B U S I N E S S

Govt eyes unlisted PSUs for divestment
New Delhi, October 16
Having burnt its fingers in the attempt to sell a part of its equity in the Bharat Heavy Electricals Ltd, the government is now planning to offer shares of some of the big unlisted state-owned companies to public as an alternate mode of disinvestment.

A model displays an Indian designer's creation during a fashion show in New Delhi on Sunday. — PTI

No plan to revise prices, says Bajaj
New Delhi, October 16
Bajaj Auto has said it plans to maintain the prices of its products even as the company reported an improvement in the operating margins.

Export demand boosts cotton prices
Bathinda, October 16
Sudden spate in export demand, mainly from China, has boosted cotton prices in the region, bringing smiles on the faces of farmers who till now were a disillusioned lot, especially on being denied MSP even after the entry of government agencies.

MUL told to replace defective car
New Delhi, October 16
Maruti Udyog Ltd (MUL) has been held guilty of deficiency in service by the Delhi State Consumer Commission which ordered it to replace a defective car sold in 1990.

Tax Advice
Legal heirs can invest capital gains in realty
Q. My late husband had an agriculture land, though situated within the municipal limits of the city. Two months before his death, he sold some of the land and deposited the amount in joint [my name as second joint account holder/applicant] capital gain tax saving account in the bank. I have following queries:

A model at the launch of Indian wear and fashion jewellery in Mumbai on Saturday evening. — PTI

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Govt eyes unlisted PSUs for divestment

New Delhi, October 16
Having burnt its fingers in the attempt to sell a part of its equity in the Bharat Heavy Electricals Ltd, the government is now planning to offer shares of some of the big unlisted state-owned companies to public as an alternate mode of disinvestment.

Apart from listing unlisted companies, the government is also contemplating to accelerate the process of selloff of its remaining equity in the companies that have been privatised earlier.

"Discussions have started within the government to list the shares of some of the unlisted public sector companies on the stock market," sources said.

"Listing some of the unlisted companies makes eminent sense in the booming stock market. There is a lot of value locked in the unlisted state-owned companies and even in the stock market there is a good appetite for good public sector stock," they added.

Of the 240 odd central PSUs, only 28 are listed and many of them have outperformed the BSE Sensex in the current bull run.

Among more than 200 unlisted PSUs, there are companies like National Hydroelectric Power Corporation and Bharat Sanchar Nigam Limited for whose shares there will be a strong demand.

Many big PSUs have already chalked out plans to tap the market to raise equity capital. The government will offload a part of equity in these companies when they approach the market as was done in case of the NTPC.

"Apart from unlocking value, the listing of PSUs will make their management more accountable and transparent and the investors will also get some good investment options," sources added.

The government is expecting less opposition to the disinvesting part of the shares of the unlisted companies through an initial public offering.

The Cabinet Committee on Economic Affairs has already given its approval for listing of unlisted profitable public sector companies with a net worth of more than Rs 200 crore.

It has also approved sale of government's minority shareholding in profitable PSUs in conjuction with a public issue of fresh equity by the company concerned or independently by the government. — PTI

No plan to revise prices, says Bajaj

Export demand boosts cotton prices
Perneet Singh
Tribune News Service

MUL told to replace defective car

New Delhi, October 16
Maruti Udyog Ltd (MUL) has been held guilty of deficiency in service by the Delhi State Consumer Commission which ordered it to replace a defective car sold in 1990.

Rejecting MUL’s contention that the complainant was not entitled to replacement as the warranty period had already expired in 1994, the commission headed by Justice J.D. Kapoor asked MUL to pay a compensation of Rs 50,000 to him within a month.

The commission felt it was immaterial as to how many years after the purchase the inherent manufacturing defects were detected.

“No manufacturer can escape from its liability of selling defective goods which are irreparable,” Justice Kapoor said.

The order came on two cross appeals filed by the company and consumer S.N. Sharma against the order of a district consumer forum wherein MUL was asked to replace the car after receiving 60 per cent of the market price from the purchaser.

Upholding the District Forum order, the commission enhanced the compensation from Rs 3,000 to Rs 50,000.

Mr Sharma had bought a Maruti-800 car from an MUL dealer in 1990 and after running 20,000 km it developed technical snags and some holes were also found in one of its doors. MUL replaced the door but it was not of the same colour. Thereafter, it did not attend subsequent complaints of Mr Sharma on the ground that the warranty period had expired. — PTI

Tax Advice
Legal heirs can invest capital gains in realty
by S.C. Vasudeva

(vii) The legal heirs have been given the option under the scheme to close the account in the event of the death of the depositor. This can be done after complying with the requirements specified in the scheme.

Tax liability

Q. I am a Central Government. employee working in a CPO. I have annual income of about Rs 2 lakh. Kindly elaborate/ show my tax liabilities as per following saving details (per annum) for the year 2005-06.

(Rs)

General Provident Fund 60,000

Tuition Fee of my Son 16,500

Life Insurance 7,100

Total: 83,600

Kindly also clarify whether the GPF amount withdrawn during financial year 2005-06 will be added in the annual income of an employee

— P.C. Saini, Chandigarh

A. On the basis of the figures given in your query the amount of contribution to General Provident Fund, and the payment towards the Life Insurance Premium shall be deductible from your total income of Rs 2,00,000. The amount of tuition fee paid shall also be deductible if the same has been paid to any university, college, school or other educational institution situated within India and is for the purpose of full time education of your son. Presuming that you fulfil the above condition, the aggregate amount of Rs83,600 shall be deductible from Rs 2,00,000. The taxable income would thus be Rs 1,16,400 on which a tax of a Rs 1,673 including education cess would be payable.

Gift and tax

Q. I am retired senior citizen but having no pension etc. My income is only from interest of bank fixed deposits and PO savings. I file my return regularly.

My son is a Manager in a private factory and file his return. He wish to give me a gift of Rs 3,50,000 by giving 7 Nos. payees cheques in my name for Rs 50,000 each for 7 continuous dates so that cheques are cleared at par inspite of out station from his saving account. I intend to invest in Senior Citizen Saving Scheme 2004 which gives 9 pc interest for my maintenance. My queries are as under:-

(i) Is this gift a non-taxable. Can I give a acceptance letter. Is this letter be given on plain paper or on stamp paper.

(ii) In my return is it sufficient just show PO income from senior citizen scheme or shall have I to give any special note informing that I have received the gift or what else?

(iii) Please send proper draft of letter to be exchanged.

— Daya Singh, Hoshiarpur

A. The answer to your query is as under;

(i) Gift made by your son is not taxable. It can be made and accepted by exchange of letters. The letter need not be on a stamp paper.

(ii) It would be desirable to indicate the amount of gift received from your son in your tax return so that the Assessing Officer can cross check with your son’s Tax Officer that the gift has actually been made by him. Your son should also declare the fact of making a gift in his income tax return. While giving the details of gift in your tax return it will be better to indicate the Permanent Account No. and the complete address of your son so that your Assessing Officer has no difficulty in co-relating the facts with the tax return of your son.

(iii) The letter by your son should state that he is making a gift out of natural love and affection for you. You can accept the gift by thanking him for the same.

Home Loan

Q. My question is about home loan and exemption of home loan interest repayment u/s 24.

(i) Can I take loan from my parents or HUF of which I am Co-parcener? Is there any limit on rate of interest which I have to pay? Should interest repayable be fixed or reducing in nature?

(ii) If amount is big, can I take partial loan from parents and partial loan from Bank?

— Baljeet Singh, Sri Ganganagar

A. (i) You can take the loan from any source which is a genuine. The interest which has to be paid should be actually paid in respect of the loan taken. There is no limit on the rate of interest payable. However, the rate of interest should not be very high so as to give an indication of appropriation of income in favour of the person to whom interest is being paid. It would, therefore, be better to fix the rate of interest which is comparable with the rate of interest payable to banks or other financial institutions.

(ii) The amount can be borrowed partly from the bank or partly from any other source.

Tax liability

Q. During the F.Y. 2005-06, my pension and family pension will be appox Rs 65,770 and Rs 57,880. My MIS interest will be Rs27,000. Towards LIC premium my contribution is Rs 10,442.

Kindly guide me how to calculate tax for the F.Y. 2005-06 (A.Y. 2006-07). How much I should invest in PPF to save full tax?

— P.L. Arora, Ludhiana

A. Your query does not indicate whether you are a senior citizen. The answer to your query is based on the presumption that you are not a senior citizen.

Your total income from all the sources indicated in your query will be Rs 1,35,650 after allowing you the relief of Rs 15,000 out of your family pension. You would be entitled to a deduction of Rs10,442 towards the life insurance premium out of the above income. In case you deposit a sum of Rs 25,208 in your PPF account, no tax would be payable by you for the assessment year 2006-07.