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Ludhiana
brokers await Sebi nod on Indonext Wage revision a rarity
in Himachal industrial belt
Fashion
shows with noble motives G-7 favours boost in
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Notes Merger talks — old wine in new bottle After several failures, there is again discussion on the merger between two national airlines, Indian Airlines and Air-India (A-I). It is like putting old wine (proposal) in new bottle. The proposal of A-I’s Chairman V. Thulasidas is unlikely to go beyond the drawing board.
Investor
guidance
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Ludhiana brokers await Sebi nod on Indonext Ludhiana, October 2 “We are hopeful that Sebi will give it’s affirmation within one-two months,” says executive director, LSE, Mr
H. S. Sidhu. The proposed Indonext Market will provide a common trading platform to RSEs, which would mean increased trading and additional revenue inflow. The measure would particularly benefit exchanges like the Ludhiana Stock Exchange, which is going through a financial crunch. “As per the proposal, BSE will provide its own VSAT connectivity whereas the existing infrastructure of the regional exchanges would be used for trading and LSE, along with other RSEs, would be the members of Indonext,” said Mr Sidhu. It was in December 2002 that Sebi constituted Mayya Committee to prepare a blueprint for the consolidation of RSEs in India on lines with the Euronext Exchange in Europe. The committee submitted its recommendations, which were discussed in detail in several meetings of the Federation of Indian Stock Exchanges (Fise) and Sebi. In its report, Fise stated that while the eventual objective may be the merger of RSEs into one entity, at the present stage, merger or dissolution of the existing RSEs is not felt to be a practical implementation strategy. Fise was of the view that for the Indonext Market to be viable and preventing fragmentation of the market, there should be only one exchange for companies having paid-up capital up to Rs 20 crore. The federation stated that companies with paid up capital of more than Rs 20 crore, but listed only on RSEs as regional listings, may be given the option to list on the Indonext exchange and/or NSE or BSE, as they may choose. “As companies having paid-up capital up to Rs 20 crore would be able to trade, it would provide trading opportunities to small companies, which cannot get listed on NSE,” Mr Sidhu adds. Not only to smaller companies, it would also provide opportunities to small brokers as well, he avers. As many as 243 companies have been suspended from trading by the Ludhiana Stock Exchange. After formation of the Indonext, Mr Sidhu says, such companies would also try to meet the requirements and it is likely that they too get in to trading, resulting in further benefit to the investors as well. Companies listed under Indonext, would come under another segment called the ‘S’ segment, he discloses. Management of RSEs, meanwhile, would remain the same.
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Wage revision a rarity in
Himachal industrial belt Kumarhatti, October 2 The small and medium enterprises (SMEs) are the prime defaulters on revising the salary of its payroll staff. However, a few big industries, too, have failed to give the desired annul wage hike. Various employee unions are locking horns with the management over the pay-hike issue by observing peaceful agitation. To combat trade unionism most of the employers are devising ways and means to terminate the services of the union leaders. In Purview Electronics Limited, Parwanoo, the staff is observing daily gate meetings against the sacking of its two union leaders, including the president. The management of company has allegedly failed to grant annual increments due from February last. In a demand charter, handed over to company management last Saturday, the agitating employees, led by the Electronic Workers Union, have demanded the restoration of services of terminated leaders and hike in wages. Similarly, in Eicher the three-year wage revision contracts of over 250 workers have not yet been finalised due to the opposition of percentage hike by the employees union. The contract was due for renewal in November last. The unions have been demanding 22 per cent hike in wages whereas the management approved a hike quite low from this. The management of Samtel Electronics had to announce a lockout in its yoke-manufacturing unit at Parwanoo following an agitation by the employees over wage hike. “Though there is no law on the annual wage increment yet it is more or less a traditional practice in industry to increase the salary based upon skill improvement, inflation and unit growth,” says Mr. Daljeet Singh, vice-president, HP CITU. During the past some time hiring of workers through contractors has increased in most units, he points out. The dilly-dally approach of the Labour Department is the main reason behind the workers plight, he alleges.
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Fashion shows with noble motives
New Delhi, October 2 Two of the most prominent people doing this are the fashion house of Satya Paul and designer Raghavendra Rathore. Satya Paul has roped in Bollywood star Sanjay Dutt to help in its fundraiser fashion shows to collect money for breast cancer patients. “Both Sanjay Dutt’s mother and first wife died of cancer, so he feels for the cause and he is genuinely a very philanthropic man,” Sanjay Kapoor, managing director of Satya Paul, said. Rathore is doing a special series of T-shirts to help promote eye donation. “I feel very strongly about this cause,” said Rathore, adding that the money from the sale of the T-shirts would go towards eye donation. “I want to make this an annual feature of ours. Sight is a great blessing. Satya Paul fundraisers would be held in New Delhi, Mumbai, Kolkata and Bangalore to spread awareness about the easily curable but often neglected
disease. — IANS
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G-7 favours boost in oil supplies
Washington, October 2 The Group of Seven (G-7) countries — the USA, Japan, Germany, France, Britain, Italy and Canada - also resolved to agree on providing battered Iraq with relief from its massive debt burden while also working on a deal to increase debt relief for the world’s poorest countries. The joint statement issued by the finance ministers and central bank presidents of the G-7 countries yesterday also repeated the officials’ desire to see all nations move to flexible currency systems. That was an appeal to China to drop its current system, which American manufacturers contend contributes to huge trade deficits and the loss of US factory jobs. The statement on currency flexibility represented a victory for the Bush administration, which is trying to use international pressure to bolster its campaign to get China to halt its practice of pegging its currency to the US dollar.
— AP
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Merger talks — old wine in new bottle by K.R. Wadhwaney
After
several failures, there is again discussion on the merger between two national airlines, Indian Airlines and Air-India (A-I). It is like putting old wine (proposal) in new bottle. The proposal of A-I’s Chairman V. Thulasidas is unlikely to go beyond the drawing board. Nearly a year ago, IA Chairman Sunil Arora was given the additional charge of A-I. He was the common chairman of two airlines which where on a high road to get on one wave-length in schemes and programmes. The ‘army’ of staff of two airlines was, for once, harping the tune that “there is a hope of renaissance in A-I and IA. Suddenly, without any justification, needless ‘brakes’ were applied by former Minister for Civil Aviation Rajiv Pratap Rudy. He brought in a new chairman for A-I and since then two carriers are working independently instead of being supplementary to each other. The A-I chief has gone on record to say that ‘merger is a policy decision’ but in the same breath he advocates the domestic carrier to be a subsidiary of A-I. Why should IA be a subsidiary to A-I? Statistics show that there are far more troubles with the international carrier than with the domestic airlines.
Fleet expansion The fleet expansion problems continue to persist. While two national carriers are still caught in this vexed issue, British Airways and Virgin have already announced their plans to expand their operations to India. British Midland Airways, UK’s low-cost airline, is also contemplating to start operations to India. Many airlines bigwigs believe that India offers a ready market for operations. While private carriers are offering low fares to woo passengers, Kingfisher Air is planning to offer: “Fly now and pay later” scheme. The new airline is expected to start operations early next year. Like Singapore Airlines, Malaysia Airlines has also got permission to operate flights to Ahmedabad and Kolkata. The airline plans to start three flights to Ahmedabad from November 30 and three to Kolkata from January 2, 2005.
Two ministers There was a time — not long ago — when there was one ministry catering to the needs of civil aviation and tourism. Now there are two ministries. Luckily, the two ministers, Mr Praful Patel (Civil Aviation) and Ms Renuka Chowdhary (Tourism) are on the same wavelength. Worldwide, aviation and tourism are considered vital. But sadly India does not provide enough importance to these ministries. Undismayed and undaunted by uncalled for hinderances, Mr Patel has already made a plea to roll back the hefty 42 per cent duty on leased aircraft. The Tourism Minister has recommended that convention centres should be included in the core infrastructure. The proposals are realistic and will improve the image of aviation and tourism. There is an urgent need to have motels and cheap hotels to attract foreign tourists. According to travel agents and tour operators, many tourists, with an average budget, get put off by hotel tarrifs. “About 25 per cent foreign tourists abandon their plan to undertake holiday to India after checking prices,” two reputed travel agencies said. In comparison to India, there are several other destinations like Malaysia and Thailand which offer bargain prices for tourists. No wonder, tourist traffic to Malaysia, Thailand and Singapore is much more than India. Even many middle class Indians feel it is cheaper to travel to Sri Lanka or Bangkok than travelling to Goa or Chennai or Bangalore from the northern part of India.
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Earning minor requires PAN by A.N. Shanbhag Q: With regards to the new proposed tax law for NRIs in the Budget 2004-05, I want to ask will an NRI, who is holding shares for more than one year, be exempt from the payment of long-term capital gain tax or will he have to pay 10 per cent. From which date will this be effective? 2. Is an NRI required to file tax return for the year 2004- 05 onwards. 3. Is PAN to be obtained for minors also. Is it necessary to have PAN for all family members (minor or major) who have income of more than Rs 50,000. — R K Bhala A: 1. Long-term gains on equities is slated to be tax-free in the hands of the individuals, whether an NRI or a resident from the date of announcement in the official gazette. This has not yet taken place. 2. No one is required to file the return, unless his Indian gross total income chargeable to tax is over the tax threshold of Rs 50,000 (except those covered under 1-by-6 rule which is not applicable to NRIs). However, it is advisable to file the return for several reasons, the main one is to claim refund of TDS, if any. 3. Normally, the income of any minor is clubbed in the hands of either of his parents and therefore, the minor need not file the return and hence PAN is not required. There are some exceptions. All the income of a physically or mentally handicapped minor child will be directly assessed in the hands of the child. Similarly, a minor earning income by way of manual work or an activity involving application of his skill, talent or specialised knowledge and experience, is directly assessed in the hands of the child. Under such situation, the minor requires a PAN. However, if it is only investment income then the same will suffer clubbing. STT
Q: I am a long-term equity MF investor. I want to know with the introduction of securities transaction tax (STT) on equity MF units should I consider the growth or dividend re-invest option more tax efficient. Are the additional units allotted during a dividend declaration come under the purview of
STT? — Prateek A: The STT is applicable on sale @ 0.15 pc on the total amount of redemption. So it really doesn’t matter whether you opt for dividend reinvestment or growth as the total amount would be the same on which the STT would ultimately apply.
GoI bonds
Q: This is with regards to the Government of India 8 pc saving (taxable) bond 2003. I wish to take the bond with cumulative option for interest. Now the query is whether could I work out the yearly interest accrual on the six-year cumulative interest and include it in my yearly income tax returns Or has the entire interest to be shown in the income tax return in the maturity year (i.e. in the sixth year) only. Please advise. — Hari Parmeshwar A: You should include the interest in your yearly income tax return on accrual basis. If you do not do so, you will lose the benefit of Section 80 L, which allows the full Rs 15,000 deduction every year since these Bonds are declared as government securities. If you do not include the interest on annual basis, you can certainly show the entire interest in the year of maturity, and claim that you are following mercantile system of accounting, but in that case you can claim the benefit of Section 80L up to its limit of Rs. 15,000 only during the last year and not every year.
Gift to fiancee
Q: I am sending money to my fiancee. I want to ask if he will be charged any tax on it. Do you have some sort of a limit beyond which if money is transferred it will taxed? — Soujanya Kaluri A: Any sum of money in excess of Rs. 25,000 received from a non-relative is to be taxed as income except if it is in contemplation of death, under a will or on the occasion of marriage. If the residential status of your fiancee is Indian resident then till you actually get married, you do not become a spouse/ relative of the recipient. However, there are no time limits declared for giving gifts on the “occasion of marriage”. Therefore, if your marriage is round the corner, then your fiancee may claim the gift as tax-exempt on account of it being on the occasion of marriage. However, the wedding has to be within a reasonable period of time, else the ITO may object to the exemption claimed.
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