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Financial crisis inevitable: Report Aviation Notes Investor Guidance |
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Financial crisis inevitable: Report
Shanghai, May 14 Li Daokui told a forum that emerging economies such as Brazil and India face fiscal and current account deficits and a crisis was "inevitable," Caijing Magazine reported on its website
www.caijing. com.cn. "China will play a very important role during the financial consolidation. But there will be no such crisis in China because it is quite different from most other developing and developed countries," he said. The US dollar, euro, and the yen are expected to face downward pressure over the medium and long term, he added. In February, the Indian government raised "serious concern" about a trade deficit that could more than double to $278.5 billion in three years and may cause an unquestionable current account deficit. Brazil's current account deficit ballooned to a record for the month of March as foreign companies in Brazil sent more profits home and Brazilians spent more on travel and goods overseas. In January, the International Monetary Fund warned fiscal balances in Brazil, China and India were weaker than the IMF earlier projected, noting a deterioration in Brazil's fiscal accounts was "particularly pronounced." The Brazilian government ramped up spending ahead of October elections last year in what some analysts called a bid to boost ruling party presidential candidate Dilma Rousseff. Rousseff's administration has since announced budget cuts, a move which Moody's Investors Service said was a positive signal but the country still need to do more to earn an upgrade on its sovereign debt rating. Brazil's debt-to-GDP ratio held steady at 39.9 per cent in March. — Reuters |
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Aviation Notes Air India, once a symbol of dignity and punctuality, will emerge out of coma only when it is run independently, commercially and professionally without day-to-day interference by politicians. To achieve this all-important horizon, two immediate actions are required: do away with merger of two carriers, Indian and Air India, to function from Delhi and Mumbai, as before, and ask the former Minister of State for Civil Aviation, Praful Patel, to explain why he forced merger on the national As Patel’s seven-year innings began, he carried nation to the garden’s path claiming that the merger would carry the national carrier to the Everest. As he succeeded in his designs of the merger, he severed one arm (Indian Airlines) from the body leaving the other half cancer-afflicted. When Patel relinquished his office, the airline was not in the ICU (Intensive Care Unit), but it had struck a ‘terminal disease’ and the bankruptcy is a stark possibility unless the government immediately lifts merger, which has flopped. A study reveals that as soon as Patel assumed his office and succeeded in merger, where his predecessors had failed, he increased the order of the fleet from 28 to 68 without working on route utilisation. Details show that Air India/Indian Airlines in 2004 had envisaged for 28 aircraft (18 Boeing 737-800, 10 Airbus 340-300). The order was later increased to 69 aircraft. The study further reveals that an increase in Boeing order was an after-thought. The inflation in the aircraft purchase was one of the major causes for the national carrier plunging into acute financial problems. Had national carriers stuck to the original order of 28 and functioned independently, as they were doing, their ‘blues’ would not have multiplied. Then at the time of merger, the minister was categorical that there would be no discrimination whatsoever. But no sooner the merger came about, than he saw to it that Indian Airlines was wiped out of the Indian skies, where private players became the ‘masters’. Then there was discrimination in salary structure and disbursement leading to the recent pilots’ strike. In a 10-day strike, there were no winners. All were losers, particularly the public, which has lost faith in the efficiency and punctuality. The private players, hungry for profits, made the most of the killing as they jacked up fares causing further pain to the travelling people. Despite threat from the Delhi High Court and Air India management, the Indian Commercial Pilots Association (ICPA) and pilots did not join work. The ICPA has asked for a CBI probe into the aircraft acquisition, which, according to the ICPA, was without any logic and viability.
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Investor Guidance Q. I am a government employee. I want to know whether the money received as alimony on divorce is taxable or not. — Saloni A. Diversion of income by overriding title is taxable in the hands of the ultimate beneficiary whereas application of income is taxable in the hands of the recipient. Income received from property charged under a court’s decree with maintenance allowance to a dependent and spent on maintenance is diversion of income at source and therefore, taxed in the hands of the dependent - Raja Bejoy Singh Dudhuria v CIT [1933] 1ITR135 (PC). On the other hand, income from property, though paid as maintenance allowance under a decree of court (without maintenance being a charge upon the property yielding the income) is application of income and therefore, chargeable to tax - CIT v Sitaldas Tirathdas [1961] 41ITR367 (SC). Consequently, if the alimony is paid by mutual consent, it will be treated as application of income and will be taxed in the hands of the payer of the alimony and not the recipient. Error in PAN card
Q. I have invested in a fixed deposit in a bank. While opening the account, I had provided a photocopy of my PAN card. When I got Form-16A, I found that there is a mistake in PAN No. The bank has deducted TDS but deposited in wrong PAN number. My query is that the bank has modified my PAN No. in their record. What will happen with the TDS which bank has already deducted. — Rattan Lal A.
This is rather serious. The possibility of the credit continuing to go to the wrong account cannot be lost sight of. You will do well by pointing out this anomaly to the Income Tax Department and also check minutely whether you have been given the credit when the assessment order is received. Insurance policy
Q. My two children availed some education loan from some trusts for enabling them to take higher education in the US universities. This was about 24 years back. As per loan conditions, they were to undertake life insurance and the policy was assigned to the lender. Fortunately both the children got scholarships as well as assignments and therefore, funds were not needed and the entire loan amount was refunded. We got back the insurance policy. Throughout, I paid the premium and now the policies are due for maturity after the period of 25 years. I have their joint accounts with mine as second name. Over 25 years, my daughter has got married, her surname has changed and so has her nationality. My son is also an NRI. Now I request your advice whether I can deposit the claim amount in our joint account and can I withdraw the claim amount as all the premiums were paid by me only. — Ravi Deshmukh A. The maturity proceeds of any insurance policy are tax-free. So there would be no tax incidence on your children. As a joint holder of the account, you are free to withdraw the maturity proceeds as you desire. The withdrawn amount would be technically a gift from the first holder (son or daughter) to you, but since gifts between relatives are tax-free, the gift also would remain out of the tax
purview. The authors may be contacted at wonderlandconsultants@yahoo.com |
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