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Chidambaram pulls up public sector banks
Govt under pressure to rein in power utilities
RBI: global oil prices may fuel inflation
JCB to expand Faridabad facility
A-I to add 2,000 seats to Gulf
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IndiGo set to take off
Not all donations qualify for 100 pc
tax exemption
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Chidambaram pulls up public sector banks
Mumbai, August 27 "Public sector banks have been consistently outperformed by the new private sector banks in deposit mobilisation. Some of the frontline public sector banks have projected a deposit growth in 2005-06 which is lower than that of 2004-05," Mr Chidambaram said. Some of the public sector banks have projected deceleration in advances as well, he said, speaking at the Indian Banks' Association annual general meeting. "If the rate of growth of the economy in 2005-06 is maintained at 7 per cent, it is difficult to understand how business projections by public sector banks, especially
deposits and advances, can experience deceleration in growth," the Finance Minister said. Stating that management of non-performing assets (NPAs) remained the foremost challenge for banks and for PSBs, he said: "We will keep a close watch on the manner in which NPA reduction is taking place and insist that cash recoveries should more than offset the fresh write-offs in the NPAs," he said. On the need for banks to raise fresh capital, he said such banks, where the government holding has reached the minimum limit of 51 per cent, would have to identify new forms of infusion of funds to strengthen their capital base. He said the banking sector may witness a net depletion of 2 per cent in capital adequacy after the adoption of Basel- II norms. This would entail raising of fresh capital as well as optimal use of existing capital, he added. Referring to the autonomy to the public sector banks, Mr Chidambaram said the government would monitor their performance through the Statement of Intent which have been drawn up by the bank managements. He said measures had already been announced to grant complete managerial autonomy to these banks in keeping with the clearly delineated ownership role.
Focus on SMEs
The Finance Minister called upon the banks to design innovative products and evolve new forms of credit and risk management systems to enhance the flow of credit to the food processing sector and small and medium enterpreneurs (SMEs). The focus should be to develop lending models with reduced transaction costs to step up lending, Mr Chidambaram said.
Equity in banks
Mr Chidambaram ruled out government diluting its equity stake in state-owned banks. The government would retain its 51 per cent equity stake in public sector banks but the banks that have reached this limit have to identify avenues to mobilise capital to strengthen their capital base. Observing that there is a little scope for the public sector banks to approach the capital markets because the government holding cannot be reduced below 51 per cent, the Finance Minister, however, suggested that banks can look for consolidation to become larger in size in order to sustain their
growth. — PTI, UNI
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Govt under pressure to rein in power utilities
New Delhi, August 27 The Left parties, the Standing Committee headed by Congress leader Gurudas Kamat and consumer organisations have called upon the government to take legislative steps to ensure that state regulatory commissions do not “pass on the inefficiencies and exaggerated losses of the state power utilities, especially private distribution companies.” Concerned over the continuing tariff hikes after power reforms, they have alleged that the government has failed to check private power distribution companies in Delhi, Orissa,
Maharashtra, Gujarat and other states. They alleged that despite massive government assistance to private and state power utilities for undertaking power reforms, “sufferings of the consumer have increased in general. They are facing the problems of defective meters, inflated bills and frequent tariff hikes.” Even the BJP and a section of the Congress have asked the Central Government to take legislative and administrative measures to ensure that consumers are not exploited in the name of power
reforms. The Delhi BJP has also submitted a memorandum to the Prime Minister, demanding a rollback of the recent power tariff hike in the Capital. Sources in the Power Ministry claimed that the government was seized of the matter and was likely to take effective steps soon on the recommendations of the Standing Committee and other stakeholders. After the end of the monsoon session next week, they said, Prime Minister Manmohan Singh was likely to take a decision on this issue though earlier the PMO had shot down the proposal of the ministry to amend Electricity Act, 2003. The Left parties have demanded that the state governments should be empowered to overrule the state electricity regulatory commissions (SERCs) in the case of unwanted power tariff hikes. The committee has questioned the release of funds to private companies under Accelerated Power Development Reforms and Programme (APDRP) since they have failed to pass on the benefits to the consumer. Under the APDRP, the Power Ministry has sanctioned projects worth about Rs 2,500 crore to private power
utilities. The government has so far released Rs 5540.76 crore under the scheme to state power utilities. However, the critics allege that regulatory commissions have failed to reign in power utilities. Rather they have allowed power tariff hikes in the states of Punjab, Haryana,
Delhi, among others, without punishing them for their inefficiency. Significantly, the Regulatory Commission in Delhi has raised the power tariff by around 10 per cent despite the fact the TATAs, one of the distribution companies, had not even asked for it. The committee wondered why the inefficiency of Reliance, another player that failed to bring down losses, was passed on to the consumer.
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RBI: global oil prices may fuel inflation
Mumbai, August 27 “Inflation would be moderate this fiscal and we believe it will be 5 per cent this year,” RBI Deputy Governor Rakesh Mohan told reporters. He said the rising global oil prices posed a risk to inflation but the non-fuel international commodity prices were stabilising.
— PTI
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JCB to expand Faridabad facility
New Delhi, August 27 “We are planning substantial investments in this plant at Faridabad in Haryana,” company CEO and Managing Director Onkar Singh Sunar said. Mr Sunar said the company, which was expecting to touch a turnover of Rs 1,500 crore this year, was looking at making the India facility of JCB as an export hub as well. “We plan to launch our 13-tonne and 33-tonne track excavators,” Mr Sandeep Singh, JCB India Vice-President
said. — PTI
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A-I to add 2,000 seats to Gulf
Kochi, August 27 The Air-India Express (AIE) flights would be operated from Thiruvananthapuram and Kozhikode to Dubai on August 29, September 1, September 3 and September 5.
— PTI
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Not all donations qualify for 100 pc tax exemption Q : Which donations can I do as an individual and get 100% tax exemption on the donated amount? Please guide as a salaried person: is section 80G, only is applicable to me for donation purposes, or are there some other sections also of the Income Tax Act, such as Section 35, under which I can claim a 100% rebate on the donated amount? — Vineet Aggarwal A: Some donations qualify for 100% deduction while some qualify for just 50%. full deduction is available in respect of : National Defence Fund, Prime Minister’s National Relief Fund, Prime Minister’s Armenia Earthquake Relief Fund, Africa (Public Contributions - India) Fund, National Foundation for Communal Harmony. An approved university or any educational institution of national eminence. Chief Minister’s Earthquake Relief Fund, Maharashtra, Any fund set up by the state government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat, National Blood Transfusion Council or to any state blood transfusion council, Any fund set up by a state government to provide medical relief to the poor, Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, National Sports Fund to be set up by the Central Government, National Cultural Fund set up by the Central Government and National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities etc. Others qualify for a 50% deduction. You may go through the Act to check the exhaustive list. Deduction u/s 35 is available in respect of donations made for scientific research. If you claim a deduction u/s 35, then you cannot claim a deduction for the same amount under any other section of the Act. Disability certificate Q : I’m an orthropaedically handicapped (OH) person availing deduction under Chapter VI-A, U/S 80U every year. However, this year the Income Tax Inspector told me that I have to submit a new OH certificate to avail the deduction. I would like to have a clarification from you whether a person having (70%) permanent partial disability certificate needs to provide a fresh OH certificate every year to avail deduction under abovesaid sections. The Act reveals that the person who’s disability requires reassessment after a stipulated period, needs to submit a new certificates. But, in my case it is permanent disability, which can’t be altered. If it is not required to submit a new certificate every year in my case, kindly let me know how to convince the Income Tax Assessing Officer by providing/referring proper section of the Act. — G. D. Kiran Babu A: It appears that you have already obtained the required certificate which clearly states that the severity of you disability is 70% and also mentioned the period after which the disability requires reassessment. If that be the case, your ITO has erred. The following is the synopsis of the extract of Section 80U relevant to the solution of your problem. "Every individual claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the form and manner, as may be prescribed, along with the return of income under section 139 in respect of the assessment year for which the deduction is claimed. Provided that where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any assessment year beginning after the expiry of the previous year during which the aforesaid certificate of disability had expired, unless a new certificate is obtained from the medical authority in the form and manner, as may be prescribed, and a copy thereof is furnished along with the return of income under section 139." Therefore, if it is a permanent certificate that you have been issued, there is no need for a new certificate. However, if it a certificate for a specified period, the same would be mentioned on the certificate. Gift to HUF Q: I created my HUF namely "Sanjeev Arora HUF" three years ago and I am filling return of my HUF regularly. My query is "Can my father gift a running firm along with premises and some capital to my said HUF’. If yes please narrate procedure/formalities to the extent as possible. Also tell me if this creates any tax liability. — Sanjeev Arora A: Yes, your father can give a gift to your HUF. 2. He will have to prepare a gift deed with associated stamp duty to effect a transfer. 3. Yes, the entire value of the property will be construed as income of your HUF under the new law. Only gifts given by relatives, or on the occasion of marriage, under a will or in contemplation of death are exempted. Since the amount received by the HUF doesn’t fall into anyone of these categories, it would be chargeable to tax in the hands of the HUF. The author may be contacted at wonderlandconsultants@yahoo.com
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