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PM’s US visit to decide fate of Indo-Iran gas pipeline
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50 cycle-making units may shift to HP
Ludhiana, September 10 Peeved over increasing labour problems and poor power supply, at least 50 units from the cycle industry here have decided to shift base to Himachal Pradesh. The owners of these units have urged the Chief Minister of Himachal Pradesh for a meeting to discuss the matter.
Punjab barley for UB’s brew
Forex reserves
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Pierre Cardin to help A-I select dress designs
Cost inflation index not applicable on short-term gains
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PM’s US visit to decide fate of Indo-Iran gas pipeline
New Delhi, September 10 However, ministry officials indicated that crucial steps in this direction would be taken after the meeting of Prime Minister Manmohan Singh with the US President George Bush in New York slated next week. Washington, has been critical of the gas pipeline, and has been exerting pressure on New Delhi and Islamabad not to go ahead with the deal. It is learnt that Manmohan Singh during his meeting with Pakistan President Pervez Musharraf in New York would take up the gas pipeline issue, as it would bring substantial economic benefit to Islamabad. The US has been mounting pressure on Iran to dismantle its nuclear programme and views New Delhi’s gas pipeline project as a major source of fund for the Islamic nation to continue its fissile programme. The ministry officials said Prime Minister during his halt at Paris would lobby for French support for India’s energy programme so as to sustain a GDP growth rate of 7 to 8 per cent. They said the issue of IPI gas pipeline is expected to figure prominently in Dr Manmohan Singh’s meetings during the tour, as India and Pakistan are emphasising that the project would “play a significant role in meeting the energy needs of both countries.” Both, India and Pakistan are likely to impress upon Washington that “the nuclear issue of Teheran should be handled peacefully” instead of resorting to economic sanctions. Petroleum Minister Mani Shankar Aiyar has expressed optimism that energy issue may be resolved amicably. A senior official in the ministry, associated with the project, claimed that India is hopeful that differences between Iran and the United States on Teheran’s nuclear activities may be resolved through talks, paving way for the US consent on the project. At the petroleum secretarial-level meeting on the IPI gas pipeline held in Islamabad, both countries have agreed to work out a tripartite framework agreement by December 2005. According to Indian Petroleum Secretary S.C. Tripathi both countries would again meet in New Delhi during the second week of November to develop understanding.
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Adidas keen to make India export base
Chandigarh, September 10 Mr Gellner was in the city today to inaugurate the largest performance store for Punjab in Chandigarh. This second outlet in Chandigarh is more skewed towards women, according to the Adidas Managing Director. “India and China have emerged as two global giants. The advantage, which India has over China is that while only big cities in China are feasible markets, small cities hold a lot of potential in India. That is why we plan to increase our presence from present 80 to 140 stores pan- India by next fiscal,” he says and adds that India has shown a dramatic growth. “North India, in particular, is a strong market of strategic relevance,” he says. Adidas, which faced a rough weather in India till last year in terms of management strategies and revenues, is in the process of structuring a major turnaround this fiscal. “We restructured the country’s top management. The business has doubled in India and last year we had promised to break-even by 2005 fiscal. I am not changing the forecast,” Mr Gellner says with an air of optimism mixed with caution, without actually spilling out the revenue figures for India. “The reason why India has done well is that franchisee models have been the backbone of Indian revenue flowchart,” he says and adds that distribution market is important in India and will remain so for the next five to eight years. Refusing to comment on the impact of recent Adidas acquisition of Reebok on the Indian market, he says that Ludhiana, NCR and Bangalore have emerged as major production outsourcing centres for Adidas in India. Globally, Adidas raked in total net sales of Euro 6.5 billion with the net income of Euro 314 million last financial year. Adidas India Marketing is a joint venture between Adidas-Salomon AG and Magnum International Trading Co.
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50 cycle-making units may shift to HP
Ludhiana, September 10 Industrialists have even identified the land in Baddi and plan to develop a cluster for the cycle industry there. If they succeed, it would mean a major loss to Punjab as many more units are likely to follow suit. "The Punjab Government is not doing anything despite repeated requests. Most of the industrialists are settled here for the past several decades. Shifting is a decision they are forced to resort to as they are left with no other option," said Mr Avtar Singh, general secretary of the Chamber of Industrial and Commercial Undertakings (CICU), which has nearly 1,700 members from the cycle industry. Ludhiana is a home to 3,000 odd cycle and parts manufacturing units and is a hub of this industry, which has a major contribution in revenue to the government. Recently, more than 500 units from the wire drawing industry in the state also threatened to shift to Himachal Pradesh on account of similar problems. The cycle industry has been complaining of recession for the past several years and is facing a tough time amid stiffening global competition. As per estimates, production of this industry has come down to less than 50 per cent in the past few years. Easy availability of labour, which was earlier a boon to industry in this region, is gradually being taken over by increasing incidents of labour unrest. "The problem is politically motivated and the government has failed to tackle it effectively, " industrialists allege. While infrastructural problems like power supply have only worsened, problems like fluctuation in the prices of raw materials, scarcity of raw material have been giving this industry a tough time.
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Punjab barley for UB’s brew
Chandigarh, September 10 And the good news is that UB wants more of this barley, which it says, is of international malting quality. UB plans to double up the malting capacity of its Patiala unit from the present 20,000 metric tonnes. United Breweries supplies its own seed called VJM 201 to farmers. The words VJM stand for Vijay Mallya, the chairman of the Bangalore-based UB group. Last year, the area under barley was 4,000 acres and this year it will be 10,000 acres, Mr Himmat Singh, Managing Director, PAFC, said. The temperature and conditions in Punjab are ideal for growing this type of barley, which is a short duration crop and requires low water and fertiliser than wheat. It also fits in the requirement very well as an alternate rabi crop. On the gains to farmers, the MD said the produce is to be procured at Rs 600 per quintal by the UB group, a rate competitive with wheat, on cash-down basis. The Managing Director, United Breweries, Mr Kalyan Ganguly, added: “For the first time, we have been able to get malt barley of international standards. Earlier, the barley we got was essentially of feed quality.
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Forex reserves
Mumbai, September 10
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by K.R. Wadhwaney Pierre Cardin to help A-I select dress designs
AIR-India, in its clarification through Perfect Relations, says: “We have always opted for desi talent. Even the newly-launched Air-India Express staff sport uniforms that have been designed by the National Institute of Fashion Technology, India’s premier design institute”. This is indeed a healthy development.
Air-India further states: “...Pierre Cardin will be a consultant for the selection process for both designers and designs only on fashion parameters. Final decision of selecting the designer as well as the design will rest with Air-India”. The internationally-accepted Indian designers are unanimous in saying that ‘Cardin is history and has no sense of Indian fashion’. “What is a point to seek assistance from a foreign designer when he is obsolete in ideas and concept,” said three of them. According to national airline’s clarification: “Air-India would finally select an Indian designer close to the arrival of the new fleet in 2007. The final decision would be that of Air-India’s management, which will be in consonance with Indian culture and Indianness with an international flavour and Pierre Cardin’s is purely that of adviser”. Analysts who have been in airline trade for decades, are of firm belief that ‘Maharaja’s messy garb’ will wear the tag of Maharaja only when Air-India looks to India and Indianness wholly. Develop self-belief is the slogan.
Indian Airlines The deal has finally been struck Indian Airlines will soon have new and young fleet of 43 aircraft (in phases), belonging to Airbus Industrie’s family. Indian Airlines can now breathe free. It can plan expansion on both domestic and international routes. Profits can soar as many profit-making routes have remained unexploited. Cost-cutting exercise, however, continues. This has become possible because the officiating chairman and managing director is also ‘financial luminary’ .
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by A.N. Shanbhag
Cost inflation index not applicable on short-term gains
Q : We sold our plot after 32 months of its acquisition and there is a net gain of Rs 7.00 lakh after counting all costs, brokerage, non-construction fee paid etc. If this amount is counted as shortterm capital gain, it will fall in 30 pc tax bracket for us. Please guide if we can apply cost inflation index or not? And secondly, can this amount be invested in any scheme or bonds to save tax?
- Neena Singh A : Had you waited for four more months to make the sale, the amount would have been long-term gains. As of now, it is indeed short-term. Short-term gains cannot use cost inflation index. This will be added to your income and taxed accordingly. You may contribute to avenues u/s 80C up to Rs. 1 lakh to claim deduction from income. There is no other avenue available to save tax on short-term gains.
Self-occupied house
Q : I have purchased a house property in the FY 00-01 at Greater Noida and paying my EMIs regularly. Following are the details: 1. Completion in March 01 2. Claiming interest paid under ‘loss under house property’ in my annual returns 3. I have also paid pre EMI interest and claiming 1/5 of that every year. Due to the nature of my employment, I cannot stay here, I was staying in a rented accommodation and claiming HRA also. I was treating this, house (Greater Noida) as self-occupied and claiming loss under HP of the interest paid approx Rs 80,000 pa and also rent paid under HRA Now, I propose to purchase another house property in FY 06-07 at Dehra Dun. The loan amount is higher and the interest paid will be higher approx Rs 120,000. From FY06 -07, I wish to treat this house as self-occupied and claim higher interest under the loss from house property. Following are my queries: In case of two houses, can I change the house earlier described as selfoccupied and claim higher interest paid ? At the same time, I understand that Greater Noida house will be taxed at fair value (notional rent, there is no rental value as of now) , can I claim interest paid / municipal taxes as deduction —- Aggarwal Ajay A : The annual value of a house or part of a house shall be taken as nil if it i) is in the occupation of the owner for his own residence or ii) cannot be occupied by him because of his employment, business or profession at any other place and he has to reside at that place in a building not belonging to him. Where the assessee has more than one self-occupied house, the annual value of only one of such houses, at his option, can be taken as nil. All the others will be deemed to have been let out. The option can change from year to year. Whereas there is a cap of Rs 1.50 lakh on the interest paid in respect of self-occupied property, the entire interest can be claimed as deduction in respect of rented or commercial properties.
Capital gains tax
Q : I had purchased a house property in Bangalore during Oct’ 1980 & I would like to dispose it of, shortly. In this connection I would like to know the following: How & at what rate the capital gains tax is to be paid in case the sale proceeds are not re-invested? How long can I keep the sale proceeds in an ordinary S B A/c till such time I re-invest? What is the maximum period allowable for the sale proceeds to be kept in capital gains S B /Deposit A/c? Whether an advance amount can be paid to the prospective seller (in case of re-investment) out of the advance received on account of the sale of my present property. Suppose I re-invest the sale proceeds for the construction of a house to be built up on the site, which is standing in the joint name of my son (First Name) & myself (Second Name). Whether I can get the capital gains tax exemption? Is there any scheme under which I can invest the sale proceeds to completely avoid the capital gains tax? — Sameeran N S A : Long-Term Capital Gain (LTCG) is to be computed by deducting from the full value of the consideration i) any expenditure incurred in connection with the transfer ii) indexed cost of acquisition and iii) indexed cost of improvement. In the case of assets, acquired prior to 1.4.81, the option of substituting the fair market value (FMV) in place of original cost is open to the investor. In other words, if the actual cost of acquisition is lower than FMV as on 1.4.81, the investor may adopt the FMV to be his cost of acquisition. On the other hand, if the actual cost of acquisition is greater than the FMV as on 1.4.81, the investor may adopt such cost. The CII based on 1981-82 only will be taken into account, whatever be the choice of the investor. LTCG is taken as a separate block and charged to tax at a flat rate of 20 p.c. No deductions are allowed under Chapter-VIA like u/s 80C, 80D etc., for LTCG. The tax on all long-term capital gains which are chargeable to tax, can be saved by investing within 6 months the amount of capital gains in infrastructure-related Bonds of Nabard, NHAI, NHB, REC or SIDBI u/s 54 EC. The lock-in period is 3 years. The current interest rate is around 5.2 pc and this is fully taxable. Obviously, the interest is quite low and what is given by savings in tax is taken away by earning low interest and the tax on this interest. The assessee may also claim similar benefit u/s 54 by investing the LTCG to purchase a residential house within 1 year before or 2 years after the date of sale of the old house. Alternatively, he may construct a residential house within 3 years after the date. The new house has a lock-in of 3 years. The indexed cost is computed by multiplying the cost of acquisition with the ratio of the CII of the year of sale and the CII of the year of acquisition. The CII for FY 05-06 is 497. Whenever a taxpayer acquired new asset before the stipulated dates as required u/ss 54, 54B, 54D, 54F or 54G it was necessary to reopen original assessments for rectification. These hardships have been eliminated through a special bank account called CGAS. The amount deposited in such an account before the last date of furnishing returns of income (or actual date, if earlier) along with the amount already utilised as required, is deemed to be the amount utilised for the purpose. If the amount is not utilised wholly or partly for the stipulated purpose, then, the amount of capital gains related with the unutilised portion of the deposit in CGAS shall be charged as the capital gains of the year in which the period expires. Theoretically, since the source of funds is coming out of your own pocket, it does not matter in which order of the names the new property is held. In practice, you will do well by having your name first.
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