Sunday, November 22, 1998
today's calendar
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B U S I N E S S | Sunday, November 22, 1998 |
| weather n
spotlight today's calendar |
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PM to inaugurate hi-tech
city today Lower
sale worries hosiery owners |
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More powers for LIC
officers FIPB
clears 20 proposals |
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Payments
to SSIs: SIDBI likely to be involved Haldia
Petro to assume role of ‘business driver’ IT
raids on onion traders Price
rise transient: FM Gold,
silver decline Delphi
automotive |
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PM to
inaugurate hi-tech city today HYDERABAD, Nov 21 — Andhra Pradesh’s engine for growth is ready for take off. The Prime Minister, Mr Atal Behari Vajpayee, will inaugurate the first phase of the Rs 1500 crore software technology park-Hi-Tech City tomorrow. Spread over sprawling area of 160 acres on the outskirts of Hyderabad, Hi-tech City, once commissioned, is expected to become a focal point. Billed as the biggest technology park in the continent, the first phase of the project is ready to commence operations. The 10-storeyed state-of -the art building, which has of late come to be known as Cyber Towers, has been built with an investment of Rs 1 billion and completed in a record time of 15 months. Several IT majors, including Microsoft, Oracle, Metamor, Motorola, Toshiba and Sun Micro Systems, besides the Videsh Sanchar Nigam Limited has acquired space in the complex. Often called as the CEO of AP Inc, Andhra Pradesh Chief Minister, Mr Chandrababu Naidu, appears determined to pitchfork the state in to the next millenium where information technology will be the main driver of the economy. Fully self-contained, the hi-tech City provides all conceivable infrastructural needs for it industry which include very large Bandwidth Communications. Continuous and uninterrupted power supply is ensured by providing the supply through multiple feeders. Data communication facilities are provided by Software Technology Parks of India, Hyderabad and VSNL. The project is a joint venture between the Andhra Pradesh Industrial Development Corporation (APIDC) and Larsen and Toubro in which L and T holds a stake of 90 per cent. Mr R. Chandra Shekhar, Secretary, Department of IT said the focus was to create the three major requirements of the IT industry: infrastructure, skilled human resources and extensive IT application. Apart from hi-tech City, wide area network called Apswan is being set up connecting state secretariat with all district headquarters with 2MBPS fibre optic cable forming the backbone for voice, data and video communications between various government departments. At the same time, the government is drawing up plans to have a broad band gigabit range network backbone to serve needs in the fields of multi-media applications for education, high degree of Internet penetration with cable TV using set top boxes etc. According to Mr Chandra Shekhar, companies like Baan Napier Software solutions and others preferred purchasing land to set up their own establishments in the second phase of the hi-tech City project. As part of the second phase, L and T proposed to construct star hotels, recreation parks, international convention centres and other facilities. The Prime Minister, Mr
Vajpayee will also lay the foundation stone for the
second phase of the project. |
Lower sale
worries hosiery owners LUDHIANA, Nov 21 — Poor off-take of woollen hosiery this year is giving sleepless nights to thousands of hosiery manufacturing units in this industrial town of Punjab. Poor sales have forced many manufacturers to think in terms of announcing pre-mature discount on their products.Pamphlets and handbills have already begin to circulate announcing “winter tohfa” to Ludhianvis offering one shawl free on purchase of two shawls. “This indicates panic in the industry,” says Mr Girish Kapoor, one of the leading manufacturers of woollen knitwear in the city”. They are not sure if they will be able to sell their stocks in normal fashion. So they are trying to get rid of them in this manner”. Normally, November is a busy time for the woollen hosiery industry of Ludhiana. “This is the time when we remain occupied round-the-clock supplying goods to dealers throughout the country. But this time, the supplies have been just about half the normal figures” says Mr Kapoor. Contrary to predictions by weathermen, winter is yet to arrive in right earnest in northern India so far, it had rained so much in September and October that weather predicted early arrival of winter this year. “But this has not happened so far”, points out a shopkeeper in Ludhiana’s famous Chaura Bazar. “November is now in its final week and people are still roaming around in T-shirts and half-sleeves. It is only in the evenings that you will feel a little chill, who will buy sweaters and jerseys in this weather”, he asks sadly. The competition among woollen hosiery units here is so cut-throat that the dealers are always able to dictate their terms to manufacturers”, says Ms Anish Dhawan, another knitwear maker. For instance, this year the dealers have been getting their supplies against long-time credit and if any one here insists on prompt payment for the goods supplies, the dealers threaten to send back the supplies. The dealers know that if they return the supplies of one manufacturer, there are 10 more who will be willing to supply them on long time credit. This is what is harming the industry here along with many other factors,” he says. Ludhiana’s woollen industry remained tied to the apron strings of the Soviet Union for too long, says Mr Ram Murti Dhawan. An old-timer who used to supply woollen hosiery to the Communist country. The economic collapse of Russia has ruined a large number of manufacturers. Some of them have stopped exports altogether and now cater exclusively to the domestic market. About 30 per cent of the manufacturers of the erstwhile Soviet Union now supply goods to Europe. But the European market is highly competitive. The European importers want that the hosiery units supplying goods to them should not only be hi-tech but also environment-friendly, employ no child labour and have excellent facilities for their workers. One European team visiting Ludhiana recently insisted on a specific number of toilets for the workers before approving the unit for exports, says Mr Kapoor. Mr Kapoor is of the view
that if hosiery manufacturers of Ludhiana want to survive
and prosper, they will have to upgrade their technology,
get more skilled workers and come up to the world
standards in working conditions. |
More powers
for LIC officers CHANDIGARH, Nov 21 —With a view to provide better customer care the Life Insurance Corporation (LIC) has enhanced the financial powers of officers down the line. The powers have been enhanced between 50 per cent and 100 per cent in several cases which would simplify the settlement of claims. This was announced by Mr G. Krishnamurthy, chairman of the LIC, at the 27th Chairman’s Club Agent Convention, here today. Talking to mediapersons, Mr Krishnamurthy said earlier the powers were centralised. In case of problems in settlements of claims people had to rush to the central office. Decentralisation would enable officers down the line to settle problems at the lower levels. The chairman said zonal claim review committees would be set up soon which would have retired High Court Judges as members. Earlier there was a committee only at the central level. These zonal committees would also have enhanced powers. While underlining the vast potential in the insurance sector, Mr Krishnamurthy highlighted structural changes in premium of policies for popularisation of various schemes. Improvement in the product range and new products were in the offing. The LIC has also revised the mortality calculation table which will be applicable from September 1,1997. He also underlined the importance of improved customer services at the time of settlement of claims. While replying to a question regarding attitude of LIC in wake of foreign companies entering the insurance sector, the chairman of the LIC said “we are ready to face any challenge?” He refused to comment on his reaction to the proposed entry of private companies. Mr Krishnamurthy announced an increase of 20 per cent in the outer pocket expenses for its agents which will be applicable from today. Earlier Mr S.K.Bijlani, a leading consultant, in his guest lecture stressed the need to change in accordance with the times. Movement of goods has made the old ideas of isolating industry for protection obsolete. Mr Y.P. Gupta, a Managing Director, said each individual should be proud of his institution. Others who addressed the gathering included Mr G.P. Kohli, a MD, zonal managers and Mr R.C. Agarwal, Senior Divisional Manager. More than 2200 Chairman
Club Member Agents are participating in the convention.
The LIC has more than five lakh agents all over the
country. Approximately 1,700 out of 2,046 of its offices
are computerised. |
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NEW DELHI, Nov 21 (UNI) — Foreign Direct Investment (FDI) to the tune of $ 3.4 billion have come to India during the first nine months of this calendar year compared to $ 4.2 billion during the entire last year. According to foreign investment promotion board (FIPB) sources, around $ 6 billion of FDI is likely to flow to India this calendar year. If that much FDI comes to the country, it would represent an increase of 42.8 per cent over that of the previous year. However, the FIPB sources did not give break-up of FDI till September this year. The sources said the total FDI during the first nine months of this year could have been much larger had the RBI not issued the notification allowing companies bringing in FDI to file documentation with the apex bank within 30 days of issuing the shares. Had Tata domestic airline project been cleared by FIPB in time, the FDI inflows might have increased to at least Rs 500 crore. However, major proposals cleared by the Foreign Investment Promotion Board (FIPB) during the year include a Rs 200 crore joint venture application of AB Electrolux of Sweden for producing domestic appliances and a $ 600 million investment by GAZ DE France International (GDF) of France for LNG transportation terminals. AB Electrolux has been given the go ahead to set up a joint venture with Voltas to manufacture domestic appliances other than airconditioners and equipments like industrial catering appliances. The company intends to cater to the large restaurants through this joint venture. FIPB today cleared 20
proposals amounting to a foreign direct investment inflow
of Rs 190 crore including a Rs 40 crore application by
Tata Timken. |
Exporters’
plea to FM CHANDIGARH, Nov 21 — The Haryana Exporters Association has urged the Union Finance Minister, Mr Yashwant Sinha, to introduce two slabs on interest on pre-shipment and post-shipment credit to exporters. In a memorandum submitted to Mr Sinha at Ambala last night the President of the Association, Mr N.C. Jain, said while one slab should be for export houses and large scale exporting units, the other slab which should not be more than 10 per cent for at least 180 days for cottage and small scale units. The memorandum copies of which were given to the press here today, urged the Minister that the banks should be directed to give credit to the small scale units against the letter of credit or confirmed order of a foreign buyer and they should not insist on collateral security. The other demands of the
association included liberal norms for recognition as
export house in the case of small and cottage units, a
universal cash incentive of at least 2.5 per cent on all
exports by cottage and small units, simplification of
procedure for custom clearance of export consignments.
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Payments to
SSIs: SIDBI likely to be involved CHANDIGARH, Nov 21 — The Centre is likely to involve SIDBI in ensuring timely payment to ancillary and small scale units for goods supplied to large units. This was reportedly told by the Union Finance Minister, Mr Yashwant Sinha, to a delegation of the Haryana Chamber of Commerce and Industry which met him at Ambala last night. The General Secretary of the Ambala district unit of the chamber, Mr Parveen Goel, said here today that a memorandum submitted by the delegation to Mr Sinha demanded that the delayed payments should carry bank interest on it. The chamber demanded that the banks should be instructed to adhere to the norms for advancing loans to tiny and cottage industry whose investment limit had now been raised to Rs 25 lakh. It alleged that medium and small scale units were taking the maximum benefits from the banks after the investment limit for the tiny and cottage industries had been raised. Alleging harassment by audit parties of the Central Excise Departments, the chamber demanded that the audit parties should visit the range offices only and should be prohibited from visiting the SSI units. The chamber demanded that
service tax should not be charged from customers but
should be paid by organisations providing particular
services. It also demanded that there should be a
uniformity in sales tax structure for the entire country. |
Haldia Petro to assume role of ‘business driver’ CALCUTTA, Nov 21 (PTI) — Haldia Petrochemicals Ltd (HPL), the mega project of Eastern India, is set to commence commercial production by June next year and is expected to assume the role of a “business driver” for exporting its products. The country’s third major petrochemical project coming up at a cost of Rs 5,170 crore in the coastal Midnapore district of West Bengal, will be commissioned in June next as per the schedule, HPL Managing Director, a Krishnamurthy said. “Seventy-five per cent of the project work is complete,’” he said. “As HPL enters the final countdown phase before it goes on-stream in 1999, the company will now change its role from that of an implementer of a mega project to a business driver”, he told newsmen at the end of an international symposium on polyolefins technology and development here yesterday. Stating that HPL was ready to “take the lead”, he said that the company’s products — using the licensed technology of acknowledged international giants like ABB Lummus, Montell, Mitsui Chemicals, IFP, BASF and others — would have a “distinct competitive edge”. Krishnamurthy said that
HPL held the prospects of becoming the catalyst for a
sunrise industry in plastics processing in the east,
adding that the company was in the process of entering
into “buyback arrangements” for exports of
LLDP, LDPE, Polypropylene after meeting domestic demands.
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PUNE, Nov 21 (PTI) — The Income Tax Department has unearthed unaccounted assets worth Rs 2.73 crore in a series of raids on onion traders at Lasalgaon, Pimpalgaon and Manmad which supply more than half the onions purchased in the country. Director of Income Tax (Investigation wing), Padmakar Mishra, in a release said the amount included over Rs 18 lakh in cash, jewellery worth over Rs 24 lakh and other assets such as shares worth around Rs 15 lakh. He said property in which unaccounted money was invested amounted to Rs 16 lakh. The search parties found fixed deposits worth over Rs 2 crore, sources of which were dubious. The raids were conducted yesterday by the Directorate of Income Tax, Pune, which employed more than 200 officers and staff, residential premises and six business-cum-residences were searched and surveys conducted in 11 connected cases. He said the searches were
still going on to unearth tax evasion. |
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PATNA, Nov 21 (PTI) — Union Finance Minister Yashwant Sinha today claimed that spiralling prices of essential commodities were only “transient” and the Centre would soon have “full control” over the situation. “The price rise is not long-lasting ... we will have complete grip over the situation soon”, Sinha told newspersons here. The Centre has already taken effective steps to arrest skyrocketing prices of consumer goods and “it has started yielding positive results”, he added. Sinha said, unseasonal rains particularly during Diwali had “to a large extent damaged the rich harvest of onions”. Sinha, however, said that the price rise would not have any bearing on BJP’s poll prospects in the November 25 Assembly elections in four states. He said he had visited
Rajasthan recently where he found that price rise was
“not at all an issue”. |
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NEW DELHI, Nov 21 (PTI) — Precious metals remained weak on the bullion market today on persistent selling by stockists against steady inflow of fresh stocks and closed with losses. Standard gold and ornaments lost another Rs 20 each at Rs 4340 and Rs 4190 per 10 gram respectively. The quotations: Silver
.999 (ready) 7370, delivery 7400, coins buyer 10.500 and
seller 10.600, standard gold 4340, ornaments 4190 and
sovereign 3750. |
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NEW DELHI, Nov 21 (TNS)
— Several director nominees for the Board of
Directors for Delphi Automotive Systems were announced
today by Delphi Chairman, CEO and President J.T.
Battenberg III and Lead Director Thomas S. Wyman.
Nominated to join Battenberg and Wyman as outside
directors on the board are: Oscar P. Bernardes Neto of
Sao Paulo, Brazil; Virgis W. Colbert of Milwaukee, Wis.,
USA; Shoichiro Irimajiri of Tokyo, Japan; John D. Opie,
Fairfield, Conn, USA; Roger S. Penske of Bloomfiled
Hills, USA and Thomas H Wyman. |
The government clearance for Seagram for manufacturing alcohol from coarse grain has raised concern. Seagram plans to convert maize, sorghum bajra and millets — the poor man’s food — into a rich man’s drink — whisky. Distilleries and breweries in India produce alcoholic drinks from molasses as it is a cheap byproduct of the sugar industry and yields high amount of alcohol — 230 litres per tonne. Indian scientists knew all along how to make alcoholic beverage from foodgrains. But this route was never pursued because of low yield (40 litres per tonne) and the fact that for a country with millions of malnourished people. It would be immoral to covert foodgrains into whisky. Under the liberalised policy, however, Seagram acquired permission to become what it claims “the only company in India which uses grain and not molasses in the production of its blended whiskies”. — PTI Beauty business The Rs 1,100 crore Indian cosmetics market is finally witnessing aggressive competition from well-known global brands, virtually ending the monopoly held by Indian giant Lakme lever for years. This is hardly surprising as India has proved to be a favourite destination for global brands since liberalisation. What is surprising is that despite several brands fading out and inability of the existing ones to make profits — majority of global brands present here are suffering losses — the market is witnessing renewed activity in terms of new arrivals, product upgradation by existing players and creation of the “mass premium” price band. Alex Jewellery Pvt. Ltd, which manufactures imitation jewellery has now introduced Saloni, 23.5 K micro gold plated jewellery for the festive season. “Lakme is still the market leader in cosmetics but even they have realised changing market dynamics after Elle18 ate into Ultra’s equity,” says a Market expert. Companies give what the consumer looks for: transfer-proof lipsticks, smudge-proof mascaras and fast-drying naile enamels — all from L’Oreal. Oriflame has developed India-specific shades (mostly brown and maroon) to retain consumer interest. — PTI Detergent tablets British researchers have come up with a new detergent tablet that can readily dissolve in water in washing machines. Persil performance tablets, introduced by Lever Brothers Company, reportedly do away with the need to measure powders before using and provide fine cleansing. Detergents tablets, that have been used intermittently in different countries over the years with varying degrees of success, have of late started gaining popularity in washing machines. — PTI Gold? No thanks Gold demand in India was “less lively” during July-September 1998 after an exceptionally buoyant growth in the first two quarters, apparently dampened by economic problems. At 171.8 tonnes, the demand fell 8 per cent below the record level of the third quarter of 1997, but remained substantially higher than the third quarter demand in earlier year, according to the World Gold Council. Tension with Pakistan and the effect of US sanctions along with domestic political uncertainties have hit-confidence. — PTI Birla women Manjushree Khaitan, daughter of Basant Kumar Birla, has joined the board of Kesoram Industries, of the Rs 1,500-crore flagship of the BK Birla group. Birla women are increasingly getting involved in family-run companies. Last year, Aditya Vikram Birla’s widow, Rajashree, joined the boards of Grasim, Indo-Gulf Fertilises and Indian Rayon — all belonging to AV Birla group. While Priyamavada Birla, the widow of MP Birla, is the chairperson of Birla Corporation, Shobhana Bhartia, youngest, of KK Birla’s three daughters, has been looking after the Hindustan Times. Nandini Nopany, KK Birla’s eldest daughter, is believed to be helping Priyamavada Birla in managing the Rs. 1,700 crore MP Birla group. The daughters of BK Birla,
Jayashree and Manjushree, were initiated into business
much earlier, says a report in The Telegraph. —
TNS |
Q: When persons are appointed by Central Government to manage affairs of factories, are they construed to be ‘occupiers’ of these factories? A: The Supreme Court in Indian Oil Corporation Ltd. v Chief Inspector of Factories (1998-II-LLJ. 604: was answering the question thus: In the instant case before the S.C. the Chief Inspector of Factories refused to recognise Depot Manager of one unit of the Indian Oil Corporation as ‘occupier’ of the factory and to grant the licence in his name. He directed the corporation to submit fresh applications by one of the Directors of the company. His insistence upon the said refusal and demand led to the present litigation, first before the H.C. and later to the present appeal before the S.C. In these appeals the discussion centred round the question as to, who was to be deemed ‘occupier’ of a factory of a government like Indian Oil Corporation. The S.C. referred to the statutory provisions, namely S. 2 (n) and S. 100 before its deletion by the amendment in 1986, of the Factories Act, 1948. The litmus test was, as the S.C. said, who had the ultimate control and to see whether the Central Government had the ultimate control over the affairs of the corporation. The S.C. added that the distinct legal entity of a company jurisprudentially recognised notwithstanding, it does not necessarily follow that Court should not scan the real character of that entity. The true test, in the opinion of the S.C. is functional, not how the legal person is born but why it is created. Control by the government over the corporation is writ large and the government company is not mere company but much more than that and has a statutory flavour in its operation and functions. The S.C. held that the legislature has provided S. 2 (n) that in the case of a factory owned by the Central Government, the person appointed by the Central Government to manage the affairs of the factory shall be deemed to be the occupier of the factory. With the result, the S.C.
directed, while allowing appeals, the respondents to
accept the persons appointed by the Central Government to
manage the affairs of the factories as the occupiers of
the factory. |
THE Finance Ministry continues to send out wrong signals to marketmen by announcing all sorts of half-baked schemes to support the sinking US-64 ship. Not only is the UTI losing roughly Rs 5 per unit redeemed, being the difference between the redemption price and estimated current Net Asset Value (NAV), but also offering to lose even more by its ill conceived announcement to offer an even higher redemption rate during November and December. Adding fuel to the fire is the Finance Ministry’s even more disastrous proposal to provide tax breaks to all mutual fund unit holders. While, in the recent past there was a talk of extending some tax concession to UTI’s US-64, but the Ministry is now of the view that such a concession should be uniform for all mutual funds, including the private ones, so that there is a level-playing field. Now, the consequences of such a move would be disastrous as it would not only result in a revenue shortfall, but also jeopardise the prospects of the Public Provident Fund (PPF) schemes which offers 12 per cent tax free income, along with a tax break under Section 88 of the Income-Tax Act. Now, the Finance Ministry would like investors to believe that it is not with the express purpose of bailing out the beleaguered UTI that it has proposed providing tax exemption to dividends received from mutual fund. Ostensibly, it is with the purpose of inducing small investors to return to the market in a big way. Sadly for the Finance Ministry, no one is buying this story, and even if one does, then it only further exposes the Ministry’s serious lack of comprehension of the ground realities in the Indian capital market. For starters, they would do well to provide tax breaks for new issue investments as the first step to try and revive the primary market. Mind you, this would only amount to a drop in the ocean as it will require a lot more than simply offering tax breaks to stimulate investment interest in the minds of small investors who have hitherto received a raw deal at the Indian bourses. While on the topic of small investors, those among them with a long-term perspective would do well to take a closer look at Voltas, which, after struggling for a while, is now on the comeback trail. Voltas is a highly diversified company with interests in room airconditioners, water coolers, refrigerators, freezer and bottle coolers, washing machine, forklift trucks, hydraulic truck cranes, electrical switchgear, machine tools, pollution control equipment and systems, textile machinery and equipments chemicals and minerals and the like. The list goes never-ending. On the other hand, the company has few fully owned subsidiaries which are also into various diversified and unrelated fields. The reason the company had to post dismal performance was its diversification, which did not allow the company to allocate proper resources to different divisions. This in turn made some of the units unviable in the open economy. But the management now wishes to concentrate only on core areas and its management has identified cooling and engineering as its areas of operation. The process of this restructuring is already underway with the company already selling its thermostat unit, which was incurring losses, to Siebe Plc, UK. Further, the company is moving out of switch gear and granite business which have not been performing satisfactorily. Besides, recently the company has signed contract with LG Electronics, to supply one lakh refrigerators a year. This is only a second contract, the first being its contract with another multinational — Electrolux — to manufacture and supply 1.2 lakh refrigerators. This will augur well for the company, as it was thus far incapable of taking on the multinationals in the white goods sector. Now, the prospects of this company seem to be slowly but steadily improving. But, then the million
dollar question now is — how long will the latest
market revival last? |
Vasishti Detergents IT is no secret that Hindustan Lever is a FII favourite at the bourses, and perhaps, rightfully so too. But, what is lesser known is that at least two FIIs have begun accumulating the shares of Vasishti Detergents. Why? Well, for starters, HLL has a sizeable stake in this company, and the grapevine has it that this stake is likely to be raised further within a year. Sensex A market veteran who has been a share punter since time immemorial is not impressed by the ongoing rally at the bourses. He predicts a sharp sensex downswing in the aftermath of the forthcoming state assembly elections on account of political turmoil thereafter. Mind you, he’s been around for donkeys years and knows his onions (!) pretty well. UTI redemption CONTRARY to the tall claims being made by the UTI top brass and all the big talk of the Finance Minister about supporting the US-64 scheme, the grapevine has it that every trick in the book is being used to fob off investors seeking to redeem their units. One such trick is to erroneously print the name of the unit holder on the redemption cheque, thus ensuring that it cannot be encashed and redeemed for some more days or weeks. Rahul Bajaj EVER since the last Union
Budget was announced Rahul Bajaj has not stopped smiling.
His competitors were made to feel the pinch of enhanced
customs duties, and even better, his main competitor ran
into collaborator trouble. Now comes the Buyback
Ordinance. But why should Bajaj be smiling? Well, simply
because his flagship company Bajaj Auto and his
group’s acquisition Maharashtra Scooters have been
rated as being the best placed among the Indian
corporates to ‘Buyback’ their own shares. |
Q: I am a retired government servant, having retired from Haryana Government and am about 67 years of age. I served for 35 years, out of which I was gazetted officer for about 15 years. Since I am in old age now, I, out of my earnings, intend distributing some money among my three children — say about Rs 2 lakh each. So, my question is — “Whether the amount given by me to my children will be taxable since all of them are tax payees and are in service. I am given to understand that one can only make a gift of Rs 30000 only during a year. Shall I give this money to my children by cheques or I can do so by paying them in cash also”. — Ram Kumar, Chandigarh Ans: On the facts stated by you, it is suggested that you should not distribute the money amongst your children before 1.10.1998. The quantum of money which you propose to distribute will be liable to tax on gift. The best solution on your facts will be to give interest-free loan to your children. Later on, through the Will you can pass on the necessary loan amount to the respective persons. On or after 1.10.1998 you may make gift and there will be no tax liability both on the donor and the done. Q: Please explain the responsibility of the concerned department deducting the TDS from the payments made against contract and (i) what are the losses suffered by the contractor (ii) what type of action shall be taken against the concerned department. — Harbans Singh, Ambala Cantt Ans: Generally, the department responsible for making payment to a contractor should deduct 2 per cent of the contract amount as TDS. If the contractor has suffered a loss while filing his Income-Tax return and the tax payable is Nil or the tax payable is lower than the amount of tax deducted at source, then he can file the Income-Tax return and claim refund. The amount of tax deducted at source as per section 194C of the Income-Tax Act has to be deposited by the concerned department deducting the said tax at source within one week from the last day of the month in which the deduction has been made. If there is a default in depositing the tax deducted at source in time, there is a penalty and also prosecution. Q: What is tax liability of 1) Senior citizen widow, income Rs 47000 from interest on pin money from Indian Pvt Co., 2) 60 year old farmer, interest income from Pvt Co. Rs 38000, 3) Work Permit holder services in USA, now major, interest income Rs 29000 from Indian Pvt Co. Principal amount was lent to Co. when boy was minor. — B.S. Gupta, Chandigarh Ans: For the Assessment Year 1999-2000 there is no liability to Income-tax be it the senior citizen or for any individual having income up to Rs 50,000. Hence in your case a 60 year old farmer having interest income from private limited amounting to Rs 38,000 need not file his Income-tax return. Likewise, a person having income of Rs 29,000 who is holding a world permit in the USA also need not file his Income-tax return in India. However, please ensure that if a person is falling within the criteria of the economic indicators, he must file his Income-tax return irrespective of the fact whether he had a taxable income or not. Q: I am pensioner from Haryana State running in 77th year of age. Besides pension, I am running a small scale Industrial unit at Panchkula, for the last 11 years. My earnings during the year 1996-97 were as under: Pension Rs 35,000 During the year 1997-98 (assessment year 1998-99) my net annual income is expected to be as under: Pension Rs 38,000 I have no other income from interest or property etc. Kindly advise if submission of Income-tax returns by me is necessary. If it is necessary to submit the returns, what will be my income tax liability. — P.R. Manocha, Panchkula Ans: On
the facts stated by you for both the years from your
income from pension you will be eligible to a standard
deduction equivalent to 331/3rd of your pension amount.
The net tax payable by you for the above years will be
nil because of tax rebate u/s 88B of the Income-tax Act,
1961. Even when no tax is payable by you, you should file
your Income-tax return because the net taxable amount of
the income is an excess of exempted amount under the
Income-tax law. |
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