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Monday,
August 18, 2003, Chandigarh, India  
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CII
bullish on GDP growth Punjab
cold stores in hot water Units seek
ban on steel export Book
profit in steel stocks |
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Rebate
under Section 88
Daewoo
suppliers face bankruptcy
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CII bullish on GDP growth New Delhi, August 17 “In view of our revised agriculture growth estimate for 2003-04, we are revising up our GDP growth forecast to a range of 6.5-6.8 per cent,” the CII said in its report ‘State of the Economy’ released today. The high growth projections of the association is based on the assumption that the farm sector will continue its upward march and will grow in the band of 4 to 5.5 per cent, while the industry and services will grow at 6.5 per cent or 7.5 per cent in the current fiscal. This will be supplemented by a robust 11 per cent growth in foodgrain production, the CII estimates said. Despite the weak agricultural
performance in 2002-03, GDP from industry and services grew rapidly at 6 per cent and 7.1 per cent. The Index of Industrial Production (IIP) grew by 5.8 per cent while the manufacturing sector alone grew at 6 per cent. Data for 2003-04, available only for the first two months of the year, supports an upturn so far; the IIP grew by 5 per cent during April- May, 2003, compared to 4.1 per cent in the same period last year. Expectations about growth in the current year, however, vary considerably. Some experts contend that the upswing in the industry will not sustain just as a similar upturn in 2000-01 had failed to sustain. Others, including the CII, are optimistic and do not see any reason for this upswing to end soon. Annual data is often misleading and a closer look at the cyclical pattern of industrial growth reveals that the upswing has just begun and has some way to go before it
peaks, the CII said. Moreover, after a long period of stagnation, the capital market has begun to show signs of life. The BSE Sensex has touched its highest level since March, 2001, as the CII puts it: decisively breaking the
barrier of 3,500. Good corporate results as well as issues from good companies such as Maruti Udyog are being credited for the revival of the market. The data also shows an increase in FIIs interest in equities: the net FII investment in equities during the first six months of 2003 was $1.2 billion compared to a little less than $500 million during the same period last year, the CII said. Regarding the price line at the macro level, the CII said the “average inflation for 2003-04 is likely to be around 5 per cent while inflation in manufactured products is likely to be lower at around 4.5 per cent.” The CII expressed concern over the government’s gilt buyback programme saying “it will add to the fiscal deficit.” While the net present value of savings works out to Rs 10,000 crore, it cost government Rs 14,000 crore for swapping the high cost debts with low cost ones. “Clearly, the exercise has not been worth it for the government,” it said.
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Punjab cold stores in hot water Chandigarh, August 17 A spokesperson for the recently formed cold store owners’ association told TNS that on the one hand, the government talked of diversification and establishing cold-chains for transportation of perishable items like flowers, fruits, vegetables and milk, but on the other, it adopted a callous attitude towards the cold stores industry. The association has been formed at the initiative of cold stores owners of Patiala. In December last year, the association sent a memorandum to the Chief Minister and a few bureaucrats concerned. “There has been no response till date”, the spokesperson said. Much to their dismay, the cold store owners have found contradictions in what was promised. Even the incentives promised and subsidies sanctioned were not released. The electricity tariff has been hiked. The minimum power tariff has been increased from Rs 25 to Rs 200 per kw during the period the cold stores do not function. The crash of the potato crop every other season has harmed the industry as neither traders nor farmers care to claim their merchandise, causing huge losses to owners. With no buyers for potato and the rent for the entire season being just Rs 30 per bag, the outcome has been a huge deficit in repayments to financial institutions. The industry demands that the state government fix not only minimum support price of potatoes but also the minimum storage rent of potatoes. The export of potatoes should be encouraged , besides promoting value addition to potatoes through processing units. The cold stores owners demand that banks and financial institutions waive penal interest on the loan, convert simple interest into term loan, defer the recovery of principal amount and reschedule loan instalments along with outstanding interest. The cold stores which do not have ice factories should be treated as “seasonal” enterprises, like the rice sheller industry. These units must be given the facility of disconnection of power.
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Units seek ban
on steel export Jalandhar, August 17 At a meeting of the Hand Tools Panel of the EEPC held here today, it was decided to close down around, 3000 manufacturing units on August 29 to register their protest against the failure of the Centre to control the price hike during the past one year. Convener of the panel of the EEPC Sharad Aggarwal alleged that the price of steel flats and rounds have gone up from Rs 14,400 per metric tonne to Rs 20,000 mt, while that of HR sheets have touched Rs 24,000 mt as compared to Rs 15,000 during 2002-2003. “The main reason behind the increase in the price of steel is unrestricted export to China by SAIL, Rashtriya Ispat Nigam Limited (RINL), which resulted in a major shortfall in the country. Besides, the speculators and hoarders created panic to gain maximum profits through sale of steel at hefty price,” he revealed. Demanding a ban on the export of steel and removal of restrictions on import, Mr Aggarwal said unrestricted export of steel to China at Rs. 15,220 mt, which was, however, being sold in the domestic market at Rs. 24,000 mt has disappointed the hand tool exporters, who are facing a threat of being blacklisted by their foreign buyers for failure to meet export obligations. In addition, the Union Government has also imposed anti-dumping duty on cheaper steel being imported from Russia and Ukraine and has fixed a minimum floor price for it, which is highly deplorable, he said.
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Book profit in steel stocks The share market displayed its nerves of steel as it powered ahead and cemented more gains for yet another week. The Sensex gained 37 points for the week to close at 3,921. The market touched an intra-week high of 3959, a level it has not seen since March 12, 2001. Nifty gained 25 points to close at 1,248. The sharp gains in the Nifty (compared to the Sensex) stemmed from a rally on the Steel Authority of India (SAIL) counter which was recently included in this index. Aggressive buying by Flls and domestic funds and participation of retail investors boosted the market. Moreover, the tabling of a new Banking Regulation Act coupled with the hope of further hike in steel and cement price added fuel to the market. It is the right time for investors to offload positions by booking profit. No fresh investment should be made at this juncture. Investors, who missed the rally, should not be lured now by the prospect of making a quick buck in the continuing rally as the rally seems to be at its end and they may end up with burnt fingers. On technical charts the last wave of the index is now extending to new highs. This process can
continue for some time as the price of stocks may continue to climb upwards even though the index itself might seem to be crawling ahead on a lower momentum. This falling momentum will cause a negative divergence on charts, giving warning signals. The Sensex, therefore, can extend to 3930-3950. Steel Automobiles FMCG |
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by R.N. Lakhotia Rebate under Section 88 Q: My query is if gross salary exceeds Rs 1,50,000, but on account of certain deductions viz. standard deduction, deductions of Section 80L deductions of HRA and housing loan repayments etc. net taxable salary goes down below 1,50,000, the rebate for investments under Section 88 should be 20 per cent or 15 per cent. My employer has calculated 15 per cent rebate for investments under Section 88 that comes to Rs 10,500 and Rs 8,700 as income tax has been deducted. In a similar case rebate calculated is 20 per cent by some other branch of our institution. Kindly give the correct position. —
Chander Arora, Panchkula Ans: To decide whether the tax rebate would be @ 20 per cent 15 per cent, we have to see the amount of gross total income. Thus, if the Gross total income is in excess of Rs 1,50,000, then the tax rebate would be @ 15 per cent. It may be noted that deduction u/s 80L is not to be made to arrive at the above figure. The standard deduction from salary income and deduction for HRA will be made to arrive at the gross total income. The housing loan repayment qualifies only for tax rebate; hence the same will not be deducted from the Gross Total Income. Death compensation Q:
My son, a Development Officer was relieved from duty on June 5, 2003 by Oriental Insurance Company under Special Voluntary Retirement Package. On June 27, 2003, he suffered brain haemorrhage and was admitted in Maharaja Aggarsains Hospital at New Delhi. He was discharged from the hospital under Coma grade II and had expired on July 11 at Jind. The company had released Rs 1,41,000 towards Leave Encashment and Rs 7 lakh towards ex-gratia grant under the package which include Rs 2,50,000 as gratuity and 60 days’ salary for each completed year of service. The company had withheld Rs 2 lakh towards
TDS. As per the notification, in the event of the death of Development Officer who was relieved under the package the compensation which would have become due and payable to the deceased Development Officer shall be paid to the person nominated to receive such dues. Accordingly the company had issued the above amounts cheque in the name of his wife being a nominee who is a household lady having no other income. Kindly clarify whether this amount of compensation is exempt from Income Tax. If yes, kindly quote the Section or give reference of the notification if issued in this regard. —
R.P. Gupta, Jind
Ans: After the death of your son, his income would be computed for the current financial year and he would be taxed on the income accruing to him on the date of death including the retirement benefits received by him. Although the payments have been received in the name of the wife of the deceased, yet income-tax would be deducted at source in respect of the payments received on behalf of the husband. Please note that next year income-tax return would also be required to be filed by the wife of the deceased in the name of her husband wherein the income received in the name of the husband would have to be reflected. Medical allowance Q:
I have come to know from a certain employees bulletin, the following information. That the Government of India, Deptt. of Revenue CBDT Ministry of Finance vide 275/192/ 200 I.T.C. (B) 23.12.2002, and Punjab Finance Deptt’s Circular No. 13/2002, vide letter No. 2/9/92-T.P.C/04 dated January 7, 2003 have certified the definition of salary for calculation of perquisite value is the same — the only change is that medical allowance and reimbursement of serious illness as prescribed in Proviso 17 (2) (vi) have been excluded from the definition of salary for this purpose (i.e. computation of income-tax for the Assessment Year 2003-2004). Please clarify whether the fixed medical allowance @ Rs 250 p.m. paid to government employees of Punjab and other states, is covered under the amendment. The query will benefit lakhs of employees. —Ashok K. Juneja, Patiala
Ans: The Fixed Medical Allowance received by the employees of Punjab Government and other states would be fully taxable as per the provisions contained in the income-tax Act, 1961. You may send me the copies of circulars cited in your letter so that we can examine the matter in greater length.
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