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Chidambaram plans to tax ultra-rich
Small carriers moot alliance to take on Jet
Mukesh Ambani WEF co-chairman
Hold Reliance for long-term gain |
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PPF account has ceiling of Rs 70,000 per annum
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Chidambaram plans to tax ultra-rich
Hyderabad, January 22 The exemption from actual filing would be given after the electronic filing of returns had become a norm, Mr Chidambaram told reporters while making clarifications on the proposed economic resolution of the Congress. However, salaried people would have still file “virtual returns,” the details of which would be announced in due course, he said. The Finance Minister also assured the taxpayers that the tax rates would be maintained at reasonable levels and that the present personal income tax exemption on Rs 1 lakh and the savings threshold of Rs 1 lakh were reasonable. The Finance Minister also clarified that the government would not interfere with the EPF interest rates, which would depend on the earnings of the fund. Even at the present 8.5 per cent level, the EPF Board would have a shortfall of Rs 356 crore, he said. The government would try to maintain a balance between its fiscal responsibility and social sector obligations, he said. He also spoke on his plans to meet the Left in the first week of February to discuss their several alternate proposals, including taxing the super-rich, for resource mobilisation. “You have come perilously close to the Budget proposals...,” he quipped He said that he has invited the Left for discussions on February 2 or 4 to discuss their alternative proposals. He also said that there would be adequate resource mobilisation to fund the flagship programmes of the Government like the NREGP. “We will find funds for our flagship programmes”. Asked about the proposal on reservation in private sector jobs, he said the matter was pending with a Group of Ministers (GoM) and the government’s decision on the issue would be based on the recommendations of the GoM and other considerations. On food subsidy cut, he said, talks were being held with various parties to resolve the issue. Until then, the price increase for the APL families would be on hold, while the quantity available under the PDS would be reduced as decided by the Cabinet. The higher quantity had been fixed to liquidate the excess buffer stock of foodgrains. The government would go in for disinvestment in non-Navratna PSUs on a case-to-case basis after a broad agreement with the Left. No target has been fixed for disinvestment. On liberalisation, he said, the government would pursue it with a humane face. On the contentious issues of labour reforms and FDI in retail, the Finance Minister sought to avoid them saying that “both are under discussion”.
— Agencies
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Small carriers moot alliance to take on Jet
New Delhi, January 22 Industry experts say the move is aimed at fighting Jet's dominant position where it may control airfares in crucial metro destinations. It may be called cartel, or just corporate understanding, or competitive win-win, or price arrangement. But the new airlines are already getting together to protect margins — rather than outdoing each other in the marketplace. And that's something which has never happened before in the Indian aviation sector. The Jet-Sahara combine will account for 85 per cent of the flights in lucrative Delhi-Mumbai route that accounts for half of total domestic traffic. Jet Airways will also have 50 per cent of all parking bays while Indian (Airlines) will have about 35 per cent. Post-acquisition, Jet will dominate the country's two busiest airports where it will control nearly all flights — and that too at peak hours. ''For new airlines wishing to launch services between Mumbai and Delhi, overnight parking slots will be required,'' said Kingfisher Airlines' chairman Vijay Mallya. ''However, they will be severely constrained and will have to be satisfied with the limited expansion that is taking place.'' The viability of any airline must depend on flying the routes where there is existing traffic, he said. ''The combination of routes and parallel development of a few non-metro sectors is a viable opportunity,'' said Mr Mallya. ''The government has a role to play in ensuring there is no route-specific monopoly.'' Jet Airways is now in talks with low-cost carrier Air Deccan to explore an operational tie-up aimed at leveraging synergies wherever possible. The likely areas of cooperation could be bundling of Air Deccan tickets with Jet Airways and feeding its passengers to Jet's international flights and vice versa. However, the tie-up will also look at sharing of ground handling and engineering resources at airports wherever possible.
— UNI
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Mukesh Ambani WEF co-chairman
Mumbai: Reliance Industries Limited (RIL) Chairman and Managing Director Mukesh Ambani has been nominated as Co-Chairman at the World Economic Forum (WEF) which is holding its annual summit at Davos, Switzerland from Wednesday. Union Finance Minister P. Chidambaram and Minister of Commerce and Industry Kamal Nath will lead a high-powered Indian delegation to the World Economic Forum (WEF) Annual Meeting, being held from January 25 to January 29 in Davos. Mr Ambani is the youngest Indian business leader to have been nominated to this position. This is a testimony to India’s emergence as a global economic superpower, according to an official press note here today. Mr Ambani will share the platform with Mr Peter Brabeck-Letmathe, Chairman and Chief Executive Officer, Nestle SA, Sir Martin Sorrell, Group Chief Executive, WPP Plc, Ms Ana P Botin, Chairman Banco Espanol De Credito and Mr Lawrence H Summers, President of Harvard University, the note added.
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— by J.C. Anand
Hold Reliance for long-term gain
Last Friday, Sensex closed at 9,521 points and Nifty at 2,901 points. When compared these ratings with where the indices stood a fortnight back on January 7, Sensex is lower by 119 points and Nifty by 13 points. The quarterly results announced so far indicate a mix trend. Reliance Industries’ demerger will be complete by January 25, but the book-closing was over by January
1 8. Reliance Industries is down by about 200 points. The shareholders who are entitled to the demerged Reliance Industries shares will gain by allotment of 7.5 shares (of Rs 10 each) of Reliance Industries, 5 shares (of Rs 10 each) of Reliance Capital and 100 shares (of Rs 5 each) of Reliance Info for every 100 shares held. Since the Reliance Info shares have not yet been listed, the exact price of these shares cannot be indicated. It appears that the total gain accruing to the shareholders from demerger part of Reliance Industries will be more or less not less than the loss suffered in the demerger process in terms of the market price. In the long run, the shareholder will gain both in Reliance Industries and in the demerged companies. It may be better to hold all these scrips for a long period for appreciation. The top information technology shares have done well though Infosys Technology’s quarterly results were below the market expectation. Tata Consultancy Services’ 9-month profit was higher by 33.75 per cent. Satyam Computers Q 3 results are higher by 64 per cent. Wipro’s 9-month results are higher by 21 per cent (from Rs 11955 million to Rs 14495 million). Maruti Udyog reported a 41 per cent growth in its net profit. ABB and Siemens India made spectacular gains. ABB moved from Rs 2101.50 to Rs 2251.95 and Rs 150.45 in terms of market price. Siemens India also moved up from Rs 3719.65 to Rs 4101.80 on the NSE gaining Rs 382.15. L & T has declared excellent third quarter results. Its net profit is 96 per cent higher at Rs 259.27 crore. L & T is planning to sourcing its raw material like plastic, steel and copper from China worth Rs 800-1000 crore. It is also eyeing China as a major manufacturing and marketing base. Its annual results are likely to be spectacular. Last week saw the engineering and sugar stocks in demand. Rana Sugar, a Punjab-based company, which was quoting at about Rs 29 or so a fortnight back, closed last Friday at Rs 48.98. Bajaj Hindustan Upper Ganges and Shakthi Sugar also made spectacular gains.
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by S.C. Vasudeva
PPF account has ceiling of Rs 70,000 per annum
Q I am a Punjab government pensioner. My income from pension + interest is Rs 2 lakh. I have already deposited Rs 70,000 in my PPF A/c. Can I deposit Rs 30,000 more in my PPF A/c for claiming deduction u/s 80C to save income tax for the year 2005-06.
— Sat Pal Kansal, Faridkot
A The maximum permissible amount of contribution to Public Provident Fund account is Rs 70,000. To claim the deduction of Rs 1 lakh you shall have to deposit Rs 30,000 towards any other saving scheme(s) permitted under Section 80C of the Income-Tax Act 1961 (the Act).
NRE accounts
Q I am an NRI. I have two NRE accounts in India in two different banks. Is it legally OK? Can an NRI maintain two NRE accounts in two different banks in India.
— Rajan Bedi, Baku, Azerbaijan
A You are permitted to open two non-resident external accounts in two different banks, as there is nothing illegal about the opening of such accounts.
Money transfer
Q I have migrated to New Zealand recently and my status is a permanent resident of New Zealand, but still Indian passport holder... I mean Indian citizen... I have over period of time when I was staying and resident of India, had acquired the shares during my residency period. Now, if I want to sell those stocks and would like to transfer the fund to New Zealand, what is the procedure? Fund was invested more than 3 years back when I was in India and naturally on non-convertible currency. I understand that capital gain...long-term is not applicable if shares are held for more than one year. Will I be able to repatriate the fund? Do I need income tax clearance before repatriating, although, it is long-term capital gain and not taxable.
— Dilip Datta,
New Zealand
A Your understanding with regard to the non-chargeability of long-term capital gain on the sale of shares is correct. The capital gain earned on the sale of shares held by you which are more than three years old, would not be subject to tax provided the transaction is through a recognised stock exchange and further that securities transaction tax has been paid in respect of such sale. A non-resident Indian or a person of Indian origin is allowed to remit an amount upto $ 1 million per calendar year out of balance held in his non-resident ordinary rupee account/sale of assets for all bona fide purposes, through the specified authorised dealer on production of an undertaking for the remittance and a certificate by chartered accountant as prescribed by the Central Board of Direct Taxes vide circular no. 10/2002 dated 9th October 2002. You can send me an e-mail on
info@scvasudeva.com.
Investment by PIOs
Q I am living in the UK since 1990. I am of Indian origin, but have now acquired British citizenship (2001). I would like to invest in India - in property (residential and/or commercial) and stock market. What tax implications, if any, I should be aware of while importing the capital into India or taking it out in future? I am looking at the most tax efficient ways of doing the above.
— Pankaj Shukla
A A person of Indian origin living in the UK is allowed to invest in an immovable property other than agricultural land/farm house/plantation property in India by purchase out of funds received in India by way of any inward remittance from the UK Similarly, such a person is also allowed to invest in any stock market through an authorised broker on repatriation basis up to 5 per cent of the paid-up value of shares issued by the concerned company. The same limits apply to debentures also. I may add that there are elaborate conditions prescribed under the Foreign Exchange Management (Transfer or Issue of securities by a person resident outside India) Regulations 2000. It is not possible to reproduce the entire text of these regulations because it has number of schedules which cover various situations. I have, therefore, given an overall position for the purposes of your query. You can take up the activity of purchase and sale of shares through an overseas corporate body or in your individual name depending upon your personal tax structure.
Tax & capital
gain
Q I had sold my house for Rs 29 lakh in September 2004, which was purchased in December 1995. The long-term capital gain calculated was Rs. 24.5 lakh out of that Ars Rs 3 lakh was invested in SIDBI and
Rs 21.5 lakh was put in long-term capital gain account in my bank. In November 2004, I had purchased a plot out of Rs 21.5 lakh for Rs 7.5 lakh balance lying in my account. I had already filed my IT return in July 2005. Can I sell this plot and buy another plot to construct my house.
— Jasdev Singh, Model Town, Jalandhar City
A The provisions of Section 54(1) of the Act, clearly indicate that for the purpose of computing any capital gain arising from the transfer of a new asset within a period of three years of its purchase or construction as the case may be, the cost shall be taken to be NIL. Accordingly, in my opinion any amount received on the sale of the plot purchased out of the amount deposited in the long-term capital gain account in the bank shall be brought to tax in its entirety as a short-term capital gain. This is apart from any consequences which occur for not utilising the amount deposited in the bank account in capital gains scheme, being brought to tax in the year in which the period of 3 years expires by virtue of the proviso to section 54(2) of the Act.
Interest on NSCs
Q I have purchased NSC for Rs 10,000 on 04.01.2000 during the financial year 1999-2000 and the maturity date is 04.01.2006. My question is: “Whether the interest accrued on these NSCs for the year 2005-06 i.e. maturity year will be accounted for re-investment purpose within the ceiling of Rs 1.00 lakh U/s 80C or not? If not, kindly illustrate with an example.”
— Er. R.K. Singla, Barnala
A The interest accrued on National Saving Certificates VIII issue purchased during the financial year 1999-2000 shall be accounted for as re-investment within the provisions of Section 80C of the Act and you will be entitled to rebate in respect of such re-investment. However, the accrued interest would be covered within the overall limit of Rs 1,00,000.
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