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India, US try to sort out subsidy issue
Action against defaulters sought
Andhra Bank to float second public issue
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UK-based
college ties up with CAAN Wings in Jalandhar AVIATION
NOTES
Airlines’ agents diversify, sell train tickets
RNOR status not for every non-resident Indian who returns
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India, US try to sort out subsidy issue
New Delhi, November 12 US Trade Representative (USTR) Rob Portman asked India not to scale down its expectations from the WTO Hong Kong Ministerial meet stating that toning down expectations from the Doha Round would damage the multi-lateral trading arrangement. He held discussions with Finance Minister P. Chidambaram, Union Commerce and Industry Minister Kamal Nath and industry representatives. A group of developing countries led by India and Brazil are insisting that the United States and the European Union are not doing enough to cut billions of dollars they give in trade, distorting subsidies to their farmers. The deadlock over agricultural subsidies has blocked progress on negotiations for a new global trade treaty and a meeting of top member nations of the WTO called this week in Geneva failed to make any breakthrough. Although relations between India and the United States have warmed in recent years, the two countries have major differences over trade issues. “Unless it is a strong resolve, I am not sure who will stand with me in my domestic constituency,” Mr Portman said. He said the US proposal of reducing the domestic support and export subsidy would have jump-started the agricultural negotiations if the EU and other countries with offensive agriculture interests had agreed to increase the market access through reduction in tariff. He agreed that unless there was a movement on agriculture, things would not move in non-agriculture market access (Nama) and services. While the USTR wanted to retain ambitions, he warned that the Doha Round would not move to a successful conclusion unless the EU allows higher market access in farm products.
Bilateral trade
Aiming to strengthen bilateral economic ties, India and the US today agreed to double trade to $40 billion in the next three years while identifying the small and medium enterprises sector as a focus area for achieving the ambitious target. Addressing the industry captains at an interactive session organised by Ficci here today, Union Commerce and Industry Minister Kamal Nath stressed that there was a huge potential for bilateral trade and economic cooperation between the two countries. Agreeing with Nath, Mr Rob Portman said doubling the trade in three years was an ambitious but achievable target and assured the support of the US administration in this regard. The minister emphasised that one of the major obstacles in trade expansion was the non-tariff barriers.
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Action against defaulters sought
Chandigarh, November 12 Addressing a press conference on the eve of the All-India Convention of Women Bank Employees, Mr Rajan Nagar and Mr C.H. Venkatachalam, AIBEA president and general secretary, respectively, urged the Central Government to come out with a law that holds industrialists personally accountable for the loans raised by them. Coming down heavily on the disinvestment up to 49 per cent in the public sector banks, they termed it “a dangerous step” towards privatisation. The contribution of the private sector banks towards the national economy had been negligible as they had hardly any presence in the rural areas.
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Andhra Bank to float second public issue
Kolkata, November 12 Andhra Bank is planning to raise tier-I capital to augment its capital-adequacy ratio before March, 2006, bank CMD K Ramakrishnan said here yesterday. "We will come out with a public issue this fiscal. This will help us improve our CAR from current 12.11 per cent," he said, but refused to divulge the issue size. The bank, which currently had a government holding of 62.3 per cent, had earlier raised Rs 150 crore from the market. Moreover, the south-based bank was also planning to venture abroad and open its first representative office in Dubai in December. The bank, targeting at Telugu- speaking NRI population in the Middle-East and the US, was also planning to open branches in places like New Jersey and California.
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UK-based college ties up with CAAN Wings in Jalandhar The Capital College, based in London has tied with CAAN Wings, a local foreign study and immigration consultancy organisation. The Capital College, according to Ms Diamond Sodhi, the director of CAAN Wings, offers professional courses like accountancy, finance, business administration, marketing and personal development, leading to lucrative placements. “In contrast to most foreign colleges, the Capital College has an affordable fee structure and a good infrastructure for the students,” she said. She emphasised that
aspirants should not go for illegal channels to migrate to foreign
countries, as there were a large number of ways to settle abroad
legally, she said in press note issued here today. — TNS
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by K.R. Wadhwaney
Airlines’ agents diversify, sell train tickets
The International Air Transport Association (IATA) has lost its sheen and controlling authority over airlines and travel agents owing to lax administration. Its recognition is no longer a big deal. The non-IATA agents are as important, or otherwise, as IATA-approved agents. There is a sea-change in the attitude of airlines and agents. They care more for commercial aspects than their reputation. The airlines, Indian and foreign, prefer non-IATA agents to high-sounding IATA agents who talk much and deliver precious little to clients. The airlines, unable to reduce overhead expenses on fuel, salaries and perks, have been in the mould of reducing agents’ commission. The reduction in commission has already been brought about from 7 to 5 per cent. Soon, there will be negligible or no commission to agents. Last year, the Travel Agents Association of India (TAAI) wanted to have a confrontation with airlines. But soon the officialdom realised that it would be an exercise in futility. They deviced a ‘face saving formula’ showing their belief in ‘live and let live exercise’. Many airlines have gone on record saying that commission saved is revenue earned. “This huge quantum of saving has helped them keep afloat in razor-sharp market”, senior airline executives said. In view of dark clouds hovering above the horizon of travel agents, they are rightly seeking diversification for their own survival more than serving the cause of the travelling community. Some well known agents have already started handling railway bookings/ reservations. But there are several hurdles and pitfalls before the Railways allows all agents to handle this mode of transportation. In computerised age, the railways have several outlets, including one reservation counter at the Press Club of India. Buying and selling the tickets with reservation may not cause much problem but cancellation and refund in towns and rural areas can be dicey since quite a few travel agents have no reputation to lose. The new team of the TAAI, headed by Ashwini Kakkar, recently spelt out plans to serve the cause of travelling public. Highly articulate and knowledge, Mr Kakkar did explain the role of agents who, according to him, are a vital link between customers, airlines and railways. He, among several other schemes, laid emphasis on insurance of passengers. Indeed passengers travelling abroad should undertake insurance policy. While plans have been well taken, the new TAAI team should train its guns on reducing corruption that has engulfed the agent community. There are several ills that plague the agents’ community. Two vitals to be tackled on war-footing are — reduction in human trafficking and controlling the growth of small-time agents, who are ruining the image and goodwill of reputed agents. The travel agency concept, initiated by a book salesman, Thomas Cook, in 1841 in the United Kingdom, started with railway tickets. The TAAI’s plan to diversify to railway reservations can be fruitful only when agents are disciplined.
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by A.N. Shanbhag
RNOR status not for every non-resident Indian who returns
Q: I am planning to return to India after being an NRI for the last 20 years. I still retain my Indian citizenship. How long do I get tax-free status? — Thomas
A: The returning NRI is allowed a reasonable time to inform all banks (and companies) about the change in his status wherever he has his investments. What is reasonable time is not specified in the Act. On receipt of this information, the bank will redesignate the NRE/FCNR accounts as a ‘resident’ account.’ The NRE SB and NRO SB accounts will be redesignated as Ordinary SB accounts. These redesignated accounts can be run up to their maturity but the interest on NRE becomes taxable from the date of the return whereas the FCNR interest is tax-free as long as the holder remains an NRI or an RNOR. Please note that the RNOR status is not available to every NRI who returns to India. It is only available to those who have been NRI for the last nine out of 10 years or have during the preceding seven years been in India for a period or periods amounting to 729 days or less. You will have to apply the above rule to your situation to determine whether you will qualify to be an RNOR or not.
Tax on STCG Q: I am a salaried person with an annual income of Rs 2.39 lakh. I will be filing my return for the first time this financial year. My query is related to short term capital gains (STCG). I want to know how exactly are the tax consequences of STCG calculated? Are they calculated on the individual trades, or on the STGC of the entire year? And also is the total gain calculated deducting the losses? Also, suppose I buy some shares for Rs. 6,000 and the brokerage is Rs. 30 (all inclusive). I sell it after 2 months at Rs. 7,000 and pay a brokerage of say, Rs. 35 (all inclusive). Then what will be the total amount of STGC? — Chandrantah Banerjee
A: The gains/losses are to be computed on individual transactions but the total of it for the financial year is to be submitted for tax purpose. When you buy shares, the cost of acquisition includes the expenses incurred and consequently jack up the cost of acquisition and when you sell the shares, the sales proceeds should deduct the related expenses incurred. In the case of your example, the STCG will be Rs. 935 = (7000-35)-
(6000+30). The information about capital a gain has to be filled in your normal IT returns form in the space provided. The computation thereof may be attached to the return form as a separate annexure.
Demat account Q: I am a Central Government employee working in Mumbai. I am a taxpayer. My income tax deduction is based upon tax deduction at source. I would like to know about investment in share market. 1. Can I purchase stocks at my name? 2. Can I take demat account at my name? 3. If I earn in share-market by selling stocks or by dividend etc., will I have to pay any tax on that money. If yes, how much? 4. My wife is a homemaker. She does not have income from any source. Will it be beneficial for me to take demat account at her name. In this case, how much tax will I have to pay? — Ashwani Kumar A: If you purchase stocks in your name, demat account has to be in your name. It is your money and if you purchase the stocks in the name of the wife, it would be construed to be a gift by you to her. Clubbing provisions will apply and it is you who is expected to pay tax on the income arising from this source. You may conveniently open a demat account in your and your wife’s name. You have stated that your income tax deduction is based upon the tax deduction at source. This statement needs to be modified. The income tax liability is always based on the income on which you have to pay the tax. If the TDS is more than the tax payable, you can claim refund by filing returns. If TDS is less than tax payable, you will have to pay additional tax while filing returns. In other words, you have to file the returns. From the tax point of view, for investments in the market, the following benefits are available — Equity shares are unique in enjoying the following four tax concessions which no other avenue is blessed with: 1. Dividend is tax-free in your hands, though it suffers dividend distribution tax @14.0250 per cent before it is paid to you (paid by the company whose shares you own). 2. The long-term capital gains is exempt. 3. Short-term capital gains enjoys the concessional flat rate of tax @10 per cent 4. There is no TDS if you are a resident. If you enter the stocks through a good equity-based mutual fund, the dividend does not suffer the dividend distribution tax @14.0250 per cent. Gains from plot Q: I am a pensioner and senior citizen. You had earlier stated that capital gains for plot is different from capital gains from house. 1. How can one claim exemption of capital gains earned from plot of land. 2. Can investment in a residential house grant exemption from capital gain of plot? Will the two years limit be applicable? Can one invest anywhere else to claim similar exemption? 3. Is the capital gain to be added to annual income to arrive at tax payable? 4. Please suggest the best method of saving tax on capital gains. — Arekar
A: It appears that you have misunderstood me.
One way to claim exemption is to invest within six months the amount of capital gains in infrastructure-related bonds of Nabard,, NHAI, NHB, REC or Sidbi u/s 54 EC. The lock-in period is three years. The current interest rate is around 5.2 per cent and is fully taxable. Obviously, the interest is quite low and what is given by savings in tax is taken away by earning low interest and the tax on this interest. The assessee may also claim similar benefit u/s 54 or 54F by investing the LTCG to purchase a residential house within one year before or two years after the date of sale of the old house. Alternatively, he may construct a residential house within three years after the date. Section 54 is applicable to capital gains arising from transfer (sale) of a residential house and requires the amount of capital gains to be reinvested whereas Section 54F is applicable for other assets and requires the net sale proceeds (after the related expenses) to be reinvested. In the case of exemption u/s 54F, the assessee should not own more than one house on the date of earning the capital gains. The new house has a lock-in of three years. The indexed cost is computed by multiplying the cost of acquisition with the ratio of the CII of the year of sale and the CII of the year of acquisition. For a resident individual or an HUF, where the total income as reduced by short-term or long-term capital gains on which tax is eligible falls below the tax threshold of Rs 1 lakh the gains would be reduced by the amount by which the total income so reduced falls short of Rs 1 lakh and the balance of the gains would be taxed at the rates applicable. In short, where the tax liability arises only because of inclusion of such capital gains in the total income, tax is levied on the excess over the minimum taxable limit. Tax on long-term capital gains (LTCG) is to be calculated separately and added to tax on other income to arrive at total tax payable.
The author may be contacted at wonderlandconsultants@yahoo.com
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New Delhi, November 12
