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CITU seeks
probe into
Jet-Sahara deal
Saudi Arabia invites India to explore gas
Flats-for-land a taxing bargain
NRIs willing to contribute for airports in Punjab |
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CITU seeks probe into Jet-Sahara deal New Delhi, January 21 “The source of funding of this merger is also a question raised by some employees and the government has to look into this aspect before allowing this merger,” CITU president M.K. Pandhe said in a letter to Union Civil Aviation Minister Praful Patel. Mr Pandhe said the verbal promise of Sahara management that their jobs would be protected would not satisfy the employees in any manner. “I understand that the employees are feeling concerned about their future and it is the responsibility of the Ministry of Civil Aviation to protect their legitimate interest,” he said. The CITU leader also expressed concern that the acquisition would result in monopoly over Indian skies. The acquisition is likely to “develop a private sector monopoly and adversely affect the interest of PSUs. There are several aspects of this merger which should be studied by the government before allowing it,” he said. “The indecent hurry made in this mega merger and the role of the government as silent spectator are raising doubts in the minds of the people who are interested in healthy development of the civil aviation industry in India,” he said. Although the Jet has announced the acquisition of Sahara, it would require clearances from regulatory authorities like the Directorate General of Civil Aviation and the Company Law Board to launch operations of the combined entity. Even the 27 leased aircraft of Air Sahara cannot be acquired by Jet Airway s till the Aircraft Acquisition Committee of the Civil Aviation Ministry grants its approval. In case Jet decides to induct new members into its Board, particularly those from Air Sahara, the bigger airline would have to get security clearances for them. On whether the acquisition created a monopolistic situation in the aviation sector, the Companies Act and the Competition Council of India could come into play, though both the airlines are companies carrying licenses issued by the Civil Aviation Ministry. At one point of time Indian dominated the sky with 100 per cent operations, but was later cut out by Jet Airways, which once gained control of almost 48 per cent of market share. This situation changed with low-cost carriers coming into the market and bagging about 10 per cent of the market share.
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Saudi Arabia invites India to explore gas New Delhi, January 21 Saudi Arabia has invited bids from the Indian petrochemical companies for the exploration of gas in the kingdom and is eager to cooperate on long-term basis with India in the hydrocarbon sector to meet New Delhi’s growing energy needs. Addressing a press conference on the opening of a 6-day business exhibition ''Saudi Arabia in India (Saudi Products),'' here today, Mr Saleh Mohammadd
Al-Ghamdi, Ambassador of Kingdom of Saudi Arabia in India, said several bilateral agreements mainly on avoidance of double taxation and protection of investment are expected to be concluded between the two countries during the King's visit. He informed that a 25-member high-level delegation comprising Saudi Ministers for Finance, Petroleum, Information and Culture will be accompanying the King. Mr
Al-Ghamdi said bilateral trade between India and Saudi Arabia was to the tune of over $7 billion. He mentioned that at present 106 joint ventures are in operation in Saudi Arabia and about 50 in India.
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by A.N. Shanbhag Flats-for-land a taxing bargain
Q: I own a piece of land in India for over 20 years. I gave it to a builder to build apartments on the understanding that I get five of them. I intend to keep one and sell four of them. Please let me know of tax consequences. Can the sale proceeds be invested in any tax saving investments? — Ramasita Raju A: Selling land or an old house with appurtenant land to a builder and obtain some flats built on the same property from him has become a common practice these days. The taxability of the various transactions is a complicated issue. Firstly, you have incurred long-term capital gain when you transferred the land to the builder. If you have acquired the land before April 1, 1981, it would be necessary to get the land assessed by a chartered valuer for its value as on April 1, 1981. The sale value of the land as on its transfer to the builder also needs an assessment from the chartered
valuer. The total capital gains incurred by you on the date of the transferred of the land to the builder can be easily computed by subtracting the indexed cost of the land as on April 1, 1981 (or the original cost) from the assessed sale value of the land. This capital gain is exempt u/s 54F if you purchase a residential house within two years from the date of sale or construct within three years after that date with entire sale value of the land. If only a part of the sale value is used, the exemption would be pro-rata and the excess will be chargeable to tax. Note that the term used is ‘a residential house’ implying that the exemption is available only on one house. But you have contracted for five. Therefore, you will have to pay long-term capital gains tax on four-fifth value of the land. This being long-term capital gain, you can save the tax by contributing to the infrastructure-related bonds of Nabard or NHAI or NHB or Sidbi or REC within six months from the date of sale. Even the one-fifth, which is exempt, may become taxable if the builder does not finish the project within two years. The builder has paid you in kind by giving to you the right to buy five houses after these are ready. How will you buy the bonds or pay tax? Well, that is your problem. The next stage is when you take possession of the five flats and sell four out of these. This will surely attract short-term capital gains since you would be selling these within three years from taking possession of these flats. The cost of acquisition will be four-fifth of the sale value of the land. This will be added to your normal income and taxed at the applicable rate. In any case, at this stage you will have enough money to pay the tax. There is no way of saving this by buying another residential house or any bonds. I have three suggestions: 1. Is it not possible for you to request the builder to sell only one large house in place of five small houses? The only condition is that this large house should have only one kitchen. It may have 10 bathrooms and toilets if you please, but only one kitchen. After some time, you are free to divide it into five parts and sell four. 2. To get the exemption u/s 54F you have to purchase within two years or construct within three years a new house. Appoint the builder to construct the five flats on your behalf so that you get advantage of one more year. 3. If the builder takes more than three years to complete the construction, you can sell the right to own just before the construction is complete. This will be taxed as long-term capital gains and at this stage you will have money in hand to buy the bonds.
FBT on treatment Q: I am working in a Central Government corporation. The corporation reimburses the medical expenditure incurred by employees or their family, at nominated hospitals, directly to the hospital. Now the question is whether the amount paid by the corporation is taxable at the hands of employee, or the employer has to pay it as FBT? My employer, for treatment of my wife has reimbursed an amount of over Rs 20,000 to the hospital. Please advice me before the tax is deducted from my salary, the right option. — Premnath N Gupta A: There is no FBT payable by the employer on Medical Domiciliary Treatment provided to the employees. Consequently, the employee is required to pay tax on the perk value of this benefit.
Retirement benefit Q: I am shortly retiring from my job and will get my PF and other retirement benefits next month. If I invest this amount, the total income along with income from already invested amount will cross taxable limits even if I cover Rs. 1 lakh u/s 80C. So I am planning to give gifts to my family members, which is my wife, two sons and daughter-in-law from my retirement benefit amount so that I come out of taxable liabilities. My questions are: How much amount can I give as gift to my family members without attracting any tax liability? What is the limit? What is the procedure to accomplish the same? — Vishwas Gupta A: Please note that the income earned by your wife and the daughter-in-law (and minor children if any) from the amount gifted by you is clubbable in your hands. It appears that you are already a taxpayer. It could also be an idea to continue to remain a taxpayer especially if you are going to become a senior citizen shortly and may not be liable to tax thereafter because of the enhanced limit of Rs. 1,85,000. The above was the tax consequence on the income from the gifted amount. As far as the gifts themselves are concerned, there is no limit on amount to be gifted to those of whom you are a Relative as per the Act. All that is required is an offer by the donor and acceptance thereof by the donee in black and white. To safeguard against any hassles, the donee should request the donor for a gift and then the donor should remit the amount to the
donee. Alternatively, the donor can offer the gift. In either case, it is necessary for the donee to accept the gift in writing (maybe through a thank you note). Only then it would be considered as a gift in India.
Single-premium policy Q: I am NRI having family back in India. Hence, I have made certain investments in insurance products in India. One such product is a single-premium policy. How is the tax treatment of single premium policies of life insurance? Is the full maturity amount taxed or is the bonus exempted? — Subodh A: FA03 inserted Sec. 88(2A) [now, 80C(3)] to provide that the rebate in respect of premium or other payment made on an insurance policy, other than a contract for a deferred annuity, shall be available up to 20 per cent of the actual capital sum assured. Sec. 10(10D) was also amended to provide that where premium paid in any of the years during the term of the policy exceeds 20 per cent of the actual capital sum assured, the maturity value received by the policyholder will be fully taxable. However, any sum received under such policy on the death of a person shall continue to be exempt. For both of these sections, in calculating the actual capital sum, no account shall be taken of i) The value of any premiums agreed to be returned or ii) Bonus received. Both these amendments are effective on policies issued on or after April 1, 2003. |
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by K.R. Wadhwaney NRIs willing to contribute for airports in Punjab
The government and the non-resident Indians (NRIs) have shown keenness in carrying Punjab forward. Their unification will lead to progress in different segments, Particularly in aviation and tourism sectors, which are ‘master-strokes’ for improving economy of the region, in particular, and the country in general. Punjab’s Chief Minister Amarinder Singh and Governor have expressed optimistic vision that nothing can prevent this region from becoming an international hub. Amritsar airport, which is undergoing further face-lift, will soon have many new flights operating from it. Two nation carriers, Indian and Air-India, will shortly initiate more international flights from Rajasansi Airport. According to Capt Amarinder Singh, all possible ‘blockages’ have been removed. The work on another international airport at Halwara will start. Initial money is lying in the kitty and more funds will follow. This international airport will cater to the needs of Ludhiana and Jalandhar, which are money-earning textile centres. “As for Chandigarh, we will initially develop it for medium range aircraft to operate on international routes,” said the Chief Minister, adding: “We will upgrade it in phases for modern wide-bodied aircraft. Similar was the vision for tourism which, according to the CM, will be so designed that it can rub shoulders with Kerala and Goa”. In the words of the Chief Minister, there is more than distinct possibility of relations between India and Pakistan further improving. If this happens, trade movement on either side of border will be eased. Then medium-sized
combi-aircraft can operate between Chandigarh and Faislabad for quick flow of import and export. In the Parvasi Punjabi Divas, 2006, two-day international conference at Chandigarh recently, one noticed sea-change in the attitude and thinking of NRIs. Talking individually to at least 20 delegates from among more than 300 present, one feels that Punjabi NRIs are beholden to Punjab, in particular, and India in general. The NRIs are now unanimous that their real home away from home is India (Punjab) where, despite long passage of time, they are considered first class citizens on par with locals. “We migrated through dubious means for livelihood and now we want to contribute for the betterment of our citizens,” said many NRIs, adding: “We will provide money for the establishment of international airports at Halwara and Chandigarh”. The defining moment is that many NRIs have assured that they will contribute by way of donations and also enter into a long-term business partnerships with locals in civil aviation and tourism so that ‘we are able to land directly in Chandigarh or Halwara or Amritsar instead of disembarking at Delhi. Seeing NRIs response, the International Punjabi Chambers for Service Industry, politicians and bureaucrats are convinced that now Punjab and northern belt will be more vibrant in all walks of life. |
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