B U S I N E S S

Air India may slash routes to cut losses
New Delhi, August 27
Cash-strapped Air India is mulling several options, including closing operations on routes where the losses were high in a bid to reduce mounting expenditure.

Boeing wins US, EU nod to fly Dreamliner 
Washington, August 27
US aerospace giant Boeing said yesterday its new 787 Dreamliner airplane has won approval to fly from US and European Union regulatory authorities.

Sesa Goa to suspend mining in K’taka 
New Delhi, August 27
Vedanta Group firm Sesa Goa today said it would stop mining in Karnataka's Chitradurga with immediate effect, following the Supreme Court's order banning mining in Chitradurga and Tumkur districts.

Gold regains Rs 28,000 level 
New Delhi, August 27
Gold prices rose sharply by Rs 950 per 10 gram, the second biggest one-day gain, to regain the Rs 28,000 level here today on heavy buying, driven by a recovery move in global markets.

Foreign income of RNOR not taxable
Q: Shortly, I will complete 10 years of living in the US. Over this time, I have been staying about 300 days (more than 182 days) each year out of India and hence have maintained my NRI status throughout. This year, I plan to wrap up here and come to India to settle for retirement.

Private operators gaining ground
Whatever powers that-be may scream and portray a rosy picture, the Indian civil aviation has been slowly and subtly slipping away from the steady hands of the government into the ever- hungry private operators. Air India officials, the Airports Authority of India (AAI) bigwigs and several agencies seem to have seen writing on the wall that soon private enterprises will be sole operators in Indian skies as Indian Airlines was decades ago before liberalisation.

Air India may slash routes to cut losses

Boeing wins US, EU nod to fly Dreamliner 

Sesa Goa to suspend mining in K’taka 

Gold regains Rs 28,000 level 

Investor Guidance
Foreign income of RNOR not taxable
by A.N. Shanbhag

Q: Shortly, I will complete 10 years of living in the US. Over this time, I have been staying about 300 days (more than 182 days) each year out of India and hence have maintained my NRI status throughout. This year, I plan to wrap up here and come to India to settle for retirement.

I have three properties here in the US. Selling these may take some time - perhaps over a year or more. When I bring back funds after selling the properties, will there be any tax liability in India? Note that I will be paying tax in the US.

— Surya

A: If you come to India anytime after September 2011, you would continue to be an NRI for the current financial year too. It is only for and from April 2012 that you would be a tax Resident of India. Moreover, by virtue of having been an NRI for all these years, for FY 2012-13 and for FY 2013-14, you will have the status of RNOR (Resident but Not Ordinarily Resident). An RNOR does not have to pay tax on this foreign income in spite of the fact that he is a tax Resident of India. Therefore, if you manage to sell the properties before April 2014, there will be no India tax applicable on the sale. Note that tax applicability has to be determined at the first instant when the income is booked i.e in this case when the properties are sold. Bringing the money to India is a mere application of income (transfer of funds) and is tax neutral. In other words, whether you bring the sale proceeds to India or not, the tax incidence will not change. If the sale is effected prior to April 2014, there will be no tax imposed in India, else, you will also be liable for capital gains tax in India and will then have to take shelter under the DTAA that India has with US.

Inherited property

Q: A relative of mine got a portion of share of his parental property and he sold that share. Subsequently, he purchased a flat after a few days adding some money from his own. He has three children, two sons and a daughter. He wants to write a will in favour of his son only as he looks after him in his old age. Please advise is it legally possible.

— PC Bajaj

A: As long as the estate of your friend is self-acquired and not inherited, he has a right to bequeath his assets to anyone as per his wish. It would be advisable to get the will registered for adequate precaution lest it gets contested later on.

Capital gains

Q: I have got a capital gain of Rs 60 lakh by the sale of inherited residential property. Please advise its proper use to save tax liabilities. Also let me know how long the amount can be kept in a savings a/c?

2. Can I purchase one or more residential property out of this amount?

3. If the residential property is less than the amount, can the balance amount be deposited in infrastructure bonds to save taxes?

— Saket Mehta

A: We presume that you have earned long-term capital gains. There are two distinct ways of saving tax on such gains by:

1. Investing within 6 months the amount of capital gains in infrastructure-related Bonds of NHAI or REC u/s 54EC. The lock-in period is 3 years. The current interest rate is around 6% and this is fully taxable. The ceiling on this investment is Rs 50 lakh per FY.

2. U/s 54, purchasing a residential house (only one and not two) by utilising the amount of capital gains within 1 year before or 2 years after the date of sale of the old house. Alternatively, construct a residential house within 3 years.

Note that in both the cases, the amount of capital gains is to be invested and not the net sale proceeds.

3. It is possible for you to use either one or both of the above-mentioned strategies to save the tax on long-term capital gains.

Tax on gratuity

Q: I worked in the Health Department from 1984 to 2007. I took premature retirement in 2007. I received a gratuity of Rs 3.50 lakh in 2009. I received Rs 5.50 lakh in April, 2010, as revised gratuity according to the 6th Pay Commission. Kindly let me know the income tax clause under which this amount is exempt from income tax.

— Romila Goyal

A: We do not have good news for you. The ceiling of exemption has been increased to Rs 10 lakh from Rs 3.50 lakh by Notification 43/2010 dt 11.6.10. This limit is applicable to the employees who retire or become incapacitated prior to such retirement or expire or whose employment is terminated on or after 24.5.10.

The authors may be contacted at wonderlandconsultants@yahoo.com 

Aviation Notes
Private operators gaining ground
by KR Wadhwaney

Whatever powers that-be may scream and portray a rosy picture, the Indian civil aviation has been slowly and subtly slipping away from the steady hands of the government into the ever- hungry private operators. Air India officials, the Airports Authority of India (AAI) bigwigs and several agencies seem to have seen writing on the wall that soon private enterprises will be sole operators in Indian skies as Indian Airlines was decades ago before liberalisation.

The private operators have spread their wings systematically and they have already secured control of major international airports like Delhi, Mumbai, Hyderabad and Bangalore. The wind is moving in their direction and the politicians connected with civil aviation seem to be favouring private sector instead of government as some of them have stakes, directly or indirectly, in private airlines.

A study reveals that the government officials have already been inclined towards private developers and builders. No sooner the government officials relinquish their offices in ministry or AAI or any such akin organisation, they are promptly absolved by the private enterprises at double or triple salaries.

Among the international airports, Hyderabad seems to be preferred airport. It has stolen a March over Mumbai. Some say that it is held higher in schemes of things where the Indira Gandhi International Airport (IGIA) is concerned.

The Ministry of Civil Aviation and the Federation of Indian Chambers of Commerce and Industry (FICCI) will jointly organise a five-day exhibition on March 14-19, 2012, as India-Aviation. About 300 exhibitors from different parts of the world have already consented to take part in the five-day extravaganza, which will have Britain as partner.

The US will be a 'guest' country while France as the focus country. There are several other countries that are participating. It is yet to be known whether China, a very viable aviation power now, will be taking part whole-hog or will be a kind of the spectator-participant.

World's two leading manufacturers, Airbus Industrie and Boeing, will be in full force to further gain ground in Indian market. For the first time, cargo section will be accorded the recognition it deserves. Actually, cargo needs upgradation on war-footing because it is a far more money earner than passenger-traffic. Famborough International Limited will be the Overseas Associate for the five-day exhibition. Why it has chosen this kind of participation has not been made known yet. But name the civil aviation unit, it will be there.

According to information, the IGIA's Terminal-3 has turned out to be a 'spoke and hub system'. The traffic is rising at an enormous speed. Despite rise in fares, negligible facilities and hazards, the passengers are determined to travel. "We are aware of the pitfalls but we choose flying because it helps us rest and relax", said passengers who, however, went on record saying that we don't get money's worth while lying through Terminal-3".