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Economy has improved, but inflation worrisome: FM
Cairn refutes govt’s stand on cess payment
Forex reserves fall by $1.02 b
Infosys gets shareholders’ nod for ADR
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Mobile firms inflating figures?
Kingfisher Airlines Chairman Vijay Mallya (L) with Airbus Chief Commercial Officer John Leahy after signing a contract in Mumbai on Saturday. — PTI
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Mayar to invest Rs 150 cr in Baddi
New terminals needed
Medical reimbursement and tax
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Economy has improved, but inflation worrisome: FM
Chennai, December 18 He said the rupee had also strengthened against the dollar and foreign exchange reserves stood at an unprecedented $ 130 billion. The Sensex had crossed 6,400 points for the first time and the government was well on its way to meeting the loan disbursement target of Rs 105,000 crore this year, he added. The Finance Minister claimed, “Even a Bharatiya Janata Party MP openly acknowledged in the House that the Indian economy has further strengthened this year.” However, he admitted the continuing inflation was a cause for concern and said, “Inflation had gone up from 5.56 per cent on December 6 last year to 7.02 per cent on the same day this year.” He felt it was due to the sudden spurt in international crude oil prices adding that the government was making all efforts to bring down inflation. But he pointed out that while crude oil prices had gone up by 40 per cent in a year, the rate of inflation had gone up by only 1.5 per cent. Replying to a question on why the subsequent decrease in international crude prices was not reflected in the pricing of fuel in India, he denied that the crude prices had gone down. He said, “The crude price fell to $ 42 a barrel a few days ago, but within two days, it had once again shot up. And the relevant factor for Indian imports was that the Indian basket had gone up from an average of $ 27 a barrel in 2000 to an average of $ 37 this year.”
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Cairn refutes govt’s stand on cess payment
New Delhi, December 18 “Assessing the impact on Cairn of any potential cess liability in Rajasthan is extremely uncertain at this time,” it said. “Cess is a fixed rate tax and Cairn’s economic interest will be affected to a greater extent by production rates, the prevailing price of oil and the ultimate recovery of reserves in Rajasthan,” the statement said. The Ministry of Petroleum and Natural Gas said the contractor was liable for a cess on the PSC. The notification does not accord with Cairn’s interpretation of either the wording or the intent of the PSC or the underlying legislation and Cairn has notified the Government accordingly, the statement said. The statement said the PSC allowed for cost recovery of any cess paid. Cess is not due and payable until the commencement of production. “Cairn will continue to defend its contractual rights under the PSC and to work with the Government of India and ONGC to resolve these differences,” the statement said.
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Forex reserves fall by $1.02 b
Mumbai, December 18 The Foreign currency assets declined by $1,010 million to touch $1,23,751 million, the RBI said. Revaluation of international currencies, including the US dollar and demand for dollar from corporates and importers contributed to the decline in reserves, reports said. The last decline in the forex reserves was of $1,370 million for the week ended August 27, 2004. Gold reserves and Special Drawing Rights remained static at $4,540 million and $5 million, respectively, the RBI said.
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Infosys gets shareholders’ nod for ADR
Bangalore, December 18 Mr Nandan M Nilekani, Chief Executive Officer, President and Managing Director, Infosys Technologies, chaired the EGM. The Chief Mentor Narayana Murthy and other members of the management were also present.
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Mobile firms inflating figures?
Chandigarh, December 18 There are reasons to believe that some players are giving inflated customer base figures to increase the “valuation” of the company. An examination of the industry reveals that there are two kinds of players — the national mobile operators like Airtel, Hutch, Reliance and the smaller regional operators, like BPL, Spice, Aircel etc. As is happening in the rest of the world, some players are waiting to be taken over by foreign investors/national operators, once the hike in the FDI comes through. It is just a question of “when?” and for “how much?” And this is where the crux and the problem lies. A mobile company’s number of customers is one of the important parameters for a foreign investor evaluating it. The more the number of customers, the higher the chances of the company getting more money from the investor. However, the investment world being a small global club, such “cheating” is likely to put off investors. The COAI reports whatever figure a company gives, without any back-check. As it has not laid any standardised reporting norms, a company can ramp up its figures by using a reporting cycle on pre-paid cards anywhere from 90 days to 180 days. If a customer buys a pre-paid card, uses it for just a few days and then discards it, he is still shown as a customer for the next 90 to 180 days by some companies. The national operators, on the other hand, base their customers on a 60-day cycle, putting them at a disadvantageous position as compared to the smaller players. The COAI needs to set a common reporting format. As license fee to be paid by operators is based on revenue figures, a model could be developed where revenue figures are also factored in while declaring the customer base of the operators.
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Kingfisher to buy 10 A320 aircraft
Mumbai, December 18 The airline will take on lease four new A320s from Debis Air Finance to launch its commercial services from April next year, UB Group and Kingfisher Airlines chairman Vijaya Mallya said here today after the signing ceremony with Airbus Chief
Commercial Officer John Leahy. The new airline would break even in the very first year of operation, Mallya said. The paid up equity capital, which was presently Rs 30 crore, would be doubled by April and go up to Rs 160 crore in 2006, he said. Asked if he would consider an IPO, Mallya said, “We can consider an IPO after 2006 to fund further acquisition”. He said his airline was modelled on JetBlue, a low-cost carrier of US, which had ordered 175 A320s, and its operations would be fully supported by the manufacturers. He said the growing market had prompted him to convert the earlier decision of going in for four aircraft with 10 options to 10 firm orders and 20 options. Airbus Chief Commercial Officer John Leahy said the A320s have proved to be a success with low cost carriers (LCC) as 87 per cent of them fly the A320s.— PTI
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Mayar to invest Rs 150 cr in Baddi
Chandigarh, December 18 The company has acquired over 26 acres of land at Baddi, for setting up a state-of-the-art herbal medicine manufacturing plant, to enhance the production capacity of its time-tested herbal remedies. Mayar India Limited, a Rs 1400-crore group, a well established player in the newsprint and timber industries had diversified in the year 2000 in the arena of herbal medicine by launching its Shivananda brand.
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by A.N. Shanbhag Medical reimbursement and tax Q: The company has taken out a policy (mediclaim) to cover the hospitalisation expenses of employees and their dependants up to a limit of Rs 3,00,000 per dependant. Occasionally, the claims have been made by employees for a sum exceeding Rs 3,00,000. The company’s senior executive committee (called management committee) looks at each claim individually and passes claims in excess of Rs 3,00,000 either in full or in part. Such claims are in the nature of reimbursement to employees for an actual sum incurred by them. The question is, whether the sum reimbursed by the company would be taxable in the hands of employees and as such whether TDS should be deducted and whether the amount needs to be mentioned in Form 16? — Taxpayer A: Yes, it is true that the group medical insurance for employees and their families or reimbursement of insurance premium to the employees who take such medical insurance is exempt. Consequently, the amount of Rs 3 lakh compensated by the insurance company is exempt. The exemption of any excess amount reimbursed by the employer is wholly dependent upon the object with which it is reimbursed. This object can fall into any one of the following: * Reimbursement of expenditure incurred by an employee or any member of his family in hospitals, dispensaries etc., maintained by the government, a local authority or in other approved hospitals. * Payments for prescribed ailments by the employer directly to any non-government hospital approved by a CIT. Where the treatment is taken in private hospitals, the employee should attach with his returns a certificate from the hospital specifying the ailment and also the receipt for the amount paid. * Reimbursement, not exceeding Rs 15,000 in a year, for medical treatment for himself and his family members from any doctor. Repatriate proceeds Q: I am an NRI. I have sold a piece of land given as a gift 24 years ago by my mother. Do I need to deposit the proceeds in a separate or new account opened for capital gain purposes? Alternatively, can I deposit the proceeds in my existing NRO account? What are my options for tax savings, if I cannot put it in PPF or NSC being a NRI? Can I repatriate the proceeds? If yes, how? — A. Lakshmanan A: 1. You can certainly credit the proceeds to your existing NRO account. 2. If you desire to save the capital gains, you may — a) Use Sec. 54F to buy a residential property with the entire sale proceeds. This is not recommended, unless, you do need such a property for your personal use. Or use Sec. 54EC and deposit the capital gains in bonds of NHB or Nabard or REC or NHAI or SIDBI having a lock-in of 3 years. After their redemption, you can repatriate the entire redemption proceeds and the interest after you have paid correct tax thereon, with a ceiling of $ 1 million per fiscal. Since the interest on these bonds is less than 5% p.a. taxable, it may be worthwhile, in a few cases, to pay tax and repatriate the entire proceeds. L&T share value Q: When L&T demerged its cement division, for every 100 shares of Rs 10 (old) L&T shares, 50 shares of Rs 2 paid up new L&T shares were given and 40 shares of Rs 10 paid up Ultratech Cement shares were given. How should a shareholder who bought old L&T shares at Rs 300 value his new holdings for short term gains/losses? — R. Vaidyanathan A: Unfortunately, L&T has not declared the proportion of the capital asset transferred and therefore, it is impossible to arrive at the tax liability of the shareholder of L&T. However, you could split the actual cost in the proportion of the face value ratios to determine the cost of the new shares. Cost of 100 shares (of face value of Rs 1,000) — Rs 30,000. Face value of 50 shares of Rs 2 each of L&T — Rs 100; the cost is Rs 6,000. Face value of 40 shares of Rs 10 each Ultratech Cement — Rs 400; the cost is Rs 24,000. Total cost of these two face values of Rs 500 is Rs 30,000. Mutual funds Q: There is a lot of confusion in the minds of NRI investors over mutual funds. Some mutual funds are deducting TDS on capital gain on Equity schemes at 30%+surcharge+2% education cess whereas other mutual funds are deducting tax only @10%+surcharge+2% education cess whereas. Kindly throw some light on the issue of long-term and short-term capital gains tax(TDS) with respect to investment in equity-oriented mutual funds. — Madhu A: The long-term capital gains (LTCG) from equity-oriented schemes is exempt and, therefore, there is no TDS on the same. On the debt-based schemes, the LTCG is taxable and the TDS on such LTCG is 20%. Though the short-term capital gains (STCG) on equity oriented funds is @10% and the at the rate of the slab applicable to the investor in case of debt based schemes, the TDS has been kept constant @30%. Of course, the education cess of 2% has to be added to all rates above.
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Union Finance Minister P. Chidambaram said here today the Indian economy had greatly improved this year though plagued by the rate of inflation.
