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Investment climate favourable in India, says Swraj Paul
Mittal Steel signs MoU with Jharkhand; to invest $9 billion
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PM seeks investment in infrastructure
High gold prices fail to dampen spirits
Aviation Notes
Investor guidance
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Investment climate favourable in India, says
New Delhi, October 8 “There is nothing wrong in the Left pressing for according a human face to the reforms and we are very keen on investing in this country as things are changing,” Lord Paul, who is heading a Parliamentary delegation from Britain, observed at an interface with mediapersons. He had no doubt that India was capable of being a developed country, which meant education and healthcare for all coupled with drastically bringing down the people below the poverty line. “The biggest change that I see is the confidence in the ordinary man.” Lord Paul drew pointed attention to the integrity and style of Prime Minister Manmohan Singh, which he believes, has helped raising the level of India globally.
Globalisation means ending borders, he insisted. He admitted that agriculture subsidies were the “biggest farce” going on in industrialised North. Maintaining that the progress achieved by India in the last six to seven years had been the maximum compared to any other country globally, Lord Paul said there are many aspects that the British Parliamentarians would like to discuss and learn from India. He pointed out India had been dealing with states since Independence while devolution of powers is a recent phenomenon in the UK. Then there is the problem of terrorism, which Britain has been battling for nearly 60 yeas. Even in the field of education, especially the country’s outbacks, there is much that can be imbibed from India. Lord Paul disclosed that his company’s turnover of Rs 100 crore in India could easily touch Rs 1,000 to 1,200 crore in the next three to four. They would, however, stick to their core areas of manufacturing automobile components and set up a research and development centre to serve the global market.
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Mittal Steel signs MoU with Jharkhand; to invest $9 billion
Ranchi, October 8 Mittal Steel Chairman Laxmi Niwas Mittal said the project would be developed in two phases of six million tonnes each with the first phase expected to be completed within 48 months of the agreement of the detailed project report and the second within further 54 months after the completion of phase one. The steel baron also signed two additional MoUs committing to work closely with the mineral-rich state to achieve improvement in technical skills and education to sustain the pace of industrialisation in the state. The company would also study the possibility of setting up of a 2,500 MW power plant and a township for its employees as part of the
project. — PTI
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PM seeks investment in infrastructure
Chandigarh, October 8 The good news, he said, is that the economy is on the move. The rate of inflation is under control despite enormous pressure on the energy front, the rate of investment is rising and the business expectations are bullish. He especially mentioned that infrastructure sectors like telecom, railways and aviation had shown rapid improvement. He added with the adoption of VAT by most states, tax system in the country had improved vastly. But despite rapid economic growth, three areas were causing immense concern. Firstly, he said, there was an urgent need for massive infusion of investment in the infrastructure sector to be followed by improving the fiscal health of the state governments and Centre. “The fiscal deficit remains at an unacceptable high level. Revenue is rising, so is the expenditure and we are in the danger of sliding back on our commitment to fiscal responsibility,” he said. He said there is an immediate need for upgrading rural infrastructure. The government he said has launched a time bound business plan under the Bharat Nirman scheme to upgrade rural infrastructure for which the government has committed Rs 1,74,000 crore He said that there has been an alarming decline in agricultural growth in the 9th and 10th Plan period and immediate steps must be taken to reverse this. “Without stepping up he rate of growth of income and investment in agriculture, it will not be possible for us to step up the overall rate of growth of economy and generate employment opportunities,” the Prime Minister said. He said his government was committed to revise and revitalise rural cooperative. He disclosed that his government had earlier fixed a target to disburse Rs 104,500 crore to agriculture and allied activities during the fiscal 2004-2005 but had now revised this to Rs 115,243 crore.
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High gold prices fail to dampen spirits
New Delhi, October 8 The industry has claimed that high demand during the festival season in India, coupled with firm demand in China, Japan and the Gulf countries is expected to further push up prices by Rs 100-200 per 10 gm in the next few days. According to the World Gold Council estimates, the gold demand in India — world's largest importer — is expected to surge by about 33 per cent in 2005 to 850 tonnes. Consumption, excluding recycled gold has already increased by 57 per cent to 508 tonnes in the first half of the year, from 322 tonnes during the year-ago period. “Encouraged by the demand especially in the Northern India, the public sector company Minerals and Mines Trade Corporation (MMTC Ltd) — major trader in the precious metals — has also decided to increase imports substantially from around 100 tonnes imports last year,” said Mr Preeti Kaur, General Manager, Precious Metals, MMTC Ltd. With the Indian economy growing at 8 per cent plus rate in the first quarter coupled with good crops, claim MMTC, booming stock markets and moderate inflation are also pushing the demand upward. MMTC is also entering the retail sector by opening 25 exclusive showrooms, including at Ludhiana, Delhi, Bhopal along with the franchises to promote hall mark certified pure jewellery. The jewellers, however, said the speculative buying, and not the retail buying was boosting the current spurt in gold demand.
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Aviation Notes by K.R. Wadhwaney Indian Airlines (IA) will soon have a full-fledged Chairman-cum-Managing Director (CMD) after Sunil Arora relinquished his five-year successful innings in early June this year. None of the shortlisted 17 incumbents — most of them from the Indian Administrative Service (IAS) — possesses aviation/airline background. No matter how competent the chosen official may be, he will need at least six months to get acquainted with the intricate functioning of the airline industry. This is the most crucial period in the chequered existence of the national carrier. It is now or never for the airline to make or unmake its reputation. All key players, particularly pilots and cabin crew, are unanimous in their belief that only an insider will be able to play a key role in keeping the national carrier afloat in the highly competitive environment. There are more than a dozen reasons why an insider can serve the cause of the airline better than any official from outside industry. Important ones are: 1. After an inordinate 16 years delay, the airline will have a huge compliment of 43 aircraft (in phases) from June 2006. Utilisation of different types of aircraft require judicious mix of planning and programming. 2. After years of lethargy and uncertainty, work culture has returned to the airline. There is some discipline in air and on ground. Flights are operating punctually and unions, luckily, cooperative. An officer, who is familiar with the functioning of all departments, can keep all staff fully motivated and focussed to get results. 3. Finances have to be raised to make timely payment to the Airbus Industries. Here again, the person with sound financial knowledge will be able to maintain proper schedule of payment. 4. Successful floating of Initial Public Offerings (IPO) and 5. Four to five new airlines will soon start flying on domestic sectors. The competition will increase. Here again an insider can help arrest dipping of market share as also maintain profitability by reducing the overhead expenses. If welfare of the airline is the main consideration, the desired outcome can be achieved only when all departments are working in complete cohesion, as at present. This is the firm belief of all those who have been connected with airline trade for decades. In sharp contrast, there is a lot of indiscipline in Air India. Capt A.K. Sharma, London-based director, for examples refuses to return to India even after completing his extended four-year tenure, which expired on September 30, 2005. The successor, Mr Madhav Lokur, transferred from Paris on emergency basis, is in London. But Capt Sharma, in defiance, refuses to hand over resulting that Mr Lokur cannot get work permit. Uncertainty has crept in London office affecting efficiency, although Air India has increased its flights from India to 24 a week. It is a lucrative route but internal feuds prove counter-productive. Once the ADC to President of India, Capt Sharma has had several out-of-term promotions since he joined at Delhi on October 2, 1984. Air India Officers Association (AIOA) took objection to his appointment on the ground that it was contrary to rules and regulations. Court cases followed. He, however, managed a posting at Tokyo as manager East Japan and Korea effective July 15, 1994. Now, he has been in London for the last four years.
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Investor guidance
Q: I am employed with a public sector undertaking and in regular employment since 1979 with the same organisation.
I opened a PPF account with the SBI on February 12, 1987, in the name of my minor son (date of birth-July 20, 1984) and another account on December 1, 1988, in the name of my minor daughter (date of birth- July 14, 1987), which have completed their 15 years tenure on March 31, 2002 and March 31, 2003, respectively, with uninterrupted contributions, from my salary, and without any withdrawals. The amount outstanding as on April 1, 2002, is more than Rs 3.87 lakh for the first account and Rs 3.21 lakh as on March 31, 2003, for the second account. I have been claiming tax benefit under relevant provisions for the contributions made. Thereafter, I have neither extended the tenure of account nor made any contributions to these accounts. I used to get the passbook for both accounts updated regularly with interest on outstanding amount being credited as at the end of each financial year thereafter. The amounts as on today stand at Rs.4.92 lakh and Rs. 3.75 lakh, respectively, as on March 31, 2005. A recurring deposit matured recently in post office in my wife’s name (not a taxpayer) and the amount available to her is about Rs.1 lakh. The contributions are made by her from her own savings and pin money. She has no other declarable income. She would like to contribute total of Rs.70, 000 from her own account to the above two PPF accounts. Recently when I approached SBI officials regarding extension of these two PPF accounts, I was told that since the children have now become major, the accounts have to be changed from a minor account to major account prospectively. My queries are: 1. Is it possible to extend the two accounts for another block of five years retrospectively from their respective dates of maturity? 2. Is it essential to change the account from minor to major? 3. Will this change be treated as gift to the children and attract gift tax? If so, who has to bear the gift tax? 4. In case the accounts do not get extended, what are the best options available before us? Recently, since July 2005, my son got employed in private sector after completing his graduation in summer 2005 with annual income of Rs. 2.75 lakh — Suresh Agrawal A: Once an account is continued without contributions for more than a year, the subscriber cannot opt to change over to continue the account with contributions. Obviously, neither you nor your wife can contribute to these accounts. 2. It is very much essential to draw the attention of the account office to the change in the status of your children. 3. Yes, it is a gift to children but gifts from relatives (as specified in the Act) are tax free. The gift was given every year when you deposited the money in their PPF account. The interest earned from PPF accounts was clubbable in your hands until the children were minor. However, the interest from PPF account is exempt from tax. 4. The only option is to close the account and open another account. The account opened by your son can be used by him for saving tax on his income. Wish you had opted for continuation of the account with subscription by filling Form-H. It is hoped that you are aware of the fact that the total contribution in the name of your minor children and your own account has a limit of Rs. 70,000 since December 6, 2000.
Stamp duty
Q: In this financial year, I am going to purchase a plot for house construction. I am going to spend Rs.40,000 for stamp duty and registration fee for plot’s purchase. I want to construct house on it in the next financial year. Kindly let me know am I eligible to deduct this expense from my gross total income. If yes, then under which section of IT. Which documents should I furnish to the IT department while filing my income tax returns regarding purchase of plot. — Pardeep Singh A: Stamp duty, registration fee and other expenses incurred on transfer are eligible for deduction u/s 80C during the year of its payment. This expense need not flow from borrowed funds. These expenses shall not include: i) admission fee, cost of share or initial deposit ii) cost of any addition, alteration, renovation or repairs carried out after the issue of the completion certificate or the house is occupied by the assessee or it has been let out and iii) any expenditure in respect of which deduction is allowable u/s 24. Please note that this deduction is allowed only when the income from the house becomes chargeable to tax, i.e. when the house is complete and possession is taken.
Demat account
Q. If I hold shares in one demat account and I ask my friend or sub-broker to sell the shares and he asks me to transfer the shares in his account and then shares are sold by him, will this sale by me to my sub broker. Kindly let me know if it would amount to sale on which STT is paid or would it amount to off-market sale. Will I be entitled to tax free status if it is a long-term share. In another situation, I have seven family members and have one map-in account with my Mumbai broker. Can I route all transactions through my map-in account and claim the shares sold of my family members as “tax free” sale. They are all long term. I am going to get contract note from Mumbai broker in a map-in account name and my map-in account is a general purpose vehicle through which I only route transactions of my family members for sale through stock exchange. Which is the best way to do so without compromising on the tax free status of sale. Ashok Dalmia, Nagpur A: The answers to both your queries are identical. The tax benefits are available only to the person who pays the STT on shares standing in his own name.
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Ranchi, October 8
