facilities and services became a necessity for the Indian hotel industry
due to rapid fall in telecom tariffs, growth of mobile phones and the
rising popularity of Internet cafes. That shrunk the margins from such
service and return on investments started falling. “The investment for
a proper IT set in an upmarket hotel would be between 5-10 per cent of
the total project cost. So, the hotels find it wiser to give these
services to sub-contractor. By that, they can make good margins on the
rentals without putting up any investment on the purchases,” Mr Pandey
pointed out. This trend of outsourcing of IT-related services is in
line with trends in the West, where hotels stick just to the core
services and give sub-contracts almost everything, including IT
services, laundry, food and beverages. The study shows that hotels
usually outsource those equipment which require frequent maintenance,
have low frequency of usage or require periodic upgradation. However,
this increasing trend of outsourcing is mainly seen in the business
hotels, which are largely located in the city centres. Another reason
that has prompted the hotels to outsource IT services is resistance from
guests against charges levied by the hotels. Over 90 per cent of the
guests interviewed during the survey said the charges for Internet
access and other services were high and unreasonable. — PTI
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Petronet twin-bond issue in June New Delhi, May 2 “The first
issue of Rs 525 crore will be guaranteed by Asian Development Bank and
will be for replacing term loan,” PLL Director (finance) P. Dasgupta
said. ICICI Securities has been appointed the lead arranger while
Standard Chartered and JM Morgan Stanley are co-arrangers for the
privately placed bonds issue. Petronet will raise another Rs 525 crore
to meet the debt portion of the Rs 750 crore expansion of the Dahej
terminal capacity to 10 million tonnes by 2007-08.— PTI |
by S.C. Vasudeva Salary arrears taxable in year of receipt
Q:
I am a Punjab Government employee and received an arrear of pay
revision from July 4, 1996 to March 31, 2003, amounting to Rs 1,88,887
during August 2003 and TDS has been deducted as Rs 40,321 during this
period (04.07.96 to 31.03.2003). I have not availed house rent rebate
for the purpose of income tax due to the fact that my G.P.F. amount
deduction was sufficient for rebate towards income tax. During the
year 2000-2001 to 2002-2003, I have availed house rent rebate while
filing the tax return. During the period 04.07.96 to 31.03.2003 and
onwards, I used to reside in a rented accommodation. My questions
are: 1. Whether I am eligible for house rent rebate during the year
1996-97 to 1999-2000 for which I have paid rent for accommodation and
can the total arrear be split up year-wise and house rent rebate be
claimed year-wise? 2. If admissible, whether I have to pay the
interest on income tax of the previous years after split of arrear of
pay. — Madan Lal Singla, Chandigarh. A: Arrears of salary received by
you would be taxable in the year of receipt. However, Section 89 of
the Income Tax Act, 1961, (The Act) provides where an assessee is in
receipt of salary in arrears on account of which the total income is
assessed at a rate higher than that at which it would have otherwise
being assessed, the assessing officer shall on an application made to
him grant such relief as may be prescribed. Rule 21A of Income Tax
Rule 1962 (Rules) deals with computation of such relief. You may
furnish particulars of such receipt in Form 10E to your employer (i.e.
the Punjab Government).
IT rebate Q: I am a bank employee. My gross
salary for the F.Y. 2003-04 is approximately Rs 2,05,000. The
interest accrued on my H.L.A. for the same period is approximately Rs.
50,000. The standard deduction in my case is maximum Rs
30,000. Kindly advise what will be the rate of rebate of tax u/s 88
in my case? — Vijay K. Sharma, Amb, Una distt. A: Section 88 of the
Income Tax Act, 1961, provides that in the case of an individual whose
gross total income before giving effect to the deductions under
Chapter VI-A is more than Rs 1,50,000 but does not exceeds Rs
5,00,000, shall be entitled to a deduction from the amount of Income
Tax on his total income with which he is chargeable for any assessment
year of an amount equal to 15 per cent of the aggregate of the sums
referred to in Sub Section 2 of Section 88 of the Act. In your case
as the gross total income before Chapter VI-A, deductions exceeds Rs
1,50,000, a rebate @ 15 per cent shall be allowed.
Capital gains
tax Q: I am a resident of Chandigarh for the last more than 40 years
and a senior citizen recognised by the UT Admn. Chandigarh. I retired
from Panjab University where there is no pension available. I have a
small flat allotted by the Chandigarh Housing Board. I want to leave
Chandigarh for good and settle in my home state. The property is being
sold for Rs 6 lakh. This amount I wish to utilise for purchasing a
house in my state. As per my information, there the cost would be
around Rs 10.50 lakh. I would like to know what precautions I have to
take vis-a-vis income tax liabilities, if applicable in this case. —
K.A. Shan, Chandigarh. A: You have not indicated as to when the flat
was allotted to you by the Chandigarh Housing Board. It is therefore,
not possible to work out the amount of capital gain in respect of the
residential property which you intend to sell for Rs 6 lakh. In any
case, whatever be the amount of capital gain if the same is invested
in the purchase of a residential house within a period of one year.
Before or two years after the date of the transfer of the flat no
capital gains tax would be payable. |
bb
FIIs net Rs 7,638 cr
Export
sops
Unit relocation SBL moots IPO
IA record Apparel park
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