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EU, China defuse textile tension
Citing drawbacks, Punjab wire-drawing units scout HP
Irani report to be basis for New
Investor
guidance
Aviation
Notes
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EU, China defuse textile tension
Shanghai, June 11 “The overall settlement offers a fair deal for China while giving respite and much-needed breathing space to textiles industries in Europe and developing countries,” EU Trade Commissioner Peter Mandelson said in a statement. The agreement was reached in Shanghai by Mandelson and Chinese Commerce Minister Bo Xilai after months of tension over an explosive rise in shipments of cheap exports from China. The pact agreed by Mandelson and Bo caps exports on a wider range of products and will remain in effect for a longer period. — Reuters
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Citing drawbacks, Punjab wire-drawing units scout HP
Ludhiana, June 11 “The policies of the Punjab Small Industries and Export Corporation (PSIEC) and Rashtriya Ispat Nigam Limited (RINL) are not in the interest of the industry. Besides recession, problems like insufficient power supply and poor infrastructure are hitting the industry in Punjab,” says Mr Badish K. Jindal, general secretary of the Wire-Drawing Federation of Punjab. Wire-drawing units supply wire rods, the basic raw material, to most of the light engineering industry, including bicycle and sewing machines firms. Nearly 550 units wire-drawing units that are primarily located in Pathankot, Jalandhar, Amritsar and Ludhiana. As per the new policy of the Steel Ministry, small-scale industrial units can lift their raw material from PSIEC only, while large units, which lift more than 600 tonnes, can take the material directly from RINL. “This is costlier,” say SSI unit owners. They say that PSIEC charges Rs 175 per metric tonne more than what is being charged by RINL. “As a result of this, the current price for the raw material is around Rs 30,000 per tonne if procured from RINL, whereas it costs Rs 32,000 per tonne if procured from PSIEC,” Mr Jindal said. Due to this problem, small industrialists did not buy any material from PSIEC last month, resulting in losses to the corporation. The industry is further troubled by RINL, which, they said, had reduced its allocation by 50 per cent to the industry in Punjab. Industrialists also say that the Central Excise Duty and Central Sales Tax in Himachal Pradesh is only 1 per cent and the raw material being provided by the HP industrial body is almost Rs 400 per metric tonnes cheaper in comparison to PSIEC. This industry provides employment to over 6,000 persons. Industrialists, who have now written to the Ministry of Steel, say they would shift base in case the government failed to do anything.
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Irani report to be basis for New Companies Bill
New Delhi, June 11 Speaking at a seminar on “New Company Law” organised by the Institute of Company Secretaries of India (ICSI) here today, Minister of State for Company Affairs P.C. Gupta said, “The government is committed to minimise the hassles of the corporate sector. The New Company Bill will be placed in the winter session of Parliament.” The committee has mooted the concept of a single-person company. It has laid down guidelines on what independent directors should be doing on company boards to look after the interest of the minority shareholders. The main thrust of the committee’s recommendations include giving full liberty to the shareholders and owners of the company to operate in a transparent manner. Further, in a significant recommendation, the expert panel has said that non-executive directors and independent directors should not be punished for day-to-day actions of the company that have not been brought to their notice. The Minister made it clear that the simplified exit scheme will close as scheduled on July 31 this year and the date will not be extended.
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Interest rates vary but all bonds are safe
by A.N. Shanbhag
Q: I have to purchase capital gain bonds for about Rs 50 lakh to avoid Long-Term Capital Gains (LTCG) tax. Kindly advise
(a) If there are chances of increase in interest rates of these bonds in near future say by August, 2005. (b) Presently some bonds like NHB etc give higher rate of interest say 5.35 per cent pa compared to Nabard of 5.20 per cent pa. Are they equally safe? If so, why would people buy Nabard which are more popular but less rate of interest. — Ramesh Bhatia
A:
I am glad to find a person in you who takes care of his money. Most of the investors have no time and energy to find our for themselves or have the wisdom to ask a consultant to undertake the collection of the data for a fee so as to enable them take data-based decisions. In an overpopulated country, the demand-price loses its elasticity. This is the reason why organisations like Nabard can afford to be complacent and adopt a ‘take it or leave it’ attitude.
The current interest rate of interest offered by the total of five companies in this field are
1. Nabard — 5.20 per cent (5.13 per cent for half-yearly rest). 2. REC — Not open. 3. NHB — 5.35 per cent 4. SIDBI — 5.20 per cent 5. NHAI — Not open. All these companies, being quasi-government in nature, are equally safe and the safety is of high order.
HRA exemption
Q:
I have purchased a house in Agra with a home loan of Rs 10 lakh. However, I work at Mumbai and presently the house in Agra is vacant. I live in a rented apartment in Mumbai. In such a case, can I get both, tax benefit on the home loan as well as HRA exemption?
— Raj Bakshi
A:
HRA exemption is available as long as you actually pay rent and stay in a rented accommodation. This has nothing to do with the deduction of interest paid on home loans or the tax deduction under Section 80C for repayment of capital. Also, the place where your purchased house exists has no relevance at all to the claim for HRA exemption.
The HRA exemption is the minimum of a) the amount received as the HRA b) the actual rent paid less 10 per cent of your salary or c) 50 per cent of your salary.
Transaction tax
Q:
In the final Budget, approved by the Parliament, senior citizens and women got some relief. That is welcome to us (senior citizens). What about increase in the PPF ceiling of Rs 70,000? Can one place Rs 1 lakh in the PPF? This point is not touched in any of the newspapers.
As for tax on cash withdrawal from bank accounts, the Finance Minister has rightly excluded saving account from the purview. It is not clear if NRO/NRE accounts are also excluded. These are essentially saving bank accounts except that the holders are NRIs.
It is also not clear when the media coverage talked about taxability of withdrawal from term deposit accounts. As I understand, term deposits are not liquid till maturity and after maturity, the proceeds go into saving bank or current account of the holder and then the regulations as applicable to the respective accounts will decide the taxability. — Waman Saraf
A:
1. Senior citizens and non-senior women got some extra benefit as compared to what was envisaged by the Budget. However, they still stand to lose. The changes effected by the Parliament are small crumbs to appease these individuals. Incidentally, this benefit is not for NRIs.
2. The PPF Rules prohibit an individual from contributing an amount exceeding Rs 70,000 The contributions by the assessee to the PPF accounts of the spouse and children, major or minor, married or otherwise, male or female, dependent or not, are eligible for the rebate (now deduction). As a matter of fact, a parent may contribute even in the name of married daughter and still claim deduction. Contributions to account of minor children have some difficulty. The aggregate contributions are eligible for the deduction up to Rs 1 lakh but is subject to the basic limit of Rs 70,000 in one account.
3. The Bank Cash Transaction Tax is applicable to residents as well as NRIs. It will not be applicable to NRO /NRE savings accounts. 4. If the depositor decides to get the maturity proceeds in cash, he will be subjected to this tax. If the maturity proceeds are credited to his account, the bank cash transaction tax will not be applicable.
Splitting rent
Q: I want to give a commercial property on rent above Rs 1,20,000 per annum.
To avoid deduction of tax at source, I wish to split the rent into two, one of rent and the other as service charge.
1) How should the agreement be framed? 2) Can I receive one cheque for both items? 3) Is 33 per cent statutory deduction available on both or only rent? — Raj Kumar
A:
Yes, you can but you should not. The service charge may attract service tax, which is more difficult to handle. The standard deduction of 33 per cent cannot be availed on service charge. There is no problem in you receiving one single payment against demands from two or more sources.
The author may be contacted at wonderlandconsultants@yahoo.com
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Abnormal cut in fares may be suicidal
by K.R. Wadhwaney
It
may be unfortunate but nevertheless true that whatever Naresh Goyal’s Jet Airways does, runs into trouble or controversy.
Mr Goyal’s latest ‘dream’ of flying to the US from June 23 faced turbulent weather over the ‘trademark’ issue. Jet Airways Inc in the US has sprung up and there is every likelihood of the US Department of Transportation (DoT) delaying the approval. Goyal’s Jet Airways is, however, in an upbeat mood. Executive Director Saroj Datta in Mumbai said that the operations would commence soon. Aviation analysts, however, feel that if Jet Airways (India) opts for legal action, operations may be delayed. In this rigmarole, the US firm has reopened Indian firm’s links with the underworld dons. The US firm has gone to the extent of saying that the Indian firm ‘has been directly financed since 1991 by some undesirables’. The Indian Jet Airways officials maintain that there is not much ground in these allegations. “We have filed detailed replies to every query and everything would be sorted out soon” maintain officials. According to aviation watchers, the ‘trademark’ may not hold water, but Indian firm’s link with the under-world dons may cause a fresh round of problem to Naresh Goyal.
Fare war In an effort to grab a pie in the Indian skies, Air Deccan has unleashed another round of fare war. The reduction in prices by about 30 per cent and offering facilities and perks to passengers, according to analysts, are shrewd ‘gimmicks’ which would merely sustain for just a whole. The fare cut is in response to Kingfisher Airlines’ discount inaugural offer. We have decided to match Kingfisher’s prices on its key sectors to protect our market,” Air Deccan managing director G.R. Gopinath said. As the war wages among private operators on domestic sectors, Indian Airlines has righty stayed out of this ‘war of attrition’. Aviation analysts are of the view that aggressive prices is one thing, but abnormally cutting prices is suicidal. They feel that in the long run, this illogical behaviour would hurt airlines and small players will fold up sooner than later. The consensus is that private operators are needlessly polluting the ‘flying atmosphere’. Licence to private operators and foreign carriers to increase operations on international routes is a healthy development because there would now be ‘no off-loadings’ during busy seasons. The traffic ex-India to Europe and the US has increased substantially.
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