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Kalam exhorts ONGC to go for non-conventional energy
Excise duty cut to soften petro price hike mooted
Foreign cos upbeat on India
Car, two-wheeler sales skid
MARKET
UPDATE
Slow FII inflow may trigger
correction
Tax
Advice
Invest capital gain to get exemption
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Kalam exhorts ONGC to go for non-conventional energy
Dehra Dun, August 14 Speaking at the launch of the golden jubilee year celebrations of the ONGC here today, he called upon the ONGC to meet at least “ 50 per cent of its annual oil and gas needs.” At present, the country was meeting 24 per cent of its oil needs from domestic production. “Since we are dealing with fossil material resources, it may not be possible to meet this requirement fully from conventional oil exploration and extraction alone.The only way appears to me is that to meet 50 per cent oil needs, you have to go to the route of renewable energy, apart from exploration of deep- sea oil resources and enhancement of the recovery factor,” said the President. Referring to successful experiments carried out by Daimler-Benz in running cars with biofuel, the President said: “ the ONGC should take the lead and enable the establishment of model bio-diesel plants with the inputs of jatropha plants coming from different parts of the country. Ultimate aim should be to find engines, which can run on bio-fuel alone. This will enable to work for a target of realising at least 30 million tonnes of bio-fuels within the next decade.” Lauding the ONGC for saving the lives of its personnel during the worst-ever accident in Bombay High last month,Mr Kalam paid tributes to the deceased. Twentytwo persons lost their lives in this accident when an ONGC ship hit the platform. With economic growth, oil and gas demand was continuously increasing and was around 114
million tonnes per year at present, the import component of which amounts to over Rs 1,20,000 crore. Earlier, Petroleum Minister Mani Shankar Aiyar said like the defence forces of the country, domestic oil companies like the ONGC were playing a significant role in the security of the nation. “Today out of 33 MT annual domestic crude oil
production, the ONGC is producing 30 MT and almost all oil fields of the country have been initially developed by the company.” CMD of the ONGC Subir Raha :“We have proposed to set up two refineries, one in Barmer in Rajasthan and another in Andhra Pradesh, which would be able to blend bio-fuel and crude oil to produce final oil products.” He said, the company would be able to generate around 250 MW through wind power in the next 18 months, as it was setting up 120 MW each wind power plants in Tamil Nadu and Gujarat.
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ONGC finds new oil, gas reserves The ONGC today reported four new oil and gas finds on the east and west coasts of India. ONGC CMD Subir Raha said gas had been found 8 km off Amalapuram coast in Andhra Pradesh in two structures GS-15-9 and GS-15-10. Gas has also been found at Krishna-Godavari offshore well G-4-4 and GS-KW-3, he said. The three gas finds can together produce three million standard cubic metres of gas per day from 2006-07. Mr Raha said oil had been found at RV-1 structure off Ratnagiri coast in Maharashtra but did not give the estimated results in the new discovery. He also disclosed that ONGC had made gas discovery in a coal bed methane (CBM) block in Bokaro district. The gas find is assessed to contain 1.625 trillion cubic feet of in-place reserves. Bids for PetroKazakhstan
ONGC along with steel tycoon L N Mittal has bid for acquiring oil and gas company PetroKazakhstan in Kazakhstan. ONGC and Mittal Group have floated two joint venture companies on July 23 which will target oil and gas opportunities in Central Asian countries and Africa. ONGC holds 49.98 per cent stake in both joint venture companies while L N Mittal, who till now was focused only on the global steel business, will have 48.02 per cent equity. The remaining 2 per cent would be with ICICI.
— PTI
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Excise duty cut to soften petro price hike mooted
New Delhi, August 14 Though the required increase in petrol prices is Rs 5.50 per litre and diesel Rs 3.75 a litre, the Oil Ministry has suggested to the Cabinet that if excise duty is cut by Re 1 per litre on each fuel, the required hike can be moderated, a senior official said. The ministry has suggested that excise duty on petrol be brought down from the existing 8 per cent + Rs 13 per litre to 8 per cent + Rs 12 per litre. On diesel it is suggested that excise duty be brought down from 8 per cent + Rs 3.25 a litre to 8 per cent + Rs 2.25 per litre. The issue may be considered by the Cabinet this month. The ministry has argued that all state-run oil marketing firms, including Indian Oil Corp, BPCL, HPCL and IBP will turn sick if prices were not raised. All the companies have posted net losses for the first quarter of this fiscal. According to the ministry's estimates, IOC's subsidiary IBP will be the first to turn financially sick by as early as next month as losses arising from freeze on fuel prices will erode its
networth. BPCL will turn sick in just over a year from now and HPCL will take just 20 months to be referred to Board of Industrial and Financial Restructuring, Petroleum Secretary S C Tripathi had written to Cabinet Secretary B K Chaturvedi
recently. — PTI
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Foreign cos upbeat on India
New Delhi, August 14 In FICCI’s Annual Survey on FDI, investors also spotlighted the need for building “Brand India” and showcasing India’s potential as an investment destination. An overwhelming 70 per cent of the foreign companies are reported to be making profits from their Indian operations and 84 per cent of the surveyed companies gave a “positive” assessment of India, up from 40 per cent in 2003, highlighting increased attaractiveness of India for investment. The survey, released by FICCI President Onkar S Kanwar, said foreign investors expressed satisfaction with the operational parametres. They, however, expressed concern about the quality of infrastructural facilities. FICCI contends that inadequate infrastructure, coupled with inflexible labour laws, incidence of indirect taxes and multiplicity of procedures is holding down India’s attractiveness as a manufacturing base or an export platform. As many as 80 per cent of the participating companies are planning expansion of their Indian operations and 91 per cent of the respondents see opportunities for greater FDI in their own industry sector. “India’s ever-growing popularity as a source of skilled IT and BPO workforce is reflected by the fact that 90 per cent have rated India’s attractiveness on this front as ‘high’,” said the survey.
— UNI
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Car, two-wheeler sales skid
New Delhi, August 14 According to figures released by the Society of Indian Automobile Manufacturers (SIAM), eight of the 11 carmakers, including heavyweigths Maruti Udyog, Tata Motors and Hyundai India, saw numbers going down due to a variety of negative factors. Tata Motors said its sales in July were hit hard due to heavy rain and subsequent floods in Maharashtra and Gujarat, which are among the major markets for all carmakers. The drop in July comes a month after passenger car sales witnessed a marginal 0.89 per cent decline in June this fiscal at 64,464 units (65,046). Alarmingly, this is the third time this
calendar year that sales of cars are down. They had gone down 4.2 per cent in February to 62,072 units (64,819) on concerns relating to the Budget. However, sales in the first four months of the fiscal are up by 2.96 per cent to 2,59,994 units against 2,52,525 units in April-July, 2004. SIAM said two-wheeler sales also saw numbers declining, going down 2.5 per cent to 4,83,090 units against 4,95,456 units in July, 2004. The fall in scooter and moped sales proved to be a drag for the two-wheeler market even as sales of motorcycles managed to move northwards, going up 5.79 per cent. Motor cycles recorded sales of 3,99,779 units in July against 3,77,899 units in the same month last year. Positive numbers for market leader Hero Honda and its rival, Bajaj Auto, propped the sales, even as other bike-makers struggled. The strike at the factory of Honda Motor Cycle and Scooter India, which ended at the end of July, was among the primary factors behind the drop in scooter sales. Scooter/scooterettee sales stood at 55,627 units in July against 86,030 units in the same month last year, declining by 35.34 per cent, SIAM said.
— PTI
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by S.C. Vasudeva
Invest capital gain to get exemption
Q. I seek your advice on the following issue:-
A shopcumflat situated at Bhopal was sold for Rs 13,50,000 in the month of August, 2004. It was purchased for Rs 3,20,000 in the year 1996. The sale proceeds of Rs 13,50,000 have further been invested in the purchase of another shopcumflat for Rs.18,50,000. It may be clarified:- (i) Whether the long-term capital gain earned on the sale of shopcumflat will be exempt from tax, if so under which Section. (ii) In case, it is not exempt from tax, whether proportionate exemption can be claimed in respect of flat only leaving aside the shop. — Manohar Singh A.
The particulars in your query do not indicate whether the shopcumflat was held for a period of more than three years so as to bring it in the category of a long-term capital asset, the capital gains in respect of which is exempt from tax under certain circumstances. It is also not clear from your query whether the flat sold as well acquired along with the shop is a residential or a commercial flat. Presuming that the shopcumflat is a long-term asset and the flat sold by you as well as acquired by you along with the shop is a residential flat, the amount of long-term capital gain earned on the sale of shopcumflat would be exempt from capital gains tax if the residential flat is acquired within two years of the date of transfer of the shopcumflat and cost of the residential flat is equal or more than the amount of capital gain earned. The exemption in respect of capital gain earned on sale of residential flat can be claimed under Section 54 of the Income-Tax Act 1961 (The Act) which provides for such exemption if the capital gain earned on sale of a residential house is invested in acquisition of another residential house within the aforesaid time limit. The capital gain earned on sale of shop would be exempt under Section 54F of the Act which provides for such exemption if capital gain is earned on sale of a long-term asset other than a residential house and is invested in the acquisition of a residential house within the aforesaid time limit.
Tax liability
Q. I shall be obliged for advice on my tax liabilities for F.Y. 2005-2006. I am 62 years old serving and getting Rs 2 lakh yearly. The employer is deducting 5.25 pc as service tax (Rs 10,500 yearly). Income from interest from bank is Rs 4,800 yearly. I am using my own car for duty. — Rajdeep Singh A. It seems you have confused tax at source. With service tax because service tax applicable for financial year 2005-2006 is 10.2 pc and not 5.25 pc. It seems you are being paid professional charges of Rs 2 lakh per year on which tax at source @ 5.25 pc has been deducted. The reply to your query is based on this presumption. On the said basis, your total income would be Rs 2,04,800. The expenditure on car maintenance and depreciation on car can be allowed as deduction against your total income provided that the car has been used for the purpose of your profession.
Cash withdrawal
Q. Please clarify the maximum amount of cash withdrawal per day to a single proprietorship firm in BCTT from bank. Is this amount differs in partnership firm? — Rajinder Chopra A. Sub-Section (8) of Section 94 of the Finance Act 2005 provides that a taxable banking transaction means a transaction being withdrawal of cash (by whatever mode) on any single day from an account (other than saving bank account) maintained with a scheduled bank, exceeding. (a) Rs 25,000 in case withdrawal is from the account maintained by any individual or HUF. (b) Rs 1,00,000 in case such withdrawal is from account maintained by a person other than individual or a HUF. As would be evident from above, the taxable withdrawal in respect of partnership would be an amount exceeding Rs 1,00,000.
Standard deduction
Q. You are requested to kindly arrange the clarification of below mentioned query:- (i) Whether the standard deductions can be claimed separately on the amount of pension and the amount of salary received on re-employment after superannuation. — Hardial Singh Devgan A.
The provisions of the Act very specifically provide that where an employee is in receipt of ‘salary’ from more than one employer, then, the standard deduction is to be allowed with reference to the aggregate amount of salary due. Accordingly in your case, the income from pension and salary will be aggregated for the purpose of allowing standard deduction.
IT return
Q. I am a government employee and income tax payee. I am going to Canada as a permanent immigrant. I had taken ex-India leave from July 2005-October 2006. How and when I should file income tax return for the financial year 2005-2006. — Rajinder A.
The due date for filing income tax return for financial year 2005-2006 i.e. assessment year 2006-2007 in your case would be 31st July 2006.
Gift and tax
Q. I have one query regarding taxes, which I would like to get answered from your side please- If I gift Rs 1 lakh to my spouse and she invests the same in equity-oriented MFs (may be even ELSS, open-ended … or even in PPF), then how will this affect a) my final tax liability? b) Tax liability of my spouse? According to my CA, the interest income which she will earn (including at the time of the redemption), will be added to my taxable income and I shall have to pay the tax at my slab rate, which is 30 pc — this I want to avoid. If this is correct, please suggest a way out, by which I can avoid paying tax, and reduce my tax liability? In this regards, please note that my spouse is a housewife, but she shows her income from tuitions, in her annual IT return. — Vineet Aggarwal A. Your chartered accountant is correct in stating that the interest income on money gifted to your spouse by you would be clubbed with your income. However as the dividend from mutual funds is exempt from tax in the hands of the recipient, therefore such dividend income even if clubbed would not be taxable in your hands in view of the same being an exempted income. However a disclosure regarding the gift and the claim for exemption of income shall have to be made in your return of income.
Readers are welcome to send questions for tax advice. These should be brief, to the point and not exceed 100-150 words. The letters should be sent to Tax Advice C/o The Tribune, Sector 29, Chandigarh-160020 or emailed to:
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