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NSCN sends Rs 3-cr extortion demand notice to ONGC
SEBI may do away with quota in IPOs
Market Scan
DoT not in favour of outside audit
Tax Advice
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NSCN sends Rs 3-cr extortion demand notice to ONGC
Guwahati, May 14 ONGC’s Nazira office in Assam on May 8 received two letters signed by Lt Col Angpa, Secretary, Konyak region, NSCN, demanding Rs 3 crore, company sources said. The extortion demand made by NSCN came within days of the ONGC getting a petroleum exploration licence (PEL) from the state government for two blocks the company had won under the new exploration licensing policy (NELP). The sources said the extortion demand on the letterhead of the office of the Chairman, Konyk region, NSCN ,stated that the ONGC should begin work only after “fulfilment of our demand.” The ONGC, which had in January received an extortion demand for Rs 500 crore from ULFA, has already informed the Petroleum Ministry about the latest threat. Oil India Ltd had in 2001 shut operations in Arunachal Paradesh after extortion demands from the NSCN. The ONGC is, however, not unnerved by the extortion threat and plans to go ahead with exploring its blocks in Nagaland. The sources said as a responsible corporate the ONGC had proposed to sign an MoU with the state government spelling out the local area development activities, including the payment of additional royalty to the Nagaland Government, offering of a minority stake in the blocks to state government companies, recruitment of locals and scholarships to Naga students. The sources said the ONGC had already paid a royalty of Rs 33.83 crore against crude extracted from the Changpang field in Nagaland. However, as a goodwill gensture, the company shall further pay a one- time goodwill grant of Rs 67 lakh to Nagaland.— PTI
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SEBI may do away with quota in IPOs
New Delhi, May 14 Armed with a suggestion by Economic Survey for 2005-06 that it was time to move away from quota system to unified auction, SEBI was exploring the
possibility of shifting away from the quota system, that creates artificiality in the market resulting in price manipulation. Both Finance Ministry and SEBI are grappling with the issue, but they are not so far come up with alternative to replace quota system. The existing quota system as well as unified auction has its own advantage and disadvantage. If there is a unified auction, big players will corner a major chunk of public offers, leaving little for small investors, a Finance Ministry official explained.— PTI
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Go for selective profit booking
by J.C. Anand After a nine-day bullish rally Sensex declined by 327 points during the closing two working days last week. It is too small a fall to call it a market correction which, of course, is long overdue. Analysts expect Sensex and Nifty to move down by at least 8 to 10 per cent for a healthy correction in the overblown market. There are, however, a few disturbing factors causing deep concern both for industry and the Indian stock market. First, the international crude prices have crossed $72 per barrel. There are indications that the petro prices may be raised by the government this week. This appears to be inevitable but it will have an adverse effect on the industry. The second worrying point is the hike in interest rates in the USA and in India. In the USA, the interest rate has now been raised to 5 per cent and this may slow down the inflow of FII and NRI funds to India. Higher lending rates by the Indian banks will impose higher burden on the industry and will reduce profit margins. The prospects of subnormal monsoon is also another point of concern. There is also a shortfall in the generating capacity of electric power and the demand outstrips the supply. There are reports that the power grid may collapse due to heavy withdrawals by some northern states (HP, Punjab, Haryana and Delhi, UT). This is bound to affect industrial production for at least up to July. Some sectors of industry, however, are likely to be less affected by the rise in the crude and petro prices. These sectors are: IT and software, phrama industry, sugar industry (particularly those companies which have capacity to produce ethanol), infrastructural sector industries, such as power generation and transmission, construction of roads and dams, metals and plantations. Long-term investors should go in for selective profit booking when the market revives. Fresh investments should be put on hold till the market correction is over.
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DoT not in favour of outside audit
New Delhi, May 14 DoT officials feel that the prima facie there are no reasons to doubt the figures being given by the operators and there is no reason for outside verification. Tata group Chief Ratan Tata had earlier questioned the allotment of spectrum on the basis of ‘self-proclaimed subscriber base” by individual service providers, prompting sharp reaction from the Cellular Operators Association of India and players like Hutchison and Bharti. Asked about the verification issue, DoT officials said the market had matured and the government had to have some faith in the service providers although the DoT had the right to verify or check if gross or visible discrepancies come to notice.— PTI
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Bonus on post office monthly income scheme is taxable by S.C. Vasudeva Q. I deposited Rs 3,72,000 under M.I.S. in Post Office on 26.06.1999 and on maturity I received Rs 37,200 as bonus. Out of Rs 37,200 I re-deposited Rs 28,000 in Senior Citizen Scheme on 28.06.2005. Kindly let me know either the entire bonus amount viz Rs 37,200 is taxable or Rs 9,200 is taxable for the year 2005-06. 2. I purchased NSCs for Rs 27,000 on 15.02.2000. I had been indicating the details of NSCs in my annual Income Tax Return every year. The date of maturity of these N.S.C. is 14.02.2006. Kindly clarify how much amount will be added in my taxable income for the year 2005-06. — Daljit Singh Rosha, Patiala A. The answers to your queries are as under: 1. The entire bonus earned on MIS is in the nature of an additional interest and therefore would be taxable for the financial year 2005-06. 2. The interest accrued for each year on National Saving Certificates should have been included in the total income and the rebate/deduction thereof could have been claimed under Section 88/80C of the Act. It seems this was not done. In case my presumption is correct, the entire amount of interest earned on National Saving Certificates for the entire period will have to be included in the taxable income for the financial year 2005-06. Tax liability Q. Please let me know my tax liability for the financial year 2005-06. I am a bank employee and my income details are as under: Total income: Rs 3,10,000. I have availed a housing loan, the annual interest in which comes about Rs 65,000. The repayment towards the loan is Rs 72,000. Can I also invest up to Rs 1 lakh. Please also advise me the securities where I can invest up to Rs 1,00,000 as the PF deduction is about Rs 30,000 this year. Tuition fee of children is Rs 12,000. — S.L. Dhar A. You have not indicated the income from house property. The said figure is required for the purposes of allowing you deduction of interest paid on said loan. In view thereof, it is not possible to compute your total tax liability. Section 80 C Q. I am employed in a bank. Please clarify under which section of income tax housing loan interest accruals is exempted. And which section covers ICICI Prudential Pension Plan Premium of Rs 10,000. I am appending below my salary income and all deduction/investments. Salary income Rs 4,35.000 for assessment year 2006-07 SPF/GPF Rs 47,000 Deduction LIC premium Rs 10,000 Aviva life ins. Rs 10,000 Premium ICICI Rs 10,000 Prudential Pension Plan premium Housing loan Rs 47,000 instl. Repayment Housing loan Rs 24,000 interest accruals Children Rs 18,500 education expenses [one doing M.Com and other PGDCA through correspondence NSCs interest Rs 6,500 accruals — R.S. Negi A. The answers to your queries are as under: The principal amount paid towards the repayment of loan borrowed for the construction or acquisition of a residential house is allowed as a deduction against total income under Section 80C of the Act. The said section also includes certain other contributions/payments and all such contributions/payments are allowed as deduction against total income subject to a maximum amount of Rs 1 lakh. The interest on housing loan is deductible against the income from house property under Section 24 of the Act. The Pension Plan Insurance premium is deductible from total income under Section 80C of the Act. However, the deductible amount is limited to Rs 10,000 in accordance with the provisions of Section 80CCC of the Act. I may add that this amount of Rs 10,000 is covered within the overall limit of Rs 1 lakh provided in Section 80C of the Act. Tax calculation Q. My total salary will be approx Rs 1,60,000 for the current financial year 2005-06 (Assessment year 2006-07). My contribution/ deduction towards GPF is Rs 60,000, PLI Rs 3,816 and CGEIS Rs 360 i.e. (yearly). What will be the figure of amount I have to pay as income tax? Please give break up details of calculation, as there happens a vast change to calculate IT (Income tax) for current financial year 2005-06. — Avtar Singh A. In case of an individual, no tax is payable for assessment year 2006-07 if his total income does not exceed Rs 1 lakh. In your case, therefore, there would be no tax liability in view of the fact that contribution to GPF and PLI etc. exceed the amount of Rs 60,000, which amounts are deductible from the amount of Rs 1,60,000 under Section 80C of the Act. This would reduce your total income to less than Rs 1 lakh, which figure would be below the taxable limit.
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