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FDI in pension may be pegged
Experts for free trade pact with B’desh
Chennai-based BPO firm keen on Punjab
CII for 7 pc GDP into infrastructure
Rajasansi is now Customs-notified airport
PNB may acquire stake in overseas banks
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Time ripe for profit-booking
Tax advice Invest capital gain to save tax
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FDI in pension may be pegged at 26 pc
New Delhi, July 10 The government is of the view that unlike insurance companies, where pooled investment of subscribers is of paramount importance, the pension fund managers would be managing the individual retirement accounts and would act more like an asset management company. Sources said FDI limit of 26 per cent would also not be spelt out in the Bill. Moreover, if the FDI ceiling is not embedded in the legislation, it would enable the government to raise the limit in the future through an executive process. The PFRDA Bill, which was referred to the Parliamentary Standing Committee of Finance, has not stipulated the FDI ceiling. The government would also offer a `default option’ to subscribers under the new pension scheme (NPS). The NPS, presently covering about 75,000 government employees, who joined service on or after January 1, 2004, so far does not offer any implicit or explicit assurance to the subscribers as the accumulated money is being invested in market-based instruments. This is a defined contribution (DC) scheme, where employees contribute 10 per cent of their basic and dearness allowance to pension with a matching contribution by the government. The NPS presently offers three options. Under option A, investment will be predominantly in fixed income instruments and some investment in equity, under option B, there will be greater investment in equity and under option C, there will be equal investment in fixed income and equity instruments. At the time of exit, it is mandatory for the employees to invest 40 per cent of his/her pension wealth to purchase an annuity to provide for the lifetime pension for the employee. Remaining 60 per cent would be paid in lump sum at the time of exit. Sources said that the a fourth option (option D) would be offered to the subscribers where the accumulated money would be invested totally or predominantly in risk-free government securities.
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WTO meeting
New Delhi, July 10 The Trade Ministers from around 30 member countries of the
WTO, including Australia, Argentina, Brazil, Canada, Japan, Indonesia, Malaysia, Pakistan, Kenya, South Africa, the USA and the European Community (EC) are expected to participate in the meeting.
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Experts for free trade pact with B’desh
New Delhi, July 10 The South Asia Enterprise Development Facility (SEDF), a multi-donor facility of the International Finance Corporation (IFC), has estimated that as against legal trade of around $ 1 billion between the two countries, there is smuggling of Indian goods worth about $ 2 billion annually to Bangladesh on the porous border, resulting in huge revenue losses to the governments of both the countries. It has claimed that a free-trade agreement between the two countries will not only check the smuggling, but will also help the economy of the North Eastern Region. It will also assist both the countries to create a congenial environment to resolve age-old border and water disputes. Mr Marlon Lezama Program Manager, Business Enabling Environment SEDF, IFC, said, “ We believe that in order to facilitate cooperation between Bangladesh and India, special attention needs to be given to encourage trade, particularly between the geographically-contiguous and adjoining region of the two countries.” He added, “In case of Bangladesh and NE India the volume of informal trade is almost as much as formal trade ($40 million formal and $ 30 million informal) thus losing valuable revenues for both economies.” Bangladesh has been urging India to provide a transit route for trade and electricity supply with Nepal and Bhutan besides removing trade barriers to improve bilateral trade between the two countries. Significantly, the Indian Government has shown keen interest in signing trade agreements with Sri Lanka, Thailand and now Singapore. However, it has not shown that much interest in signing free trade agreement with Bangladesh that has the potential to boost trade activities in the North-Eastern Region.
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Chennai-based BPO firm keen on Punjab
Chandigarh, July 10 Chief Minister Amarinder Singh and his delegation are on a visit to "IT cities" of south India. The team has already visited Hyderabad and Bangalore. The spokesperson added EDS Managing Director Abhey Gupte showed interest in Punjab for future expansion plans. The team also visited the yet-to-be opened facility of IT company, Cognizant. The CEO of Cognizant, Mr Lakshmi Narayanan, expressed interest in the Punjab team's presentation. The Chief Minister invited the Cognizant CEO, and his team to visit Mohali.
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CII for 7 pc GDP into infrastructure
New Delhi, July 10 Members of CII’s National Council, which met in Chennai and reviewed the economy, felt that a minimum of 7 per cent of the GDP had to go into gross capital formation in infrastructure, the CII said in a statement. The private sector could do at best 20 to 30 per cent of this investment. Therefore, the balance has to come from the government. Currently, it is estimated that the investments are only half of what is needed.
— PTI
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Rajasansi is now Customs-notified airport
Chandigarh, July 10 The notification amends 16 customs notifications which were issued under various export promotion schemes so as to permit, inter-alia, imports and exports through the Rajasansi airport. The Punjab Chief Minister, Capt Amarinder Singh, had written to the Union Finance Minister, Mr P. Chidambaram, and the Aviation Minister, Mr Praful Patel, to notify the port as a port for export so as to encourage exports from the state. The Secretary and Director, Industries, Mr Sanjay Kumar, told The Tribune that this would simplify and facilitate exports and cargo movements in a major way from Amritsar. Exporters would also be saved from the botheration of taking clearances for their consignments time and again, he added. With the Airport Authority of India already upgrading facilities at the Rajasansi airport, the notification would help the exporters and importers from the region to use the cargo facility at the airport. It would largely benefit agriculture/horticulture exports and would increase export potential of agro products from the neighbouring states of Rajasthan, Uttaranchal, Jammu and Kashmir and Himachal Pradesh.
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PNB may acquire stake in overseas banks
Kolkata, July 10 “There are one or two opportunities available with us for equity participation in the banking sector in foreign countries, including one in Bangladesh,” bank Chairman and Managing Director S C Gupta told reporters here yesterday. While declining to name the Bangladesh bank, Mr Gupta said “talks are in early stage. But if all conditions are met, we will take management control with a stake.” The PNB has already picked up 20 per cent shareholding in the Everest Bank of Nepal and was “exploring such opportunities” in other countries. Besides, in a bid to increase its international presence, the bank has opened a branch in Kabul and four representative offices in the UK, China, Kazakhstan and Dubai. “The board has given approval for a few more foreign branches in Singapore, Hong Kong and Canada”, he said.
— PTI
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by S.C. Vasudeva Invest capital gain to save tax
Q I want to clarify the following queries.
(a) I purchased a constructed house in January 1992 by paying Rs 1,75,000 and spent Rs 21,875 on stamp papers. For this I raised a loan of Rs 1.3 lakh from LIC, against which I have paid Rs 1,10,000 as interest up to 2001. If I sell this house for Rs 6 lakh then what will be the capital gain tax on it and how it will be calculated? (b) After how much time before or after selling this house can I invest this amount for another house. If I again raise a house loan of about Rs 3 lakh then what will be my capital gain tax. If total cost of construction goes beyond Rs 6 lakh or within 6 lakh. (c) Whether money spent on stamp papers in 1992 and interest paid on loan to LIC will be considered to calculate long-term capital gain or not. — Dr Sucha Singh A The answers to your queries are as under: (a) Total cost of the house Rs 1,75,000 + Rs 21,875 = Rs 1,96,875 Indexed cost (480/199 x 1,96,875) = Rs 4,74,874 Sale price = Rs 6,00,000 Capital gain = Rs 1,25,126 Capital gain tax on the above shall be charged at the rate of 20 per cent plus 2 per cent education cess. (b) In case you want to save the payment of capital gain tax you will have to invest the capital gains in the purchase of another residential house within a period of 1 year before or two years after the date of the sale of a house or construct a residential house within three years of the date of sale. The raising of loan has no connection with the computation of capital gain. (c) Cost of stamp papers will be added to the cost of the house. However, interest paid on loan to LIC is deductible from the income and is not to be added to the cost of the house. Saving schemes Q Kindly mention saving schemes fetching deduction (up to Rs 1 Lakh) from gross income for financial year 2005-06 and related conditions, if any. — Balvinder Kumar A Section 80C of the Income Tax Act provides for the deduction in respect of aggregate of various sums referred to in the sub-Section (2) of the aforesaid section as do not exceed Rs1,00,000. This sub-Section refers to almost 20 types of deduction, which are allowable to be deducted from the total income. It is not possible to describe all deductions here. However, a few of the deductions are (i) Life insurance premium paid to effect or keep in force an insurance on the life of the assessee, his spouse and any child of the assessee and in case of Hindu undivided family of any member thereto. (ii) The contribution by an employee to a recognised provident fund or any provident fund to which the Provident Fund Act 1925 applies or any provident funds set up by the Central Government. (iii) To effect or keep in force a contract for deferred annuity on the life of the assessee or persons referred in (a) herein above. (iv) Subscription to saving certificate as notified by the Central Government (v) Contribution to Unit Linked Insurance Plan 1971 (vi) Payment of tuition fee (excluding any payment towards any development fee, donation or payment of similar nature) whether at the time of admission or thereafter to any university, college, school or other educational institution situated within India for the purposes of full time education of any of the persons specified in (a) herein above. Tax liability Q I am a retired person and was working with the Punjab
Government, have drawn pension of Rs 1,10,000 during 2004-05. I purchased a house after getting a loan from a private finance corporation and got an income of Rs 2,09,000 from this house per annum during 2004-05. Also, I paid Rs 2,48,000 during 20-04-05 as refund of loan money to the finance corporation. I also paid Rs 30,000 as house tax to the local municipal council. Kindly guide me how I should prepare my income tax return for 2004-05. I also paid Rs 80,300 during 2004-05 as LIC premiums and in PPF a/c in post office. A You will be entitled to a deduction of Rs 30,000 as standard deduction from your pension income of Rs 1,10,000. As far as income from property is concerned after deducting the house tax you will be entitled to a statutory deduction of 30 per cent from Rs 1,79,000 (2,09,000-30,000). The total taxable income, thus would be Rs 2,35,300 on which a tax of Rs 22,022 would be payable after allowing a rebate of 20 per cent of Rs 14,000 (maximum allowable) under Section 88 of the Act. IT exemption Q I am in the process of being allotted a flat by a private housing company (regd). Am I eligible for IT exemption on account of payment of instalments as per the latest budgetary proposals? — Sushil Kaushal A In accordance with clause (xviii) of Section 80C(2) of the Act, deduction is allowed for the purposes of purchase or construction of a residential house or property where such payment is made towards or by way of any instalment or part payment of the amount due to any company or cooperative society of which the assessee is a shareholder or member towards the cost of the house property allotted to him. Your query does not indicate whether you comply with the conditions specified in the clause. In case you do comply, you will be entitled to a deduction to the extent of Rs 1,00,000 from the total income. Readers are welcome to send questions for tax advice. These should be brief, to the point and not exceed 100-150 words. The letters should be sent to Tax Advice C/o The Tribune, Sector 29, Chandigarh-160020 or emailed to: |
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