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RBI hikes CRR for banks in bid to contain inflation
Jet announces new fares
SIA to buy 31 Boeing aircraft
Aviation
Notes
Investor
guidance
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Singapore woos students
Cipla to set up Rs 85-cr drug factory
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RBI hikes CRR for banks in bid to contain inflation
Mumbai, September 11 The CRR would go up to 4.75 per cent from 4.5 per cent of NDTL effective fortnight beginning September 18 and subsequently to five per cent from fortnight beginning October 2, an RBI said in a release today. The measure is aimed at lowering the rate of inflation in the country. From September 18, the banks would be paid an interest of 3.5 per cent per annum on their eligible cash balances maintained with the central bank under the CRR requirement as against the current practice of payment at the bank rate (6 per cent). The payment of interest on monthly basis would continue as at present. It was indicated in the annual policy of 2002-03 that the RBI would continue to pursue its medium-term objective of reducing CRR to its statutory minimum of three per cent, while retaining the option to use the CRR in both directions for liquidity management as and when essential, in addition to other instruments. On remuneration of eligible cash balances under the CRR, the RBI said their Internal Group on Liquidity Adjustment Facility (December 2003) had recommended that with the scaling down of the CRR, coupled with a decline in interest rate structure and increasing liquidity needs, the degree to which the CRR had been impacting banks as an implicit taxation earlier is considerably less in recent period. Accordingly, the remuneration of eligible cash balances at the bank rate was no longer justifiable and remuneration of the CRR, if any, be delinked from the bank rate and placed at a rate lower than the repo rate.
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Jet announces new fares
New Delhi, September 11 The ‘Check Fares’ would be 30 to 45 per cent lower than the normal economy class fares and available near the date of travel in two levels, the premier private carrier said in a release. Under the latest pricing initiative, which would complement the existing advance purchase (Apex) fares, the passengers would be offered innovative bargains in accordance with the ongoing review of air ticket prices. The ‘Check Fares’, operative on select flights, include Delhi-Mumbai (Flights 9W 302, 305, 306 and 353) at a cost of Rs 4250 in Level-1 and Rs 5150 in Level-2. Similarly, flights 811 and 802 on Bangalore-Delhi route would cost Rs 5,855 and Rs 7,150, while Delhi-Hyderabad flights 825 and 828 would be priced at Rs 4,750 and Rs 5,950. The flights between Delhi and Guwahati (9W 601 and 602) would cost Rs 5,750 and Rs 6,750 in Levels-1 and 2, while Mumbai- Bangalore flights 443, 417, 444 and 418 would cost Rs 3,250 and Rs 3,750, the release said.
— PTI
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SIA to buy 31 Boeing aircraft
Chandigarh, September 11 Eighteen of the 31 aircraft are firm orders for delivery between 2006 to 2010, while the remaining 13 are subject to exercise of purchase rights. At list prices, the order is worth $ 7.35 billion, including the cost of spares and spare engines. General Electric GE90-115B engines will power the twin-engine aircraft. SIA CEO Chew Choon Seng said the evaluation process was comprehensive and the competition between Boeing and Airbus for the order was very keen. The airlines, along with Hong Kong Tourism Board, Macau Government Tourist Office, Malaysian Tourism Promotion Board, Singapore Tourism Board and Star Cruises also hosted a Travel Mela at the Chandigarh Club today. The mela was organised to spread awareness among leisure travellers in Chandigarh about the outbound tourist destinations and travel services to Hong Kong, Macau, Malaysia and Singapore.
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Aviation Notes by K.R. Wadhwaney
Cabin crew is a vital segment which may make on mar an airline’s reputation. Hostesses responsibilities on board the flight are
immense. But their actual competence and skill surfaces when an emergency takes place. Here trained crew members can handle an arduous situation meticulously while untrained crew an make the passengers miserable. Globally, chosen hostesses are subject to rigorous training before they are placed on the flight under the watchful supervision of a highly-trained senior hostess. Air-India, wisdom which has started placing untrained hostesses on the aircraft courting is unnecessary and avoidable controversy. To say that there is nothing written in the Aircraft Act prohibiting an airline from flying any person as staff in addition to the minimum number of stipulated cabin crew members is shocking. The argument is as illogical as allowing an untrained person to sit in the cockpit along with the commander and the co-pilot.
Fleet acquisition There is uncertainty in two national carriers. Air-India and Indian Airlines, as far as fleet acquisition goes . The IA’s board is scheduled to meet on September 15 but no decision is expected because there is a difference of opinion among members. Quite a few of them do not seem to be on the same wavelength as the Minister of State for Civil Aviation, Mr Praful Patel. If the re-bid move succeeds, there will again be intense tug-of-war between Airbus Industries and Being and the decision of augmenting fleet will receive needless setback. While world’s manufacturing leaders will be busy lobbying the two national carriers will continue to stay imprisoned at the bottom of the civil aviation. The need of the hour is to remove redtapism and allow airlines to expand their fleet without any loss of time.
No-frills Aviation fuel prices are rising alarmingly making it difficult for even the established airlines to cut even. The load factor has shown signs of improvement but not sufficient enough to earn profit on several uneconomical routes. Hard days are ahead and there is a little chance for an average players to survive because competition has become very tough. In this murky scenario, no-frills operation is only adding to the confusion. While the Kingfisher operations are likely to start in January 2005, Air Deccan is ‘eyeing’ on capturing the Gulf traffic. The inaugural Air Deccan flight from Delhi to Chennai on September 6 was not without
problems. While the delay of 90 minutes could be explained away there was no justifiable reason for not stocking sufficient food for passengers. The passengers were paying for the food but there was no food on board the flight.
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Investor guidance by A.N. Shanbhag Q: Rules of the Senior Citizens Savings Scheme have now been notified. The provisions of TDS are unclear and some of the post offices (in Thiruvananthapuram) have informed the elderly that TDS will apply in all cases. Seniors can submit Form 15H and claim no deduction as long as the tax liability is nil as opposed to when the total income is less than the taxable limit (Rs 50,000) as in the case of assesses below 65 years. The scheme is by and large for Seniors and post offices should be accepting the form 15H and not deduct interest at source. Some clarification is needed on the matter. — M. Singokulam A: It is my considered opinion that TDS is not applicable on this new scheme. Some post masters in some locations cannot take a view on this subject and start applying TDS, unless there are clear-cut instructions for them to do so and the rate of TDS is specified. I request you to bring this irregularity to the notice of the Small Savings Commissioner whose office is in Nagpur. Capital loss Q:
Budget 2004 has proposed that equity/equity-based mutual funds will enjoy a reduced rate of 10 per cent Short Term Capital Gain (STCG) tax from the date of publication of the official gazette (say, x). That means before the date ‘x’, STCG will be as before i.e. 30 per cent (if the individual’s tax slab is so). My question is that can any Short Term Capital Loss incurred on equity/equity based mutual fund before date ‘x’ be allowed to set off with the STCG incurred on equity/equity based mutual funds after date ‘x’? Debt-based mutual fund will have a 30 per cent STCG tax as before. So will the STCG incurred on debt-based mutual funds be allowed to set off with the STCL on equity which will have a reduced rate of tax 10 pc? — Nilay Kumar Hazra A:
All short-term capital losses can be set off against short-term capital gains. There is no change in this regard in the Budget proposal. Since LT gains are subject to lower incidence of tax, setting off LT losses against ST gains is against the interest of the revenue. Therefore, LT losses can be set off only against LT gains. ST losses can be set off both against LT and ST gains. Unsettled LT and ST loss shall be carried forward separately for eight years to be set off only against LT gains and LT/ST gains respectively. Now that the ST loss arising from the sale of equities and equity-based MF units are charged to tax lower at 10 per cent setting off the same against the STCG arising out of G-sec and debt-based MF units (or other types of assets) is against the interest of the revenue. The Budget does not propose to stop this set-off. This point appears to have escaped the authors of the Budget.
PAN for NRIs Q:
Because of the new tax law, I understand I will have tax deducted at source from my NRE SB account. I am a US citizen, NRI, POI. Is it now mandatory for me to get a PAN tax number? — Rajeev Batra A:
If your income chargeable to tax from all Indian sources is over the tax threshold of Rs 50,000 you have to file the tax return, even if your tax liability is nil. And this rule is independent of the amount of TDS. If your liability happens to be more than the TDS, you are required to pay the additional tax. If it happens to be less, you can get a refund from the department, but only after you file the returns and claim the refund. You require a PAN in case you file IT returns.
Tax-free dividend Q:
As we all know dividends are tax free at the hands of investors in case of equity funds , also mutual funds are paying 12 per cent tax on dividends declared by debt funds. I would like to know whether the status of dividends declared by debt funds are tax free at the hands of investors ? If not, may be this will become a case of double taxation, whether we have to show the dividends received in our tax returns Please clarify. — R. Pitchaimoorthy A:
On debt-based, the dividend distribution tax (at 12.8125 per cent earlier and 13.06875 per cent as per Budget 2004) is paid by the MF (effectively by the unit holders). The investor does not have to pay any tax on the dividend received. In other words, the dividend is tax-free both from the debt-based because of the dividend distribution tax and it is tax-free in the case of equity-based schemes because of special provisions u/s 115R(2) which were valid for one year commencing from 1.4.03, but the Budget proposes to extend it without any time limit.
TDS for NRIs Q:
I am an NRI working in the Gulf. Following the recent decision to tax the interest on NRE/FCNR deposits, it is not clear whether the tax will be deducted at source and whether the tax would be imposed on a retrospective basis or the tax is applied only to fresh deposits from September 2004. Is it correct that the interest will be taxed only when it goes beyond Rs 1 lakh? What is the maximum deposit amount that one can keep in bank under a single name in a single branch to avoid tax? — Selvaraju A:
The TDS will be slapped even on your existing deposits and there is no minimum threshold beyond which the interest is taxable. In other words, the TDS is applicable even if you earn an interest of just Re 1. The date for bringing the deposits to tax has been extended to April 1, 2005. The Budget has also proposed to render income up to Rs 1 lakh tax-free. However, for this tax return has to be filed and from the tax worked out, a rebate up to the tax payable can be claimed under section 88D. For example lets take the case of an NRI whose only Indian income is the interest on deposits. Lets also assume that such interest is at 3 per cent. In such a case as much as over Rs 37 lakhs held in deposits would be rendered tax-free. This is because at 3 per cent a deposit of Rs 37,33,333 will earn interest of Rs 1,12,000. Rs 12,000 would be tax deductible u/s 80L leaving an interest income of Rs 1 lakh which in any case is tax-free by virtue of Sec 88D above. The only problem here is that irrespective of all this, TDS will be applicable. The return has to be filed and in any case the NRI would need to file tax returns to claim refund. (The figures mentioned above are the actual numbers, practically deposits would be accepted in terms of round figures).
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Singapore woos students
Chennai, September 11 Australia, the US and Great Britain had been trying to spread their education market in India. And now it is the Singapore Tourism Board, which has taken the task of marketing education in India, albeit in an aggressive manner. The Singapore Tourism Board recently organised a two-day Singapore Education fair here, which attracted a large crowd. It is conducting a two-day fair in New Delhi currently to attract a large number of students from north India, particularly from Punjab and Haryana who prefer to study in the West. The board’s sole objective is to enrol as many students as possible from India with universities in Singapore. Singapore offers a Unique Selling Proposition (USP) —“Western-based education in an Asian environment.” Many schools there have Tamil as the second language. The country’s approach towards education is cost effective and it is also capitalising on the traditional links with India. According to Mr. R Rajaram, deputy director, National University of Singapore, “Culturally, Singapore has many traditional links with India. There are many Indians living in Singapore and students can feel at home.” Compared to expensive education offered by universities in the West and Australia, Singapore universities can be afforded by Indians. On an average a student needs to spend approximately Sin $ 6,200 per year, which is equivalent to Rs. 1,61, 200 and if he or she enrols in a public university, the fees is subsidised by the Education Ministry of Singapore. Though Singapore offers a wide range of courses the one, which is most in demand among Indian students is engineering. Culinary science is another course preferred by many Indian students because it is a comprehensive course and the jobs were assured, he added.
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Cipla to set up Rs 85-cr drug factory
New Delhi, September 11 “Though the Karnataka Government has given the clearance to us, we are currently awaiting a formal nod from the state industrial area development board, apart from the approvals like the Consent for Establishment from the Karnataka Pollution Control Board,” sources in Cipla said. The sources said the company has generated its revenues for investment for its second plant in Bangalore from its own earnings and will not go in for any external borrowings. This is the second facility on the outskirts of Bangalore.
— PTI
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