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FinMin objects to STD fee cut
6 biomass-based power projects for
Reliance Info full money-back offer
World Travel Award
Atlas to set up Rs 20-cr plant
It’s time for caution
Tax Advice |
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FinMin objects to STD fee cut
New Delhi, November 13 The Finance Ministry is understood to have raised procedural objection to the licence fee cut by Communications Ministry as it had non-tax revenue implications. MoF per se is not objecting to the licence fee cut in this regard, but felt it should have been consulted before. If various ministries resort to such steps, there could be huge loss of revenue to the government, finance ministry officials said. Royalties and licence fee of various ministries account for Rs 25,000 crore annually out of the total non-tax revenue of Rs 77,000 crore and, therefore, revenue implications should be studied before taking such decisions, officials said. The Department of Telecom officials put the loss to the exchequer due to the licence fee cut at Rs 400 crore. DoT last week announced cut in the entry fee in the national and international long-distance segment to Rs 2.5 crore from Rs 100 crore and Rs 25 crore, respectively. Sources in the Communication Ministry indicated that the Financial Advisor had not endorsed the move to slash the revenue share for the operators. The revenue share was also reduced from 15 to 6 per
cent. These changes are to take effect from January next year. Meanwhile, the new Telecom Policy, which will replace the
existing NTP 99, is expected to dilute the Telecom Regulator's power that will boost the confidence of the industry as well as investors in regulatory framework. The draft policy that is currently being prepared by DoT will have a mechanism in place that would review the activities of the regulator. The policy has also proposed that on quitting TRAI, officers will not be permitted to accept commercial employment with any telecom service provider. The government has come up with a number of policy measures aimed at further opening of the sector to more players and that would increase competition and bring down tariffs in all areas of the industry for the benefit of customers. Experts, however, say the steps would weaken TRAI, at a time when the telecom industry is moving at a fast pace and there is a need for checks and balances. Speaking after chairing the Telecom Commission meeting, Communications and IT Minister Dayanidhi Maran said voice-over-internet-telephony (VOIP) has been legalised. So far net telepohony was not permitted in India and it has been decided that the access service provider can provide Internet telephony, Internet services and broadband services. If
required, access service providers can use the network of NLD/ILD service licensee.
— Agencies
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6 biomass-based power projects for pvt sector
Chandigarh, November 13 The Director, Punjab Energy Development Agency (PEDA), Mr S.S Sekhon, said Punjab has abundant availability of biomass in the form of agro residue namely paddy straw, rice husk, cotton and arhar stalk. The projects will be set up on build, operate and own ( BOO) basis in the tehsils of Malerkotla, Batala, Patti, Talwandi Sabo, Ferozepore and Fazilka by at a cost of Rs 264 crore. One such demonstration project of 6 MW capacity has already been commissioned by M/s Malwa Power Pvt Ltd at Gulabewala village in Muktsar district. The state on an average generates biomass to the tune of 18 to 20 million tonnes annually, which can be used to generate the additional power required. Biomass is an important source of energy and the most important fuel worldwide after coal, oil and natural gas. In view of the grim future power scenario in the state, the present installed capacity of 5,700 MW needs to be augmented through decentralised renewable energy-based power projects.
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Reliance Info full money-back offer
New Delhi, November 13 The offer would be valid for both pre-paid as well as post-paid subscribers across the country, on new connections only. With talk time value of an equivalent amount, the new handset would effectively be free of cost for the consumer. Pre-paid subscribers would now be able to use the talk time value of Rs 2,500 without recharging their account for 90 days from the date of activation of the handset. For post-paid customers, the free talktime value would be credited to their bills in six equal monthly instalments.— UNI
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World Travel Award
Shimla, November 13
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Atlas to set up Rs 20-cr plant
New Delhi, November 13 “We are putting up a modern plant in Ludhiana with an initial investment of Rs 10-20 crore which would increase our capacity to 3,000 cycle per day from 2,000 cycles per day,” Chairman and Managing Director Arun Kapur said here. With the new plant, the company, which had a strong presence in central India, planned to enter into the southern market, he said.
— PTI
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— by J.C. Anand
It’s time for caution
When the market closed in October with Sensex at 7685.64 points, almost all analysts expected the market to go down further by at least 50-100 points. When the market reopened after Divali, Sensex was up by 207 points and closed at 7892 . When the market closed last Friday Sensex stood at 8471 points. In less than 10 days Sensex is up by 786 points. In other words Sensex is only about 330 points less than its all-time peak of 8800.
This has been attributed to many factors. There was a revival in the global markets. Secondly, the FIIs made a dramatic return. The FIIs made purchases worth $ 100 million in two sessions alone this month. Thirdly, the mutual funds made heavy purchases. Another factor for revival was fall in the crude prices at the international level. So far so good. But the investors as well as traders should be cautious about their investments in this highly volatile market. It is also time to book profit in fundamentally weak scrips. This note for caution is based on careful analysis. Many foreign analysts expect slow-down in the inflow of FII funds. They regard India’s valuation as the highest in the emerging markets. While the earning multiples of the Indian market are 15 times, in the other markets like Brazil, Russia and South Korea they are traded at 9-10 times. Many foreign analysts believe that while India’s long-term prospects are good, the Indian market is over-priced at present. Other reasons for the expected slow-down of FII funds are: the falling rate of the Indian rupee against the US dollar, political uncertainty in India and rise in interest rates in the USA. According to experts, the interest rates in USA which now stand at 4.25 per cent may even move up in stages to 4.75 per cent. This would also affect the inflow of NRI funds. Some analysts believe that India might face a balance of payment problem in the coming months. The FIIs normally close their accounts during these two months and traditionally the FIIs are sellers rather than buyers in the emerging markets during this period. Now that all quarterly results have been announced, the market is likely to go flat for there is little to push up the market in terms of good news. The long-term prospects of Indian market, however, are good. The rate of GDP growth is likely to be 7 per cent during the current year. The economy is based on sound footing. Many companies are going global in their investments and marketing reach. The mutual funds too are playing the role of sustaining the market. Investors should invest only in fundamentally strong companies which have sound managements; and only on a long-term basis. The following sectors of the industry are good for investment: information technology, textile and garment industry, export-oriented industries, cement and companies engaged in infrastructural projects. Those companies which have a very high PE-ratio and unsustainable EPS ratio should be avoided.
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— by S.C. Vasudeva
No tax on withdrawal of old balance from Q. I am having a PPF A/c with SBI which was opened on 04.01.1990 in my name and has thus already matured on 31.03.2005, but has still not been closed so far. My queries are as under:- (i) Whether I shall continue to get the interest on the credit balance in the said account even if it is not got extended by me and no fresh deposit is made into it. (ii) Whether still I can get income tax benefit by making any amount of deposit in to it without getting extension of it. (iii) In case, I get it extended now for further period of 5 years; whether I shall continue to get tax benefits on the fresh deposits to be made onwards in future. (iv) Whether the withdrawal of old balance as on 31.03.2005 will also attract tax liability or only the withdrawal from fresh deposits to be made in extended period of 5 years will be taxed after the account matures after 20 years (15+5) i.e. 31.03.2010. — A. N. Garg, Muktsar A. The answer to your queries is as under: (i) You should get your PPF account extended for a further period of five years by depositing a token amount. (ii) In case you want to claim the benefit of deduction against your total income, you can deposit a sum up to Rs 70,000 in your extended PPF account and the same would be allowed as deduction out of your total income. (iii) The withdrawal of old balance will not be taxable in your hands in view of the present provisions of the Act. NOR status Q. I am senior citizen settled in the UK for the past 40 years. For the past 10 years I am coming to India every year, but my stay never exceed 180 days in every financial year. Now I am planning to settle in India. I need your guidance on the following. 1. If I come to India how long I can enjoy NRI status 2. After quitting my NRI status, can I enjoy RNOR status as a special provision for returning Indians. 3. If I transfer all my liquid assets, including my UK pension what will be my tax liability. — Madan Modgil, Ludhiana A. (i) According to Section 6 of the Income-Tax Act 1961 (the Act), an individual is said to be resident in India (a) in any previous year if he is in India in that year for a period or periods amounting in all to 182 days or more; or (b) having within the 4 years preceding that year, been in India for a period or periods amounting in all to 365 days or more, is in India for a period or periods amounting in all to 60 days or more in that year. Further, according to the aforesaid section, an individual is said to be "not ordinary resident" (NOR) in India in any previous year if such person: (a) has been a non-resident in India in 9 out of the 10 previous years preceding that year (i.e. the year for which status is to be ascertained); or (b) has during the 7 previous years preceding that year (i.e. the year in respect of which status is to be ascertained) for a period of, or periods accounting in all to, 729 days or less. As you would be settling down in India you would become a resident for that year. I am unable to comment as to your NOR status as I do not have the exact details as to the number of days you were in India in preceding years so as to ascertain the applicability of clause (b) given above. I may add that ordinarily, a non-resident when he comes back to India is able to enjoy the N.O.R. status for a period of 2 years. (ii) A resident is taxable in respect of a income from whatever source derived which (a) Is received or is deemed to be received in India in such year by or on behalf of such person; or (b) Accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) Accrues or arises to him outside India during such year: Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) of Section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. The pension earned in the UK when received in India would become taxable in view of the fact that the same has been received in India. However, for a period of two years of NOR status one may instruct the authorities to deposit the pension in a UK bank account so that the same is deemed to have been received in the UK. The transfer of any amount from bank account in the UK, thereafter to any Indian bank account would not lead to the taxability of such transferred sum for a period of 2 years of NOR status. However, after the period of two years, the pension income would become taxable in India. Tax liability Q. I am a Punjab Government employee. My salary details as under for the year 2005-06. 1. Gross Salary 4,20,000 2. Repayment of Home Loan (Self occupied) 87,000 (Principal amount) 3. Interest accrued on House Loan 55,000 4. LIC 10,000 5. GPF 31,000 6. GIS 1,440 Please tell me my tax liability for the year 2005-06. — Dr Vijay Garg, Sangrur A. The Finance Act 2005 has brought a change with regard to the deduction allowable out of the total income of an individual or HUF. According to the new provisions, a maximum amount of Rs 1,00,000 is deductible from the total income in respect of repayment of amount borrowed for the purpose of construction or acquisition of a house and various payment made towards saving schemes. Accordingly, you would be entitled to a total deduction of Rs.1,00,000 as against the amount of Rs.1,37,000 paid by you towards the payment of loan, Provident Fund Contribution and LIC payment. It is presumed that the GIS payment is towards your medical insurance premium. If that be so, the same would also be deductible under section 80D of the Act. The amount of Rs 55,000 representing interest accrued on house loan can also be claimed against your property income, provided the house has been acquired or constructed after first day of April 1999 and the construction has been completed within a period of 3 years from the end of the financial year in which the amount was borrowed. Presuming that this condition has been complied with, your total taxable income would be Rs 2,63,560 on which a tax of Rs 29,649 would be payable. Capital gains Q. I am a senior citizen. My total income from pension and interest is Rs 70,000. I live in an ancestral home in the name of my late mother. We are five heirs to it. We want to sell it. All other heirs have told me to relinquish their share in favour of me as gift. The house will bring Rs 3 lakh only. What is my I.T. liability. I don’t want to buy any other house. — Keshiv Krishan, Gurdaspur A. The query does not indicate the cost of the ancestral house. If the house was constructed prior to 01.04.1981, its value as on 01.04.1981 is also required so that the same can be substituted for the cost. In the absence of the said information, it is not possible to compute the amount of capital gains as well as amount of your tax liability. Gift & tax Q. My mother has sold ancestral inherited agriculture land on July 15, 2005 for Rs 7 lakh falling under sub-tehsil of Kalanaur (distance between land and sub-tehsil is 5 km) with main tehsil of Rohtak (distance of 25 km). She wants to gift this amount to me to start business. I am not a tax assessee. (i) What are her tax liability for 2005-06? She had been filing return of Rs 60,000 as income from agriculture produce till financial Year 2004-05. (ii) What is the procedure for gift? (iii) Whether we have to show it in IT returns of 2005-06? (iv) Is this gift amount taxable at my hand? — H. Singh A. The answer to your query is as under: (i) The capital gain earned on the sale of agricultural land is taxable in case the agricultural land is situated: (a) In any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) In any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette) You will have, therefore, to verify the coverage of the agricultural land within the definition of capital asset on the basis of notification which was issued by the Ministry of Finance on 06.01.1994. The relevant details are as under: Notification No. SO 10(E), dated 06.01.1994, as amended by Notification No. SO 1320, dated 28.12.1999. (ii) A gift of movable property can be made by exchange of letters, the donor issues a letter with regard to the gift and the donee replies accepting the gift. (iii) The gift as made should be shown by your mother in her income tax return. (iv) The gifted amount is not taxable in your hands. Interest on SB a/c Q. Kindly give the following information regarding Assessment Year 2006-07 (i) Whether the interest on saving account of a bank/post office is exempted from tax? (ii) What are various deductions of "Exempt Amount" of Rs 1,00,000? Does it include interest from saving account? (iii) In a joint "saving account", do both operators (in either/or) share the liabilities of Tax on saving account is taxable. — H. K. Bedi, Chandigarh A. The answer to your queries is as under: (i) The interest on saving bank account of a bank/post office is not exempt from tax for assessment year 2006-07. (ii) An amount of Rs 1,00,000 is allowable as deduction from the total income under Section 80C of the Act, such amount can either be in respect of Provident Fund contribution, LIC payment, repayment of house loan, contribution to an approved superannuation fund, subscription of approved savings certificate, contribution towards ULIP, payment towards tuition fee for the education of wife, husband or any child of an individual and the like. It is not possible to reproduce the entire section in view of the paucity of space. (iii) The interest would be taxable in the hands of the person to whom the funds in the savings bank account belong, even if it is a joint account. 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: taxadvice@ tribunemail.com
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