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Big investors under taxman’s scanner
BIS announces new safety standards for IT industry
Businessmen want new IT return form withdrawn |
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Maruti gets duty relief
MRP of drugs to include local taxes
Tata Power pulls out of race for Austrian co
Prescription pad for doctors
Market Update
Tax Advice
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Big investors under taxman’s scanner
New Delhi, June 4 Through AIRs, launched last year, the tax authorities have received information that 6,19,249 transactions worth Rs 7,76,158 crore of investment in mutual funds and 90,647 cases investing over Rs 5 lakh in RBI bonds totalling Rs 3,16,300 crore. This is part of 3,036 AIRs received by the department for giving details of 18,63,490 high- value transactions involving investment of Rs 13,97,400 crore during 2004-05, Revenue Secretary K. M. Chandrasekhar said here. Aimed at widening and deepening tax base, AIRs would capture investments by people in seven areas. Apart from investments in mutual funds and RBI bonds, five other high-value transactions are cash deposits with banks exceeding Rs 10 lakh, credit card payments exceeding Rs 2 lakh
annually, investments in bonds and debentures exceeding Rs 5 lakh annually, investment in shares over Rs 1 lakh, sale and purchase of property beyond Rs 30 lakh. Of over 18 lakh transactions in these categories, permanent account numbers were quoted only in seven lakh cases, Mr Chandrasekhar said, adding that the tax authorities would send notices to remaining over 11 lakh cases, asking them to get PANs. Mr Chandrasekhar said wherever the Tax Department got details of permanent accounts numbers, the information about transactions is uploaded to the respective regional computer centres. After that, letters are issued by Commissioners of Income Tax (computer operations) to all transacting parties, advising them to furnish income tax returns if they have not done so already, he said. Now, all 7 lakh transactions with PANs are being put into individual transaction statements. These statements will then be matched against income returns, he said. “Then we will be able to identify non-filers because if there are transactions reported and there are no income tax returns then we know there is something wrong and we immediately write to them,” he said. If there is mismatch between the transaction statements and income tax returns, letters are written to them, he said. Besides, RBI and mutual funds, AIRs were filed by banks, registrars, sub-registrars and companies. Mr Chandrasekhar said banks had filed 1,504 returns giving information about 5,45,780 transactions in cash deposits exceeding Rs 10 lakh each, totalling Rs 49,939 crore. These returns had also given information about 3,62,871 credit card transactions of at least Rs two lakh each, aggregating Rs 5,844 crore. Companies have given 249 AIRs, disclosing 29,146 transactions in bonds debentures of companies, totalling Rs 95,248 crore and 1,47,013 transactions in shares of companies, aggregating Rs 75,491 crore, he said.— PTI |
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BIS announces new safety standards for IT industry
Chandigarh, June 4 These standards have been prepared to provide a model for establishing, implementing, operating, monitoring, reviewing, maintaining and improving an ISMS, within the context of the organisations' overall business risk. Officials in the BIS informed TNS that most of the requirements set out in the international standard are generic in nature. "However, requirements like establishing and managing the ISMS, management responsibility, internal audits of the ISMS, management review of the ISMS and its improvement, cannot be excluded when an organisation claims conformity to this international standard," said Mr Chandra Shekhar, Deputy Director-General,
BIS, Northern Region. All that an organisation has to do is to first formulate its ISMS policy, relevant to managing risk and improving its information security. The policy has to be formulated after defining the risk assessment approach of the organisation, identifying the assets that are at risk, and then identifying and evaluating options for treatment of risks. |
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Businessmen want new IT return form withdrawn
New Delhi, June 4 “The new income tax return form is nothing but an exercise to hand over the honest taxpayer into the cruel hands of Inspector Raj,” CAIT said in a press note demanding its immediate withdrawal. Terming the new form as a “vicious document”, CAIT Secretary- General Praveen Khandelwal said “on the one hand the government strongly advocates simplification and rationalisation of the tax structure whereas replacing the earlier Saral form with this four- page document amply expose its tall claims.” The CAIT statement quoted Nag-Vidarbha Chamber of Commerce, Nagpur, President B.C. Bhartia as saying that the Saral form had brought a large number of people under the ambit of income tax. “Since the said form was doing well what was the need for introducing a new four- page form?”— PTI |
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Maruti gets duty relief
New Delhi, June 4 Maruti through its dealers offered a warranty of two years while selling a car. In March 2002. The company later extended the scheme to sold cars as well. The Tax Department asked the company to cough up around Rs 18 crore as excise for the period between April, 2002, and March, 2005.
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MRP of drugs to include local taxes
Shillong, June 4 What happened now was the sellers added local taxes over and above the MRP printed on the drugs, thus forcing a buyer to pay more, Mr Paswan said here asserting that this practice would be stopped. The ministry, which controlled the price of 74 medicines, was formulating a policy, he said. It decided to bring all 354 'essential' drugs under its control to check arbitrary pricing by the manufacturers. The manufacturers were given time from July 1 to October 2 to dispose of the existing stock and the new practice would start from October 2, the minister said. The ministry also asked the manufacturers to start printing the MRP in Hindi apart from English from October 2 this year.— PTI |
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Tata Power pulls out of race for Austrian co
Mumbai, June 4 “We had made a bid to acquire a power firm in Austria. But, there is a growing sentiment in Europe, that European firms should be acquired by entities belonging to that region only. So the deal was called off,” Tata Power Director Adi Engineer said. The development comes shortly after liquor baron Vijay Mallya was forced to opt out of a race to acquire Champagne maker Taittinger amid demand from the workers council that ownership should remain with French firms only. Elsewhere, India-born entrepreneur L N Mittal has had to contend with stiff opposition to his bid for rival Arcelor. Besides, the Tata Group itself has been facing opposition from groups in Bangladesh, which are against its $3 billion investment in power, steel and fertiliser projects. But the group has not yet called off its investment plans.— PTI |
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Prescription pad for doctors
New Delhi, June 4 Dr Anil Vij, who is a general medicine specialist, apprised mediapersons on how his “prescription pad”, a software that contains complete prescribing information of more than 15,000 brands of Indian pharma, was compiled in such a way that it would take just a minute to understand, thereby making a doctor’s life much simpler. |
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Indian growth story intact
by Lalit Batra
The correction in the Indian markets in the past fortnight has taken everyone by surprise. Some analysts call this sharp fall as a crash but I would rather call it a sharp correction. The relentless bull run which started three years ago needed a breather. A combination of factors such as the soaring oil prices, fall in metal prices and fear of the Federal Reserve of the USA raising interest rates further started the initial fall and margin calls from brokers accentuated it.
The Indian equity market has had more than its share of pain compared with its peers as the BSE Sensex has corrected much more than the other such emerging market indices. The much talked-about Indian growth story remains intact with strong growth in the gross domestic product (GDP) as well corporate earnings. After the correction the market’s valuation has reached attractive levels of 14 times the current financial year earnings. The recent economic data vindicates this view. The Index of Industrial Production (IIP) has grown by 8 per cent in the fourth quarter of the last fiscal compared with a growth of 7 per cent and 6.5 per cent in the previous two quarters. The manufacturing sector grew by 9 per cent for the same quarter compared with a growth of 8.1 per cent and 7.8 per cent in the previous two quarters. I expect the growth to continue in April, 2006, as is indicated by the leading indicators like electricity production and sales of motor cycles, commercial vehicles and cement despatches. The market has now reached a zone where a long-term investor may start to find value. Likewise, I recommend that any sharp correction may be used to build a folio for a long term as markets over a long term respond to corporate earnings than to margin calls. Allcargo Global Logistics
Incorporated in 1993, Allcargo Global Logistics Ltd (AGLL) is a leading integrated logistics services provider involved in multimodal transport operations (MTO), operating of container freight station (CFS) and handling of project cargo. The company operates on a pan-India basis with presence across 26 locations in India and covers over 4,000 international destinations. To strengthen its presence at strategic international destinations, AGLL has acquired a 50 per cent stake in Belgium-based ECU Hold NV. The company also has a joint venture with the Transworld Group (New Jersey), which caters to the US markets. With the Indian economy growing at a healthy pace, the demand for logistics services is likely to remain strong, a bid positive for companies like AGLL. Indian logistics industry is highly fragmented and unorganised. As a result, integrated logistics companies like AGLL enjoy a better bargaining power as compared to non-integrated players. The company’s initial public offering has a price band of Rs 625 (floor price) to Rs 725 per share (cap price). At Rs 725, the issue is offered at a price to earnings multiple of 29.7 times annualised earnings. While valuations are on the higher side, the fact that the company is expanding capacity on the CFS side is likely to propel profitability going forward. I recommend investors to bid for this stock at the lower end of the price band in the IPO, which closes on this Tuesday. |
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Rebate on tuition fee can be claimed by filing revised IT return
by S.C. Vasudeva Q. I am a retired PCMS officer. My son got admission in MDS in April 2004 and I paid his tuition fee for year 2004-05 of Ist year MDS, but did not get any tax rebate. For the fee of 2nd year, my son took loan from a bank on his own name and paid the fee in May 2005. Now my queries are: 1. Can I get the income tax rebate of tuition fee in the financial year 2004-05 after filing the revised income tax return and how much is the upper limit of rebate? 2. What are the income tax rebate benefits to my son while returning the loan after completion of his studies. — Dr Inder Krishan Sharma, Talwara Township A. 1. The rebate of tuition fee can be claimed by filing a revised return for the financial year 2004-05. For the financial year 2004-05, you would be entitled to a rebate of Rs 12,000 for each child. The maximum amount eligible for rebate for the said year is Rs 24,000. 2. Your son would be entitled to a deduction under Section 80E of the Act of any amount of interest paid by him in the financial year out of his income chargeable to tax on the loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education. Tax liability Q. Kindly calculate my tax liability as on 31.03.2006, Assessment year 2006-07. I am an employee of a nationalised bank. 1. Gross salary, including arrears of pay received during the period 01.04.2005 to 31.03.2006. Rs 4,35,000 Investments 1. Premium of insurance policies Rs 30,000 2. SPF/GPF contribution/deduction Rs 47,000 3. Accrued interest on NSCs purchased in earlier years Rs 6,500 4. Housing loan instalments payment Rs 47,000 5. Housing loan interest accruals Rs 24,000 Total investments Rs 1,54,500 Please also let me know whether house loan instalments and interest accrual should be accounted under Section 80C or under other section. — R.S. Negi, Chandigarh A. On the basis of above particulars, your total taxable income would be Rs 3,35,000 on which a tax of Rs 51,510 is payable, including education cess of 2 pc. The interest on housing loan will be deductible from the income from house property. The amount repaid towards the principal amount of loan is deductible under Section 80C of the Act subject however to the maximum limit of Rs 1,00,000 provided under the said section. Deep-discount bonds Q. I purchased two bonds of Krishna Bhagya Jal Nigam Ltd — Deep-discount bonds — @ Rs 5,000 each for Rs 10,000. Their date of allotment was 17.06.1996 and their date of maturity is 17.06.2006 and maturity value is Rs 56,000. I sold these units on 08.08.2005 for Rs 50,000 (Net gain Rs 50,000 - 10,000 = Rs 40,000) in a private deal (i.e. not through broker/exchange). 1. What is the tax treatment on income of Rs 40,000? Will it be interest income or long term capital gain (LTCG)? In case of LTCG, would there be indexation cost applicable or not? If so, at what rate it will be taxed as I have not shown any accrued income in my previous income tax returns. 2. How the net gain to the buyer at maturity (Rs 56,000 - Rs 50,000 = Rs 6,000/-) shall be treated (as interest income or short-term capital Gain)? 3. As the company is supposed to deduct TDS, on what amount will they deduct (56,000 - 10,000 = 46,000 or 56,000 - 50,000 = 6,000). For you information, no consideration amount is mentioned on the transfer form. If TDS is deducted @ 10.2 pc on Rs 46,000 i.e., Rs 4,672, how it will be shown in return? — Ashok Kumar, Amritsar A. (i) The cost of deep-discount bonds will have to be indexed for the purpose of ascertaining the long-term capital gains. The long-term capital gain will be taxed at the rate of 20 pc plus education cess as the income is below Rs 1 lakh. (ii) In accordance with the Board's circular No 2 dated Feb: 15, 2002, the net gain of Rs 6,000 (Rs 56,000 - Rs 50,000) to the buyer on maturity would be treated as interest income and taxed accordingly. (iii) The company would deduct TDS on the difference amount of Rs 46,000 i.e. (Rs 56,000 - Rs 10,000). This position is also as per the above circular. Saving schemes Q. I am a retired bank officer and after retirement doing a private job. My age at present is 55 years plus and my wife is a railway employee. 1. My approx. income for the year shall be as follows: (Rs) Pension: 79,000 Investments: Salary: 48,000 ULIP 15,000 Interest (bank) 35,000 Premium 80CCC: 10,000 Comm: 2,500 Fee: 60,000 Total: 1,64,500 Total: 85,000 In this year I have to receive maturity proceeds from LIC:45,000. Whether is it questionable to invest about 50 pc of income or more to save the tax. 2. Please also advise me regarding the purchase of CD for the self computation of income tax and oblige. — Ravinder Kumar Sharma, Amritsar A. Since the amount which is to be contributed towards the saving schemes is not payable out of the chargeable income, the department should not question the extent of investment in savings schemes. I am not in a position to recommend any particular CD as I would like to avoid the controversy of preferring one software over the other.
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