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Govt to infuse capital for PSB’s turnaround
Rural Business Hub Council formed
Haryana to introduce Industrial
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Extend e-credit facility to SCSS in post offices
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Govt to infuse capital for PSB’s turnaround
New Delhi, June 25 “Just as we turned around five banks in 1997, we will turnaround the Punjab and Sind Bank in three years time,” Finance Minister P. Chidambaram told newspersons on the sidelines of a seminar on Foreign Contribution Regulation Act (FCRA) organised jointly by the Institute of Chartered Accountants of India (ICAI) and the Ministry of Home Affairs (MHA). Mr Chidambaram, however, refused to divulge the quantum of capital infusion into the PSB, but said that it would depend on the targets that are set by the management. The bank’s management would identify the targets on the basis of expansion of credit, deposit mobilisation and reduction of non-performing assets (NPAs). According to an agency report, the Punjab and Sind Bank had sought a Rs 600-crore bailout package from the government as a part of its action plan to improve its financial health. “I have asked the bank to set the targets and submit me their plan”, Mr Chidambaram said. Earlier in the day, the Finance Minister visited the head office of the bank and urged them to make all out efforts to make the bank to be counted among the best financial institutions in the country. “However, a concerted effort is required for this to happen,” he said. Speaking at a seminar on Foreign Contribution Regulation Act (FCRA) organised jointly by the Institute of Chartered Accountants of India (ICAI) and the Ministry of Home Affairs (MHA), the Finance Minister said that accounting and reporting are essential ingredients of FCRA compliance and should not be construed as invasion or intrusion on the NGOs’ rights. He called upon the NGOs to cooperate with the government in ensuring that foreign receipts are not diverted or misutilised. He emphasised the need for greater awareness and compliance of the law. “In the present world scenario, flow of capital in private accounts has grown to hundreds of billions of dollars. Therefore, the law like FCRA becomes very important to ensure that such flow does not disturb the security of a country,” the Finance Minister said. Home Minister Shivraj Patil emphasised the need for bringing in a new legislation to replace the existing FC(R) Act, 1976 with a view to facilitate inflow of foreign contribution for genuine activities without compromising the national security concerns. He informed that the draft Bill in this regard has been prepared and the same has been referred to a Group of Ministers for deliberations and giving a final shape. The draft Bill recommended by GoM will be placed before the Parliament after obtaining approval of the Cabinet. He called upon all stakeholders to give their views/suggestions in this regard and said the draft Bill would be uploaded on MHA’s website for seeking free and frank views.
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Rural Business Hub Council formed
New Delhi, June 25 The Rural Business Hub Council will be co-chaired by him and industrialist Sunil Kant Munjal, he said after a CII meeting on the subject. Other members of the council would include Dr Arjun Sengupta, and others. These hubs would be based on local resource endowments and would be reflective of the felt needs of the people with the absorbtive capacity of people determining the business model, he said. Mr Aiyar said a working committee, which will work in tandem with the high-powered council, would also be set up which would be co-chaired by Mr Wajahat Habibullah, Secretary, Ministry of Panchayati Raj, and Mr S. Sen, Deputy Director-General, CII. The minister said the main thrust of the two groups would be to build on the existing cultural and knowledge base that exists at the panchayat level, which he believes would uplift India’s entrepreneurship. To begin with, 10 states, including Punjab, Uttaranchal, Kerala, Rajasthan, West Bengal, Karnataka, Uttar Pradesh, Chhattisgarh and Jammu and Kashmir, have been identified for launching the pilot project. Rural Business Hub enterprise would initially focus on processing agriculture produce like fisheries, forestry, orchards and crops, handlooms and handicrafts, decentralised power generation and alternative fuels. Nabard would be roped in for providing financing while the 6,000 branches of Institute of Engineers would be used for skill upgradation. The notification to its effect would be announced soon, he added.
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Haryana to introduce Industrial Promotion Act
Chandigarh June 25 The Chief Minister, who is on a two-day visit to Mumbai, was addressing the delegates of FICCI on ‘Investment Opportunities in Haryana’ on the first day of his visit and invited the captains of trade and industry in Mumbai to set up their ventures in Haryana. While stating this, a government press note issued here quoted Mr Hooda as having said that Haryana had investment-friendly climate and special emphasis had been laid in the state’s industrial policy on the development and strengthening of infrastructure. Mr Hooda said keeping in view the interests of the industrialists, tax in the state would be at par with Delhi.
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by A.N. Shanbhag
Extend e-credit facility to SCSS in post offices
Q:
I have invested in the Senior Citizens Savings Scheme (SCSS) and am happy that it gives 9 per cent interest, possibly the highest rate in any fixed income avenue. I have, however, one regret, that, the ECS (Electronic Credit System) facility has not yet been extended to this scheme. With the characteristic lethargy that prevails in any post office set up, very frequently we are forced to go in person and actually cajole the staff to credit accounts with the quarterly interest in the passbook, so that the same could be used, though provisions already exist in the rules. I wonder why the post offices do not agree to this system for SCSS also.
Another problem is that the passbook is not updated every month for the MIS accounts. If the ECS method has been adopted, then the monthly amount goes directly into the nominated bank savings account, but there is no entry in the passbook issued by the PO. I will be grateful to hear from you more in this matter, if the ECS could be made applicable to the
SCSS.
— D. C. Nakra A: The woes of the investors in NSO schemes handled by post offices are many more than what you have pointed out. These arise mainly from the rent-seeking staff of the post offices and the lethargy of the office of the commissioner of the NSO in taking corrective action, even when the various problems are brought to their notice by the public. Not extending ECS facility to SCSS even when enough expertise is already available with all the post offices, thanks to the facility already operative with the MIS, is beyond comprehension. Some great visionary had created the basic concept of small savings. The NSO authorities complacency has turned it into a nightmare. I had heaved a sigh of relief when some of the scheduled banks, which were already handling PPF were asked to handle SCSS. But alas! There is more chaos there also as branch managers have been framing their own rules into the SCSS. This has resulted in some branches applying TDS, some others charging commission for paying the interest , some offering ECS and others refusing to do so, some insisting in “Know your customer” as per RBI guidelines for customers of banks even when the SCSS depositor is not a customer of the bank, etc., etc. I plead with all chairmen, CEOs and MDs of the banks that they ensure that uniform practice is followed by all their branches.
Taxing joint property Q. Both, me and my wife, are employed. We have purchased a flat jointly and are staying in the same flat. The home loan is also in our joint names. For repayment purposes, is it okay if I make the payment from my bank account? Else, we could open a joint bank account and pay the EMI from that account. However, since I earn more, I would be interested to claim more deduction than her. Is this possible? — Pramod Sawant A. As both of you are co-owners, both are eligible for the attendant tax benefits in the proportion of your share in the loan. For financial year 2005-06, the interest deduction is up to Rs. 1.50 lakh and the capital repayment deduction u/s 80C is up to Rs 1 lakh. It would be more convenient in the long run to open a joint bank account and make the payments. Even if a joint bank account is not opened, each should pay for one’s share separately from one’s individual account. If you pay the entire EMI, you would end up paying for that part of the house that you don’t own. If you are not exhausting your tax deduction limits, the only way to get a higher deduction vis-à-vis your joint owner spouse is to change the share in the ownership of the house. However doing this would entail stamp duty payment. Do so, only if necessary. Fringe Benefit Tax Q: Is the HRA/transport allowance exempt u/s10 up to Rs. 800 or is even LTA taxable under FBT. If yes then guide us about the exemption amount — Shilpa A: There is no clarity on the issue. The problem is that one of the clauses of the FBT section specifies that Fringe Benefits (FBs) would not include perquisites in respect of which tax is paid or payable by the employee. Twisting this around, it could mean that FBs would include perks on which tax is not paid or payable by the employee i.e. group medical insurance, HRA, LTA etc. However, it is our opinion that it is not the intention of the law to bring these under the ambit of the FBT. The exemptions provided for these allowances are given specifically by the Income Tax Act. The authorities always had the option of removing the said exemptions. If these are indeed brought under the ambit of FBT, it would give rise to the absurd situation where on one hand, a particular section of the Act seeks to extend exemption and another section in the same Act seeks to tax it. This would be a contradiction in terms. In any case, to put the issue beyond doubt, CBDT should come out with a clarification. However, even if the FBT is indeed payable, then it would be only on the exempt portion of the allowance as on the taxable portion, the employee has already paid tax. NRI citizens Q: As per the definition with regard to senior citizen in the Finance Act, NRI senior citizen will be able to avail the prescribed limit of 1.85 lakh. (a) Does a senior citizen, whose income in India is below the threshold, has exemption for filing the income tax return? (b) If a senior citizen visits India after every two years and stays for three months each time in that financial year, what will be his status for income tax purposes in future? — S. Singh A: The enhanced threshold of Rs. 1.35 lakh for non-senior females and Rs. 1.85 lakh for senior citizens applies only to Resident Indian citizens. b) An NRI with income less than the threshold of Rs 1 lakh need not file tax returns. c) He will continue to be an NRI. The author may be contacted at wonderlandconsultants@yahoo.com
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