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Auto scene
LIC hints at rise in interest rates
ITC to support Tobacco Bill
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Centre to help Punjab attract new investment
Forex reserves up $287m
LG launches ballad-flat TV
A-I yet to get nod for new aircraft
No tax rebate on car loan
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Maruti sales accelerate by 38.4 pc in April
New Delhi, May 1 Maruti sold 36,928 units in the domestic market in the review month, a company statement said. Bajaj Auto
Bajaj Auto Ltd (BAL) has clocked a 19 per cent growth in two-wheeler sales in April 2004 at 1,05,247 units as compared to 88,749 units in April 2003. It recorded a 22 per cent rise in two and three wheelers at 1,21,399 for April as against 99,430 units in the same period last year, the company said in a release here today. Pune-based auto company sold 90,532 motor cycles during the month, a 27 per cent growth over April 2003.
Honda
Siel
Honda Siel Cars India (HSCIL) said today its April 2004 sales surged 117.3 per cent to 2,793 units over 1,285 units in the same month of last
year. HSCIL, 99 per cent owned by Honda Motor Corp. of Japan and one per cent by Siel group of India, posted a 63.1 per cent rise in sales at 21,703 units last fiscal. The company manufactures sedans, City and Accord, at its facility on the outskirts of Delhi and imports sports utility vehicle, CR-V.
Hero Honda
Hero Honda started the new financial year (2004-05) on a high note, by setting a new sales record. For the month of April 2004, Hero Honda CD-Dawn, in the 13th month of its launch, achieved the milestone of crossing the 5-lakh-sale mark, the fastest-ever in the Indian two wheeler industry. On the sales front continuing its excellent performance, the company registered a sale of 1,96,024 units in the first month of the new financial year. This translates into an impressive growth of 46 per cent over April 2003 sales (1,34,318 units).
— Agencies
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LIC hints at rise in interest rates
New Delhi, May 1 “We see signs of interest rate hardening and there is a slight increase also”, LIC Chairman S.B. Mathur said here at an insurance seminar organised by Birla Institute of Management Technology. Observing that the yields on Government securities had risen to 5.23 per cent during October 2003 as compared to 5.11 per cent in the previous year period, he said “there was ample liquidity but market expects interest rate to go up marginally.” At present, interest rates on small savings have been aligned to the movement in the yields from G-secs. “Again there is a feeling that interest rates will go up,” Mathur said. This apprehension comes in the wake of US Federal Reserve Chief Alan Greenspan recently indicating that interest rates could go up globally. Asked if it could affect the returns on Varishta Pension Bima Yojana, he said, “if interest rates go up, then to that extent government subsidy declines.” Stressing that one has to live in such an environment where interest rates could change in any direction, he said it would thus pose challenge for the investment planners in the mutual fund and the insurance sectors and noted that there were many hedging instruments for mitigating interest risk.
— PTI
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ITC to support Tobacco Bill
Kolkata, May 1 “We are obviously going to comply with the legislation (Tobacco Bill). There cannot be two views on that,” ITC Chairman Y.C. Deveshwar told PTI here today. The ban on advertisement of tobacco products, which comes into effect today, will also force major tobacco companies like ITC and Godfrey Philips to spend less on their advertisement budgets. On an average major Indian companies spend Rs 360 crore annualy on advertisements. Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, not only bans smoking in public places, but also prohibits promotion of tobacco products through advertisements and sponsorships. ITC Ltd is believed to be the largest spender on tobacco advertisements and at one stage was the biggest event- sponsoring tobacco company. Giving a detailed reaction on the new legislation, an ITC spokesman said, “As a responsible company, ITC will fully conform with the legislation in letter and spirit.” He also said ITC had announced its decision to support the government in its endeavour to enforce this legislation three years ago when the government had, for the first time, announced its intention in this regard. — PTI
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Centre to help Punjab attract new investment Chandigarh, may 1 Mr Agrawal said the state government could convert some existing focal points with similar industrial concentration into industrial parks. The PHDCCI was asked to conduct the feasibility and propose locations appropriate for such estates and parks. Mr H.C Sood, member, Operations, PSEB, revealed some of the salient features of tariff petition for 2004-05 to be submitted to the Regulatory Commission before May 31. Some of the incentives proposed for the industry are elimination of the minimum monthly charges, introduction of a two-part tariff on the lines of other states, recovery of security and service on KVA instead of KWH, rebate on hi-end consumers from 3 to 6 per cent, reduction in tariff hour for power intensive units and
incentives for maintaining a better power factor.
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Forex reserves up $287m
Mumbai, may 1 According to the Reserve Bank of India (RBI)’s weekly statistics, the foreign currency assets which surged by $291 million to $112.394 Billion during the week, contributed the entire growth in the forex reserve, while the gold reserve and Special Drawing Rights (SDRs) remained unchanged at $4.198 billion and $ 2 million
India’s reserve position in the International Monetary Fund (IMF), which also included in the total forex reserve from the week ended April 2, keeping line with the international practice, declined further by $4 million to $1.285 billion during the week.
— UNI
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LG launches ballad-flat TV Chandigarh, May 1 Announcing the launch, Mr Kim, Managing Director, LG India, said: “The focus in LG has always been on the consumer, prompting us to regularly provide them with new and innovative products. The market in Punjab has matured tremendously and recognised as a high-growth area for LG.
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IBP new MD
New Delhi, May 1 |
by K.R. Wadhwaney
A-I yet to get nod for new aircraft Like Indian Airlines chairman Sunil Arora, Air-India chief V. Thulasidas talks only when it is absolutely necessary. He believes that actions speak louder than words and international airline has to be used as a commercial venture and not a social responsibility. A seasoned bureaucrat Thulasidas has gone on record as saying that expansion is linked with market and Air-India will spread its wings wherever there is demand. Growth, according to airline officials, is key to success. “We have not kept pace with many foreign international carriers for several reasons and we have to catch up to stay afloat in the intense competitive environment”, said a senior airline official. Mr Thulasidas has reportedly said that growth is essential but growth must lead to profitability for the company to sustain. While airline is looking for new avenues, its team of officials is currently engaged how to reduce over-head expenses. As bad memories of terrorist onslaught in 2001 are dying, there is a positive growth in incoming traffic. There are signs of out-bound traffic picking up and experts are of the firm belief that ‘happy days of aviation are on the anvil’. The Indian Association of Tour Operators (IATO) is now back in business after internal hiccups. This is a healthy development. Air-India is yet to get approval for buying new aircraft, which can be effectively utilised on long haul and medium haul operations. The approval can now be possible only after formation of new government. Until then, the national carrier has been concentrating on leased aircraft. It has already acquired 14 and a few more are expected to be inducted soon. There is a distinct possibility of Air-India starting a west bound flight from Chennai. Mr Thulasidas was in Chennai recently. After detailed discussions with officials of different areas, it seemed he was convinced that Chennai was a potential market for the flights to operate. While Air-India’s plans for operations from Chennai are on drawing board, Indian Airlines has already decided to start a second flight between Chennai and Singapore every day from May 1. There is a huge demand on this route. IA has several other plans for expanding its wings in international skies. This sudden upsurge to start operations ex-India is because the world Travel and Tourism Council (WTTC) has ranked this country as second fastest growing tourism economy. Growth is indeed on cards but there is an urgent need to have hotel rooms for middle class tourists. “We should be able to cater to the needs of all types of tourists”, said a senior official of the tourist industry. The authorities have worked out detailed plans to make the Indira Gandhi International Airport (IGIA) more secure than it has been. It is a healthy concept but it will yield results only when there is coordination among different agencies working at the IGIA. The amalgamation of several existing structures is one thing but providing friendly ambience to the terminal building is quite another. The need of the hour is to have trained officials to reduce passengers’ problem instead of harassing them, as it has been happening regularly.
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by A.N. Shanbhag No tax rebate on car loan Q: I wish to buy new car, and want your advice on whether to use my funds or take a car loan. I can get a loan of Rs. 3 lakhs to buy the car @ 7.0 per cent interest on monthly basis for 5 years. The EMI per lakh is Rs. 1,974 per month. i.e. Rs. 1,974x3= Rs. 5,922 p.m. payable for 5 years. I can earn 8.0 per cent interest (taxable) and at the moment and I am in the 10 per cent tax bracket. — A. H. Choksey A: The exact interest rate works out 7.09 per cent. I hope you have given the exact figures and the loan amount includes the one-time processing charges. I also hope the vendor does not give any discount if the buyer is able to give down payment. In any case, does it makes any sense to earn Rs. 24,000 interest (on Rs. 3 lakh @ 8 per cent), pay tax of Rs. 2,400 (10 per cent bracket) and pay Rs. 2,127 (@7.09%)? You retain Rs. 263 with you. Is it worth the trouble? I strongly feel that if you are in a position to buy a car with your own funds, do so. Take a loan, if you are a businessman or a professional and therefore, are in a position to claim deduction for interest against your business income. Otherwise, there are no tax concessions on this interest or capital repayment on car loans. It is only housing finance that is connected with tax concessions. Monthly income scheme
Q: My mother had invested a sum of Rs 3 lakh in the MIS of the Post Office (PO) in her name after retirement last year. Subsequently she had invested another Rs 3 laks in the MIS of PO with my father being the second holder in the new a/c as per the provisions governing the scheme. Unfortunately, in April 2003, my father expired. My mother is interested to continue with the MIS of the PO for both accounts since she has locked into a rate of return of 9 per cent, which was prevailing when she opened the MIS as against the rate of 8 per cent, which is prevailing now. As per the rules governing, the MIS of PO can my mother continue with the second account where my father was the second holder & request the postal authorities to add my name in lieu of my father’s name as the second holder, since the date of his death in April 2003. When I approached the postal authorities they were not clear about the rules. Can I become the second holder of the second MIS a/c or will my mother have to close this account prematurely for no fault of hers. Kindly enlighten me as to what are the provisions. — Haridas M. Sambhat A: Premature withdrawals are allowed any time after expiry of one year. Penalty of 3½ per cent (reduced from 5 per cent by Notification GSR758(E) dt 23.9.03) of deposit amount shall be deducted if withdrawals are effected within three years; no penalty thereafter, other than loss of the bonus. If nomination is not made at the time of opening the account, it may be made by the depositor at any time after the opening of the account by means of an application, accompanied by the pass book to the Postmaster of the post office. In the case of death of the depositor before maturity, the account may be closed and deposit refunded with interest up to the month preceding the month in which the refund shall be made to the nominee/legal heir. Such withdrawals will not attract the penalty of 3½ per cent for premature withdrawals within three years but there will be no bonus. The nominee/legal heir will not be allowed to continue the account by transferring the same in his name after the death of the depositor. Applying these rules in your case, your joint account has become a single account on the death of the other joint holders. Consequently, you will be surpassing the ceiling of Rs. 3 lakhs for single accounts. You will have to encash this account
Gift tax
Q: I am a regular reader and have certain queries regarding the Income clubbing. I am a salaried employee and already in the higher tax slab. I have a mentally-retarded child (13 years old) and I am claiming the benefit under Sec 80DD. I want to transfer to her, shares of listed companies without any consideration (i.e. gifting). 1. What are documents and proofs needed to gift, so that it not questioned by the tax department. 2. What will be the tax implications of the following incomes? a) Dividend from these shares b) ST Capital Gain c) LT Capital claim and d) Any future income arising out of reinvesting the same. The child being a retarded either my wife or me will be the guardian for the account. Considering her handicap, we have to remain her guardian even after she becomes major. Hence, whether it will be clubbed with my or my wife’s income? 3.Is there any limit to the amount I can gift to her in a financial year? — J. Y. Shankar A:
Please accept my sympathy. I pray for her recovery. Until last year, in the case of an assessee having a handicapped dependent, both following deductions could be availed of —- 1. Sec. 80DD where the assessee can claim the benefit and 2. Sec. 80U where the child, even a minor one, can directly claim the benefit. Now, only one out of the two can be chosen. The income of a handicapped child is not clubbed in the hands of the parent. The disability is classified into two parts as defined under the Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1996. Disability over 40 per cent is non-severe and that over 80 per cent is severe. The deduction allowed will be Rs. 50,000 for non-severe and Rs. 75,000 for severe disability. You have been opting for Sec. 80DD. I would like you to consider the possibility of building up an estate in the name of the child. A gift in foreign exchange by NRIs was always tax-free. Now that the Gift Tax Act has been abolished w.e.f. 1.10.98, all gifts, made by anyone, NRI or otherwise, through foreign exchange or Indian assets, are free from gift tax. 1. The procedure related with gifts is simple. All that is required is an offer by the donor and acceptance thereof by the donee in black and white. To safeguard against any hassles, the donee should request the donor for a gift and then the donor should remit the amount to the donee. Alternatively, the donor can offer the gift. In either case, it is necessary for the donee to accept the gift in writing (may be through a thank you note). Only then it would be considered as a gift in India. If your child is not in a position to sign, the other parent can accept the gift on his behalf. 2. The tax implications on income from various sources are the same for a handicapped assessee and a non-handicapped one. 3. There is no limit on the amount of gift by any person to any other person.
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