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Assocham for equity conversion option
Rs 1,500 cr to be spent to upgrade non-metro airports
DLF told to clarify
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BSNL, MTNL not to privatise broadband
China Eastern to deploy Indian airhostesses
Tax Advice
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Assocham for equity conversion option
New Delhi, May 28 In a paper on option to convert small savings to PSUs equity at the time of maturity, Assocham has opined that with the accordance of this facility to the issuers, investors will get not only a better avenue for re-investment, but this would help government unlock the funds well before the maturity period and thus reduce its expenditure in the form of interest payment. This, the paper says, will automatically make a positive impact on fiscal deficit, interest liability and also improve the sovereign ratings of the country. The return on investment in specific securities permitted under the Employees Provident Fund Act are not generating enough resources to meet the committed liabilities of the fund. Therefore, the government should amend the Act to permit the investment of certain percentage of employees provident fund money into equity. In this regard, Assocham welcomes the proposal of the Department of Posts to invest its surpluses in the capital market. According to the paper, the total investments in small savings as of now are estimated at over Rs 2,10,184 crore. Therefore, to allow the small investors to be a part of the growth strategy of the PSUs, the government should give the option to the investors at the time of maturity of the investments to convert the maturity amount into PSUs equity. The chamber has also suggested that a ceiling of Rs 3 lakh on public investments in government-promoted savings schemes like Kisan Vikas Patra, Monthly Income Schemes of Post Offices, bonds and Senior Citizens Savings Schemes to promote larger public investments in Mutual Funds. Assocham President, Mr Anil K. Agarwal, suggested that households continue to invest about 2 to 5 per cent of their savings in capital market instruments and therefore there is a need for providing some incentives for retail sector to invest in capital markets through mutual funds schemes. In addition, the paper also seeks that the schedule commercial banks should be permitted to invest 20 per cent of their excess Statutory Liquidity Ratio (SLR), which currently works out to be Rs 40,000 crore for buying leading PSUs equities. In addition, it has also sought that the government should liberally divest their stakes in PSUs by offering for sale their shares to the banks and the retail investors as it will ensure the world-class phased development and expansion to timely provision of high-quality infrastructure. Assocham said the suggested move would boost the capital market as well as help to bring down the control of capital market from foreign institutional investors and FIs to banks and Indian public.
— UNI |
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Big B to endorse ADAG
New Delhi, May 28 Superstar Bachchan is perhaps acting for the first time in a corporate ad film, though arguably he is the biggest brand ambassador in India endorsing a host of products. According to sources, the group would spend approximately about Rs 150 crore for playing up the advertisement film, with the theme line 'Think bigger; Think better', in televisions and other media outlets. Corporate makeover initiative comes within a year of the birth of the group, a result of demerger of Reliance Industries, which is expected to spend a whopping about Rs 700 crore this fiscal alone in the advertisements, perhaps the largest budget by any corporate entity in India.
— PTI |
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Rs 1,500 cr to be spent to upgrade non-metro airports
New Delhi, May 28 According to sources, the AAI is awaiting approval from the Ministry of Civil Aviation on the final list of airports to be covered in the first phase of the non-metro airport modernisation programme. The AAI has already identified 12 cities, which include Jaipur, Udaipur, Srinagar, Amritsar, Ambala, Thiruvananthapuram, Vishakapatnam, Mangalore, Nagpur, Goa, Varanasi and Trichy, sources said. Of these 12 airports, 10 will be modernised using the public private partnership (PPP) model. The air side of the modernisation will be with the AAI, which will include modernisation of terminals, parking bays, taxiway and runways. The modernisation of airports has become a contentious issue between the UPA government and its Left allies, who have opposed privatisation process. Mr Patel had said a route different to the one followed for Delhi and Mumbai could not be taken for modernisation of Kolkata and Chennai airports. Yet, two models for the modernisation of non-metro airports were currently being discussed, one being the PPP model and the other being a joint-venture between private party and the AAI, sources said. As part of non-metro airports’ modernisation programme, the AAI expects to install CAT II systems in select airports like Amritsar and Srinagar. Sources said installation of the CAT II system at Lucknow airport has been stalled due to the state government’s inability to provide land for the expansion despite the AAI having deposited Rs 16 crore with the
government. — PTI |
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Ratan Tata not to bow to graft
London, May 28 “Corruption is rife,” he told ‘The Times’ in an interview adding that “we will not submit ourselves to corruption.” Describing 67-year-old Tata as “a quiet, gentle man,” the paper noted that Tata Consultancy Services with revenues of $2.97 billion is the biggest Indian IT and business process outsourcing firm. Seven out of the US Fortune Top 10 firms are its clients. The UK is the company’s second largest market. Ratan Tata wants to do more than this. In his vision, Tata people will become creators, designing software or products for the rest of the world, it said. Tata now wants to produce a 2,000-dollar car for the Asian market. In India, where only 4 per cent of the households own a car, Tata believes he could sell a million a year. Asked whether any jobs are left for the people in the west, he said “skilled people in the UK and the USA might find it worthwhile to relocate in
India.” — PTI |
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DLF told to clarify
New Delhi, May 28 DLF, which is awaiting SEBI clearance for its draft red herring prospectus, has denied any ‘wrongdoing’ and said it would respond to SEBI and the Finance Ministry on Monday. According to reports, the complainant alleged that the minority shareholders had been kept out of the company’s convertible debenture issue while promoters and chosen shareholders were given the benefit of the same last year, an issue that caused minority shareholders hundreds of crores of rupees. A DLF spokesperson said that Mr Agarwal had filed a complaint to the Ministry of Finance and SEBI which had sought clarification. “We will respond to this tomorrow,” he said. As per the complaint, DLF, with the promoters holding a 97.4 per cent stake, had made an offer for debentures of Rs 100 for each existing share in 2005 but minority shareholders were denied the opportunity as they did not get the notices. According to sources in the company, a certified letter was sent to each shareholder and advertisements were released in the papers about the same. However, the company cancelled a lot (involving some shareholders) on the ground that no response had been received from some shareholders. This lot did not have promoters or their associates. The rights issue of debentures closed earlier this year and then the company had issued seven bonus shares for each share. The move came weeks before the company started the process for its
IPO. — PTI |
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BSNL, MTNL not to privatise broadband
New Delhi, May 28 At the first meeting of a PMO-appointed panel on opening PSUs’ network for increasing broadband penetration, BSNL officials said their copper lines were very old and it was a myth that through unbundling, broadband avenues would open for all 42 million fixed line connections of BSNL. Only 7 million lines are capable of being used for broadband, they said. According to sources, the Department of Telecom made it clear that there would be no compensation or subsidy to BSNL and MTNL even in the case of the two PSUs deciding to open up last mile connectivity.
— PTI |
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China Eastern to deploy Indian airhostesses
Beijing, May 28 Sixteen Indian air hostesses hired and trained by China Eastern Airlines will start serving passengers on the Beijing-Shanghai-New Delhi flights from June 1, ‘People’s Daily’ reported. Earlier, Chinese media reports had said that some stewardesses from India had served on a trial basis on flights from Shanghai to New Delhi during the week-long holiday season in China for International Labour Day from May 1 to 7. Since 1993, the Shanghai-based airline company has recruited 500 foreign flight attendants from India, Japan, South Korea, France, the USA, Germany and
Spain. — PTI |
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Capital gains from rural agricultural land not taxable
by S.C. Vasudeva
Q. I seek your kind advice on the following points.
(i) Is the sale proceeds of rural agriculture land taxable? (ii) If with sale proceed, new land is not purchased, where can this money be invested? Can we purchase bonds or invest this money in the purchase of a plot and building a house on it? (iii) Is the gifted money taxable? —J. S. Bedi, Chandigarh A. The answers to your queries are as under: (i) The capital gain on the sale of rural agricultural land is not taxable. (ii) Since the capital gain on such sale is not taxable, there is no obligation to invest the money in purchase of another land/shares/bonds. You may utilise the sale proceeds in any manner in which you like. (iii) As per the provisions of Section 56 of the Act, any sum of money exceeding Rs 25,000 received without consideration by an individual or an HUF from any person after first day of September 2004 is taxable as his/its income. The aforesaid provision, however, does not apply to any sum of money received (a) from any relative (b) on the occasion of marriage of an individual (c) under a will or by way of inheritance (d) in contemplation of death of the pair. For this purpose relative means: (i) Spouse of the individual (ii) Brother or sister of the individual (iii) Brother or sister of the spouse of the individual (iv) Brother or sister of either of the parents of the individual. (v) Any lineal ascendant or descendant of the individual (vi) Any lineal ascendant or descendant of the spouse of an individual. (vii) Spouses of the person refer to the clause (ii) to (vi) above. Tax liability
Q. I am a retired government servant and my age is 68 years. I am also getting income from my house property to the extent of Rs 1,50,000 per annum. I am paying monthly instalment of Rs 5,800 towards the repayment of house loan taken from a bank. Kindly let me know my tax liability as per the new slab for the assessment year 2006-07. — A.N. Sharma, Shimla A. You have not indicated the component of the interest and principal amount out of the monthly instalment of Rs 5,800 which you are repaying to the bank. As per the provisions of Section 80C of the Act, only repayment of principal amount is allowed as a deduction under the said section and the interest qualifies for deduction under Section 24 of the Act i.e. from the house property income. In the absence of the said bifurcation it is assumed for the purpose of this calculation that the entire amount of repayment is towards the principal. I may add that there would be no change in your tax liability once the amount is bifurcated between principal and interest as both sums would be allowable under the separate provisions as specified above. As per details given by you, your gross total income works out at Rs 2,55,000. After allowing the deduction of Rs 69,600 your total income works out at Rs 1,85,400. Since you are a senior citizen, the maximum amount which is not chargeable to tax in your case would be Rs 1,85,000. Accordingly, your tax liability works out at Rs 82 including education cess. Section 80C
Q. Kindly clarify following points regarding income tax: a. For the Financial Year 2005-06 or Assessment Year 2006-07, if a tax payer deposits Rs 1,00,000 in different savings, that amount is deductible from his/her total income while calculating tax. May I know where all can we save, i.e. which all funds should we deposit money in to save tax? b. Are there any limits of savings in all such funds/schemes? c. Does Public Provident Fund (PPF) forms part of such savings for the purpose of saving tax? d. Does this clause of saving means that if a person has an income of Rs 2,00,000 in FY 2005-06, he/she does not have to pay any tax if he/she saves Rs 1,00,000 in specified funds/schemes? —Col. K.S. Attal, Mukerian A. Section 80C of the Act provides for many savings schemes. It is, therefore, not possible to list the entire range of saving schemes provided in Section 80C of the Act. The schemes under which amounts can be saved may provide for such limits. The Public Provident fund forms part of savings under Section 80C of the Act. Resident status
Q. I am working in foreign-based shipping company. In a financial year my stay out of India was 190 days and stay in India was 175 days. As per u/s 6, “An Indian citizen who leaves India in any previous year for the purpose of employment outside India, if the period of his stay in India is less than 182 days, he will be treated as non-resident for that year and his foreign income would not attract tax liability”. I have no income in India. Can you please advise that my status is non resident for that year and my foreign income does not attract tax liability. —N. Singh A. Section 6 of the Act provides that an individual will be considered as non-resident if he i) is in India in that year for a period or periods amounting in all to 182 days or more: or ii) having within the four years preceding that year been in India for a period or periods amounting in all to 365 days or more, is in India for a period or periods amounting in all to 60 days or more in that year. The explanation to section further provides that in case an individual being a citizen of India leaves India in any previous year for the purpose of employment outside India, the period of 60days mentioned in (ii) above shall be substituted by182 days. Accordingly, in case you have not been India in preceding four years for a period or periods in all to 365 days or more and have not been India for182 days or more in the previous year you will be treated as non-resident and your income would not be chargeable to tax in India. |
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