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Govt still to recover over
Rs 66,000 cr IT arrears
Paswan hints at banning iron ore exports PNB hikes interest on fixed deposits
Give Kolkata airport its due
STCG tax applicable on debt funds |
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Govt still to recover over
Rs 66,000 cr IT arrears New Delhi, August 5 According to Finance Ministry, the total amount of income tax outstanding against various companies as on June 1, 2006, amounts to Rs 66,598 crore, although it claims to have taken various steps to recover the outstanding tax arrears through legal and administrative measures. Official sources say it is not the film stars or politicians but large corporate houses and a vast number of companies spread across the country, which owe tax arrears amounting to over Rs 100 crore each. “In fact, it has become a normal practice for some companies who file appeal against the tax demands. Since the courts and tribunals take a long time to decide the cases, they save interest on tax amounting to crores during that time,” an official in the Finance Ministry said. The ministry recently set up a task force for recovering tax arrears. It is soon expected to devise effective strategies and develop innovative approaches to collect tax arrears. Finance Minister P. Chidambaram has also reportedly instructed the identification of cases involving substantial amount of arrears pending before Commissioners (Appeals) and Tribunals requesting them to dispose of such appeals at the earliest. “The Ministry has requested the Tax Tribunal not allow stay of demand beyond 180 days as prescribed in the Section 254 (2A) of the Income Tax Act, besides requesting settlement commission to dispose of high demand cases expeditiously,” Ministry of State for Finance S.S. Palanimanickam had informed the Parliament. Concerned with the new tactics of tax evasion, Finance Minister has asked the officials to “increase their knowledge and database before going after tax evaders.” A number of businesses and professions in India, such as the film industry, real estate, diamond trade, and politics, are organised in such a manner that tax evasion and delay in payment is built into their operations. The sources admit that despite government’s claims not much progress has been made so far on the recovery of outstanding tax arrears due to legal and administrative hurdles. In addition, they add, there is no record of all small and big companies maintained at the Central level. Consequently, it is not easy for the tax officials to follow the cases. Further, shortage of manpower is also coming in the way of recovery. |
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Brussels, August 5 The decision on the appointments was taken by the Arcelor and Mittal Boards, which met in London and Luxembourg, according to a statement issued by Arcelor-Mittal. The Boards also approved the appointment of Michael Wurth as Senior Executive Vice-President Flat Products (Europe), Malay Mukherjee, Senior Executive Vice-President Stainless, Mining (Asia and Africa), Gonzalo Uriquizo Senior Executive Vice-President Long Products and Distribution and Davinder Chugh in the same capacity of shared services. The new management Board would meet on August 8. While Joseph Kinsch was appointed as the Chairman of the new Board, other Arcelor representatives include Jose Ramon Alvarez Rendueles, Edmond Pachura, Prince Guillaume of Luxembourg, Sergio Silva de Freitas and Jean-Pierre Hansen. L.N. Mittal was appointed as the President of the Board and names of five other members of Mittal Steel were also approved by the respective companies' Boards, including Vanisha Mittal, Wilbur Ross, Lewis Kaden, Francois Pinault and Narayanan Vaghul.— PTI
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Paswan hints at banning iron ore exports New Delhi, August 5 “The government will consider putting a ban on iron ore exports,” Mr Paswan said, while releasing Assocham study on “ Steel Cementing Growth” here yesterday. The minister endorsed the proposal of the chamber that iron ore reserves should be auctioned to the domestic steel producers just as the government awards coal blocks to the indigenous power producers. The study has recommended imposition of 16 per cent excise duty on iron ore, arguing that it would add Rs 1,800 crore to Rs 2,200 crore to the government kitty, besides helping the domestic steel industry. |
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PNB hikes interest on fixed deposits New Delhi, August 5 "The interest rate on domestic term deposits was last increased on July 1,2006, but signalling a tightening trend, PNB has increased interest rates for deposits by 25 to 75 bps in the range on all maturities of 180 days and onwards", a bank release said here. The revised interest rates are effective from August 7. "PNB has announced this hike taking care of the hardening of interest rates in government securities market and the credit pick up which have been the key triggers", PNB CMD S.C. Gupta said. The Finance Ministry has been concerned over the decision of the banks to raise interest rates, following the hardening of interest rates. — UNI
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by K.R. Wadhwaney Give Kolkata airport its due Whatever may be general health of the Airports Authority of India (AAI), it has many technically-knowledgeable and competent officials. But, sadly, these officials have not been effectively utilised for ‘construction and development projects’. Suddenly, a golden opportunity has come about. After a lot of procrastination, the West Bengal government has made a public statement that it will prefer AAI to any private enterprise for the modernisation of the Netaji Subhash Chandra Bose international Airport in Kolkata. This is a healthy development. The AAI engineers and technicians are capable of doing a wonderful job, which can put private operators for renovation at the Delhi airport into background. CPM leader Sitaram Yechury has gone on record as saying: “We hope that the AAI would take it up as a challenge and accomplish the task even before Delhi and Mumbai projects are completed”. There was a time when Kolkata was an important civil aviation hub. Suddenly, there was a shift in the policy and several foreign carriers stopped operating flights from Kolkata. Now, there is a welcome change and Kolkata is rightly regaining the importance it deserves. Actually, Kolkata should be a centre for east-bound flights and, if this concept is meticulously developed, a lot of congestion at the Delhi airport can be reduced. This is the right time for the government to look beyond Delhi and Mumbai. An all-round development is the most urgent need to attract tourists from different countries. The authorities at Kolkata are said to have already chosen design for the overall structure development costing more than Rs 2,000 crore. The design has been prepared by the same firm that had designed the Charles De Gaulle airport in Paris. At the Delhi airport, the GMR group led joint venture, Delhi International Airport Limited (DIAL), has taken over from the AAI. On paper, the changeover in the management control was smooth but there are many ‘weak areas’, which are causing bottlenecks and inconvenience to passengers and airline operators. Touts and other unscrupulous operators are taking advantage of the lax control around arrival concourse. Twin runways are functioning but delays have become a routine. Needless long queues at every counter, including x-ray baggage area, have become more pronounced than earlier. The GMR group officials reiterate that functioning will settle down soon. Some new no-frills airlines are all set to start flying. It will lead to more congestion. Most of the airlines on the domestic sector are sustaining heavy losses. Even Jet Airways has posted loss. The airline plans revamp but overall picture is far from rosy.
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by A.N. Shanbhag STCG tax applicable on debt funds Q: I want to know what is the tax payable on the capital gains made on mutual fund weekly reinvestment - dividend growth fund. How do I calculate the tax on investment of systematic transfer plans (STPs) from debt fund to an equity fund? — Sanjeevani A: On debt funds, short-term capital gain (STCG) tax is payable at the slab rates applicable to the investor. Long-term tax is payable at the rate of 10 per cent without indexation or 20 per cent with indexation, whichever is lower. An STP implies selling the units of the debt fund and investing the proceeds into the equity fund. Therefore, an STP would entail payment of short-term or long-term capital gains tax, as the case may be. Options u/s 80C
Q: 1. What are the various options available to invest up to Rs 1 lakh to claim deduction u/s 80C? 2. Is the interest in existing National Savings Certificates (NSCs) considered as reinvested, deductible from income u/s 80C now for AY 07-08? 3. Can we buy two certificated of NSCs from different post offices of Rs 50,000 each to claim total deduction of Rs 1 lakh u/s 80C? 4. Are the scheduled banks accepting FDs for 5 years lock-in, to give benefit of deduction u/s 80C? Which are these banks? — Y.P. Kumar A: 1 Under Section 80C, contributions by an individual or HUF to some specified schemes (Co-PF, PPF, LIC, NSC, ELSS, etc.) up to an aggregate limit of Rs 1 lakh qualify for a deduction from gross total income. There are no ceilings on deductions for individual schemes, unless the rules of the schemes provide for their own limits. For instance, the maximum contribution to PPF is Rs 70,000. Yes, you can contribute Rs. 50,000 each to PPF and NSC. 2. The interest accrued at the end of each year up to the end of the 5th year shall be deemed to have been reinvested on behalf of the holder and therefore, the amount of interest is entitled to deduction u/s 80C. 3. Yes, you can do so. 4. The desired notification has now been issued but we will have to wait for publication in the official gazette after which the scheduled banks will take their own time to launch their own schemes. Interest on NSC
Q: If I follow cash system of accounting, then is it necessary to show interest accrued on NSC every year. Generally in cash system of accounting, we are taking into account interest on NSC income in the year of maturity and if it is so, then is it possible to claim deduction on interest accrued on NSC for the first five years u/s 80C without showing interest as income each year (as interest would be taxable in the year of maturity). — Arun Sahu A: Irrespective of the accounting system you use, the interest of NSC has to be shown on accrual basis. Otherwise, you will not be able to claim the benefit of deduction u/s 80C on interest for the initial 5 years out of its term of 6 years. HBL benefit
Q: I have taken a house building loan in the year 2002 and paying the instalments timely. But I was not claiming the rebate of repaying the principal as well as interest amount till the FY 2004-05. But from the FY 2005-06, I am taking the advantage of rebate only on the interest amount (1/5th of previous years + current year) and principal amount (only current year). My question is whether I can claim rebate for the principal amount paid by me in the previous years? If so what are the provisions in the rule? The construction of the said house is completed in the year FY 2005-06. — Himadri De A: The deduction u/s 80C and the interest u/s 24 are allowed only when the income from house property becomes chargeable to tax. In other words, the construction should be complete, the flat should be ready for occupation and the municipal annual value is known. The interest for the years prior to the year in which the property was completed, shall be deducted in equal instalments for the year during which it was completed and each of the four immediately succeeding years. Unfortunately, there is no corresponding provision for the capital repayment. This is an interesting feature. If the construction or acquisition is completed anytime in a FY, the interest paid during the entire FY is deemed to be the normal interest though a part of the FY is pre-construction period. Tax liability
Q: I worked as a primary teacher in Heritage School in Delhi from April 2005 to March 2006. The total salary I got from this school in this time period was below Rs 1 lakh (near about Rs 95,000). I also saved Rs 10,000 in LIC in one year. Do I have to pay any tax? — Ravi Dahiya A: There is no legal obligation to file tax returns unless the income chargeable to tax exceeds the minimum tax threshold of Rs 1,00,000. However, it is prudent to file the returns not only for claiming the refund of TDS, if any, but also to ensure continuity. Gift to US citizen
Q: I am holding a commercial property in Chandigarh, myself (25 per cent) along with my wife (25 per cent) and younger son (10 per cent) want to gift the said property to my elder son and his wife settled in the US who are holding American passport and are citizen of the US. My query in this regard is: a) Can we gift the above property to my elder son or his wife in the US under the Indian laws without any tax liability? If yes, whether any approval from the RBI is required. My son and his wife are assessed in Chandigarh on their Indian Income. b) Whether rental income from above gifted commercial property can be remitted to the US. c) Can we plan that this gifted property be transferred on the basis of irrevocable power of attorney to be executed by all of us (i.e. myself, wife and younger son) in favour of second son or his wife. Will this create any problem in remitting the rental income to the US? Will the RBI have any objections in the above arrangement? d) After the property is gifted and transferred in their name, whether the sale proceeds of the above gifted property be remitted to the US. e) He along with his wife also hold balance 40 per cent share of the above property which has been purchased through their Indian funds/income. Whether the sale proceeds or their share can be remitted to the US? — P.K. Goyal A: 1. A resident can give a gift of an immovable property to an NRI or a PIO. 2. After payment of taxes, the remnant amount can be remitted abroad. 3. This suggestion has to be handled with great care. Many of our readers have landed themselves in some difficulty or another by gifting an irrevocable PoA. 4 & 5. In the case of immovable property acquired out of rupee funds, the remittance of sale proceeds is not available, unless the property is held by the owner for minimum 10 years.
The authors may be contacted at wonderlandconsultants@yahoo.com
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