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Budget may rationalise tax incentives for savings
Punjab must gear up for 2007, says
Centre, states to share profits under NELP
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FinMin against EPFO investing in POs
ONGC to invest Rs 569 cr in Heera offshore field
Dabhol project solution in sight, says Sayeed
Rs 26,000-crore impact of finance panel’s report
Per capita income rises
SBI buys 51 pc stake in Mauritius bank
Ten Sports signs 5-year contract with WWE
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Budget may rationalise tax incentives for savings
New Delhi, February 3 Sources said the government was considering restructuring the existing system of tax incentives for savings as it is “inefficient and iniquitous”. Adequate attention would be given to encourage public savings through appropriate tax incentives by introducing “a simple and easy-to-understand system”. “The objective is to remove the distortions in the existing tax saving instruments. There will be incentives, as the level of domestic public savings has to grow. The tax incentive system for savings, therefore, has to be more efficient. The Budget is likely to contain measures to make the system favourable towards the lower income bracket”, sources said. Currently, a wide range of tax exemptions is granted to personal income tax assessees under various financial and government administered savings instruments. These include premia paid under the life insurance policies, deferred annuity plans, provident funds, superannuation funds, post office savings deposits, investments made in central government securities, post office savings bank deposits, equity and debentures of infrastructure companies and other similar schemes. Exemptions are extended under various sections of the Income Tax Act such as Section 88 and Section 80. Sources said that the Budget is likely to contain measures to remove “distortions” in the present system of exemptions. Saving instruments with similar maturity but different tax concessions result in different effective yields, which involve a distortion. “At present, there is a bias in favour of investment in short-term instruments, thereby creating serious distortions in the allocation of savings”, sources said. Sources also said the present system of tax incentives for savings is “regressive” in general as the deductions from income are largely in favour of the upper bracket taxpayers. In addition, inequities of existing system of tax incentives have also arisen from inadequate information to the taxpayers. This is because of the rather complex nature of the system. Consequently, this distorts the information efficiency of the capital and debt markets and results in misallocation of financial resources, source said. The demand of the Left parties to raise the corporate tax rate further is unlikely to be met. In fact, the corporate tax rate could be integrated with the peak income tax rate of 30 per cent, although it could come along with fewer exemptions. Currently, the corporate tax rate in India is 35 per cent for domestic companies and 40 per cent for foreign companies. In addition, a surcharge at the rate of 2.5 per cent thereon is also payable plus 2 per cent education
cess. The effective tax rate for domestic companies thus comes to 36.6 per cent and for foreign companies it is 41.8 per cent.
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Punjab must gear up for 2007, says PHDCCI chief
Chandigarh, February 3 This was stated by Mr K.N. Memani, president, PHD Chamber of Commerce and Industry (PHDCCI), after a meeting with the officials of the Punjab government and the Governor, Gen S.F. Rodrigues, here today. Mr Memani said while agriculture had reached its saturation point and could contribute to the GDP only after value addition by way of food processing, encouraging industry was the only alternative with the Punjab government. “They have to act now not just by creating a conducive environment to the industry’s growth but also providing infrastructural facilities. The tax holiday in Jammu and Kashmir and Himachal Pradesh is taking a toll on the industry in Punjab. Industrial units are shying away from the state and expanding in these states. However, these benefits will be off by 2007 and Punjab must prepare for that,” he said. Stating that the business profile of India was changing for better, Mr Memani maintained that the government has to decide how the region could take advantage of this “new emerging India.” “Keeping this in mind, we have floated the idea of creating an export hub for fruit and vegetables which would come up in the region to cater to J & K, Punjab, HP and Haryana, shortly. Talks are on with the railways to provide refrigerated vans for the same. The Punjab Governor has responded positively to our suggestion. Emphasis is going to be on value addition of these fruits and vegetables in the coming days,” he explained. Welcoming the implementation of Vat and highlighting the expectations of the business fraternity from the budget, Mr Memani pointed out that the overall GDP, the share market and the property were doing well in the country. He said the PHDCCI would shortly have its own office in the city, which is coming up at a cost of nearly Rs 3 crore.
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Centre, states to share profits under NELP
New Delhi, February 3 The demand was accepted by the Government at its cabinet meeting yesterday. Finance Commission said state governments should be given half the Centre’s share in profit petroleum and gas available from blocks under the New Exploration and Licensing Policy. However, there will be no profit sharing on the non-NELP blocks as there was no profit sharing agreement with producing companies for these blocks and the central Government as well as states were getting a cess on these blocks. Under the terms and contract of NELP, the sharing of profit petroleum would be bid, based on a sliding scale tied to pre-tax multiples of investment recovered and would be specified in the contract. Profit petroleum is the government’s share from the sale of crude oil or natural gas recovered from fields once exploration and development costs have been recovered. The states will be given the share due to the rising importance of non-tax revenues. Producion in the NELP blocks is yet to commence but significant discoveries were made by some companies under the NELP blocks. The NELP scheme was announced in 1999 and it takes atleast seven years to commence production. Nearly 90 blocks under the NELP scheme have been awarded and another 20 blocks were being offered, for which bids will close on May 31.
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FinMin against EPFO investing in POs
New Delhi, February 3 The Finance Ministry, sources said, is also not in favour of EPFO investing its funds in post-office (PO) savings and instead is of the view that the fund should improve its recovery. Labour Minister K Chandrashekhar Rao said recently, that the EPFO is examining the feasibility of investing a portion of the fund in equities to generate higher returns to make good the losses. The decision to fix the rate of interest at 9.5 per cent will result in a deficit of Rs 920 crore. The investment sub-committee will meet this month and the matter of investing in equities will also be taken up with EPFO’s banker — State Bank of India
(SBI). While in 2001-02 and 2002-03, the net yields of the fund amounted to Rs 504 crore and Rs 204 crore, respectively, it dipped to a (-) 271 crore in 2003-04 forcing it to dig deeper into the pockets to offer high rates of return to EPF subscribers. There are about four crore EPF subscribers currently. Private provident funds have already been allowed to invest five per cent of their assets in shares of blue-chip companies and 10 per cent in corporate debts and equity-oriented mutual funds from April 2005.
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ONGC to invest Rs 569 cr in Heera offshore field
New Delhi, February 3 This investment is expected to yield additional oil production of 20 million barrels and gas production of 3.753 billion cubic meters (BCM) by 2020-21. At current oil price of around 40 per cent US dollar per barrel, the revenue from oil sale alone will amount to $ 800 million or Rs 3680 crore. Heera, a medium-sized offshore field located 70 km offshore Mumbai city, in a water depth of 50 meters, is being operated by ONGC since 1984. With estimated in-place oil reserves of 1941 million barrels, the field has cumulatively produced 522 million barrels of oil till now. The project is expected to get completed by February 2007. Both platforms would be designed incorporating the state-of-the-art facilities by in-house engineering team.
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Dabhol project solution in sight, says Sayeed
New Delhi, February 3 Refusing to give a time frame, Mr Sayeed said, “A solution is in sight.” The minister said, “We are putting all our hats together to find a solution” to the now closed Dabhol project in Maharashtra. The government had earlier indicated that it was hopeful of arriving at an amicable settlement soon for the project so that the plant could be restarted within the next one-and-a-half years. “We are working towards a suitable solution acceptable to all interested parties, including the foreign promoters for Dabhol power project,” Law Minister H. R. Bhardwaj had said. The GoM, headed by Defence Minister Pranab Mukherjee and including Mr Sayeed and Mr Bhardwaj among other ministers, has met several times to discuss ways to restart the plant that has been lying idle for over three years. The government had earlier agreed to provide counter guarantee to the domestic lenders for buying out the foreign debts. It has already asked companies like IDBI, NTPC and GAIL to form a special purpose vehicle for this. The efforts to restart the plant gathered steam after foreign promoters filed claims worth $6 billion in the international arbitration court at London for alleged breach of the Bilateral Investment Protection Agreement.
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Rs 26,000-crore impact of finance panel’s report
New Delhi, February 3 The 12th Finance Commission has also recommended debt relief to states by suggesting that debts be written off within five years under the condition that fiscal parameters as mandated by the Fiscal Responsibility and Budget Management Act are maintained. “The debt relief will work out to Rs 21,276 crore in interest payments and another Rs 11,929 crore in repayments during 2005-2010,” Mr Swarup said. The commission has recommended that all loans up to March 31, 2004 will be consolidated and charged at a reduced rate of interest of 7.5 per cent against the current rate of 9 per cent. The repayment period will be 20 years. He said that so far only five states have enacted the Fiscal Responsibility and Budget Management. These are Karnataka, Kerala, Tamil Nadu, Punjab and Uttar Pradesh. The 12th Finance Commission has also recommended an increase in the share of states to 30.5 per cent from 29.5 per cent from the divisible pool of resources. Between 2005 and 2010, the share of central taxes and duties would be Rs 6,13,112 crore and grant of Rs 1,42,639 crore. The grant and aid for non-Plan revenue deficit amounted to Rs 56,855 crore.
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Per capita income rises
New Delhi, February 3 The Private Final Consumption Expenditure in the domestic market at current prices is around Rs 17,65,849 crore during 2003-04 against Rs 15,85,132 crore in the previous year. At constant prices, the Private Final Consumption Expenditure amounted to Rs 9,64,865 crore during the period against Rs 8,91,419 crore during 2002-03. — UNI
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SBI buys 51 pc stake in Mauritius bank
Mumbai, February 3 “This is part of our plans to expand overseas,” SBI chairman A K Purwar told PTI here today. Though Purwar declined to comment on the financial deal stating “we will come out with details later”, bank sources said the deal was worth over $ 10 million. The country’s largest public sector bank has acquired over 51 per cent stake in the retail bank based at Port Louis and has finalised an agreement with the principal shareholder to enable SBI gain management control, SBI informed the Bombay Stock Exchange. SBI’s Deputy Managing Director (International Operations) D.D. Sumitra has flown down to Mauritius to finalise the deal, sources said. —
PTI
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Ten Sports signs 5-year contract with WWE
Chandigarh, February 3 “We are delighted to extend our very strong relationship with the WWE for years to come . Ten Sports’ experience with the WWE is that the programmes appeal to every demographic sector of our viewer base, including some very surprising ones - such as housewives !” said Chris McDonald, CEO, Taj Television Ltd, owners of Ten Sports. Ten Sports plan to spruce up the WWE programmes with various innovative promotions in near future. “We look forward to building up on the WWE property by introducing new and innovative promotion al angles around the programmes,” Chris McDonald added.
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