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Hike in petro prices
unlikely
ONGC not keen on venture with Mittal
Govt set to raise bonus ceiling
Narayana Murthy retires from Infosys |
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Hike in petro prices
unlikely
New Delhi, August 20 In other words, any hike in fuel prices, whether petrol or diesel, is not imminent, Petroleum Ministry officials said. The oil marketing companies have so far not effected any adjustments in prices since last price increase on June 6, 2005. The Union Cabinet had on June 5 raised the petrol price by Rs 4 per litre and diesel by Rs 2 per litre and had given autonomy to the public sector retailers to raise prices when the Indian basket of crude oil stayed above $70 a barrel for a month. The government, however, did not increase the prices of PDS kerosene and domestic LPG to protect the interests of the common man and the weaker sections of society. The average price of the Indian basket of crude oil at the last time of hike was $66 to $67 a barrel. Even though the July average stayed well over $71 a barrel, public sector oil firms have decided not to pass on the surge on August 1, when the monthly revision was due. ''During the current month (July-August), the Indian basket has averaged over $73 per barrel,'' the officials said. Last month also, the government did not revise the oil prices when the crude oil prices had gone up to a record $78.40 per barrel as the Middle-East crisis had reached its peak. However, the government sources said they were keeping a close watch on the turbulent situation in the West Asian region. For the new pricing scheme to come into effect, the average has to stay above $70 for full month. To help smoothen any hard landing due to huge under-recoveries, the government is going in for a combination of tax cut, issue of oil bonds to bridge under-realisation on petrol, diesel, LPG and kerosene, and upstream oil firms like ONGC extending discounts on crude they sell to refiners, for bridging the Rs 73,500 crore revenue loss expected this fiscal on selling fuel below the cost. ''The increased burden arising from rise in international crude oil prices will be borne by the oil companies. The refiners, who have been making handsome margins, would be asked to chip in some form of discounts,'' the official said. Some of the additional burden may be borne by the oil marketing companies themselves. Another option before the government is to lower import duty on crude in proportion to the increased revenue flowing from higher oil prices. However, this measure may not find favour with the Finance Ministry which had earlier said it was finding it difficult to meet fiscal targets. Petroleum Minister Murli Deora had said that the government along with oil companies had decided to absorb over 87.5 per cent of this burden, leaving only the balance 12.5 per cent to be borne by the consumers by way of increase in petrol and diesel prices. Finance Minister P Chidambaram had tabled supplementary grants providing for issue of Rs 14,150 crore of oil bonds to public sector oil firms for their under-recoveries on fuel sales during the first two quarters of 2006-07. The oil ministry is also trying for a duty relief on the fuels from the Finance Ministry to ''protect consumers'' from any flare up in domestic prices. Petrol price needs to be raised Rs 6.31 a litre, diesel Rs 8.25, kerosene Rs 18.69 and cooking gas by Rs 166 a cylinder if these are to be sold at international prices, experts
say. — UNI
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ONGC not keen on venture with Mittal
New Delhi, August 20 Mr Mittal last week wrote to the government about delays in shaping up of ONGC-Mittal Energy Services Ltd (OMESL), a JV company that was to trade and ship oil and gas (including LNG), industry sources said. After the exit of high-profile Subir Raha, the brainchild of the coming together of India's largest oil and gas producer and world's largest steel-maker, ONGC has reversed several decisions of the July 2005 MoU. Sources said ONGC has refused deputation of its employees to the ONGC-Mittal Energy Ltd (OMEL) — the company formed to acquire oil and gas properties abroad and OMESL. It has also reversed the decision to open an office in Delhi, sources said adding the Indian firm this month cancelled interviews for recruitment of professionals to OMEL. The Mittal letter pointed to delays on the part of ONGC to register oil companies with OMESL, a pre-requisite to begin trading in crude oil and petro products. Frustrated at the delays, Mr Mittal is believed to have begun talking to global giants like Chevron, Exxon Mobil for an oil trading venture. The sources said ONGC was willing to continue with OMEL but with a skeletal staff. On OMESL, the PSU's new management has privately said the oil-trading business does not form its core competence and would therefore prefer to exit from it. — PTI
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Govt set to raise bonus ceiling
New Delhi, August 20 The current ceiling of Rs 3,500, fixed in April, 1995, is expected to go up substantially in the view of the booming economy and record profits posted by several companies, besides the substantial revenue for the Central Government, whose employees are also covered under the ceiling. The ceiling, prescribed under the Payment of Bonus Act, also restricts the bonus payment between a minimum rate of 8.33 per cent of the total salary and a maximum of 20 per cent, subject to a ceiling of Rs 6,000. This means that the government or the private sector can pay its employees a minimum bonus of Rs 3,500 and a maximum of Rs 6,000, though the actual 20 per cent would be slightly more than Rs 8,400. However, private companies are at liberty to pay higher amounts without any limit, depending on their profits and willingness to keep their employees happy, but in the form of ex gratia. Various central ministries also follow a productivity-linked bonus and announce the number of days that would be taken into account for the calculation of bonus. The assurance on an early hike in the ceiling of bonus has been given by none other than Prime Minister Manmohan Singh. “There has been discussion on the ceiling for bonus. I agree that the current ceilings were set more than a decade ago. We will soon consider this in the Cabinet and will take a favourable decision,’’ he told a delegation of trade union leaders late last evening. The bonus ceiling had been fixed at Rs 1,600 in 1965, which was raised to Rs 2,500 in 1985 and to Rs 3,500 10 years later by amending Section 2(13) of the Payment of Bonus Act. “I would like to assure you that the welfare of our working class is of great importance to our Government,’’ Dr Manmohan Singh said while making the announcement on bonus. Further, bonus is not the only good news for industrial workers and other employees as, according to the Prime Minister, the government would also review nature of the price indices to remove any distortions that may have crept into them. “I will have an index review committee constituted as requested by you to look into this matter,’’ he assured the delegation. The index review is expected to have an impact on the calculation of dearness allowance (DA) which forms a formidable chunk of the pay packet. — UNI
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Narayana Murthy retires from Infosys
Bangalore, August 20 Mr Murthy turned 60 today and as per the company’s corporate governance policy, he relinquished his executive post. However, he would continue as its non-executive Chairman from tomorrow. Mr Murthy launched Infosys with a handful of friends with each of them contributing Rs 10,000. From its humble beginning, the company under Mr Murthy grew to be the second biggest software exporter in India with a present market capitalistation of $21 billion. The annual income has grown to $2.15 billion with 98 per cent of its income coming from exports. Infosys would now be headed by its seniormost founding member Nandan Nilekhani, who was the CEO and MD. No decision had been taken on appointment of the new Chairman, company sources said. The IT major, which had started with a staff strength of just over 10, now had more than 58,000 on its rolls in nearly 25 offices both in India and abroad. — UNI
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It’s time to book profit
by J.C. Anand During the past fortnight the stock market was almost consistently on a rise excepting on the last working day (Friday, August 18) when Sensex was down marginally by 11 points. Sensex was up by about 652 points during the past fortnight, registering a gain of 5.68 per cent. There are at least three major factors which moved the market up: a partial resolution of the West Asian crisis, a decline in the crude price from $ 77 to $ 70 per barrel, and an all-round bullish temper in the global stock markets. The Prime Minister’s Economic Advisory Council has also forecast that the economy will grow at 7.9 per cent in 2006-07 which is slightly lower than the average growth of 8.1 per cent registered in the past three years and the inflation rates will be contained at 5.5 per cent. It appears that this jumpy stock market is heading for a correction. Heavy floods in Maharashtra, Gujarat and Madhya Pradesh as well as the hike in interest rates and crude prices at $ 70 per barrel are likely to affect profit margins of the corporate sector during the second quarter. There is also an indication that the government is likely to review the oil prices on September 1. It is time to book profit rather than to make fresh investments but if there is some substantial correction this week, the long-term investors may enter the market and make investments in some promising companies. Welspun India
This company is the largest manufacturer of towels and home furnishing in India. Recently, Welspun India bought Christy, the UK’s largest towel manufacturing as well as distribution company at Rs 132 crore. This will give Welspun India access to the European markets along with a strong brand and superior technology. Welspun India already has presence in several US value ratailers such as Costco and Wal Mart. The acquisition of Christy would make it the largest company in its area in Britain. The company’s equity capital is around Rs 73 crore and has a book value of Rs 71.1 for its Rs 10 facevalue equity share. Its quarterly results during this year are better. The market price of its equity share has been ranging between Rs 67 and Rs 145. During the past week, the stock moved up from Rs 67 to Rs 90. It is a scrip for long-term investors, with good management and excellent fundamentals. Nahar Spinning
One can also recommend investment in Nahar Spinning Mills. This company has produced excellent first quarter results with its net profit of Rs 826.34 lakhs as against Rs 435.35 lakh for the corresponding period last year. Its EPS for this quarter is s 4.93 (as against Rs. 2.64). This company has a paid-up capital of Rs 1675.52 lakhs with free reserves of Rs 57824.24 lakh. Last week it was quoting around Rs 205 per share for its Rs 10 face value share. This week it is likely to come down to Rs 200 or lower. The share is cum dividend and the shareholders will be entitled to it at the rate of Rs 5 per share. While Mahavir Spinning Mills has already declared bonus shares, Nahar Spinning may follow suit in a year or so. |
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Honorarium for evaluating answersheets taxable
by S.C. Vasudeva Q. I am working as a lecturer in a government college. At the end of session, I evaluate answer sheets sent by the university and also give examination duties for which we get honorarium. Some times we have to buy some new books for evaluating the answer sheets. By adding this honorarium to my total salary, I get in to 20 per cent tax bracket. Whether this honorarium is taxable or not? If yes, then the amount which we spent on buying books may be deducted from this honorarium at the time of adding it in total income as income from other sources or not. If yes, to what extent? — Raminder Pal Singh, Ferozepur A. The honorarium payable to you is taxable under the head ‘income from other sources’. Section 57 of the Act provides for deductions against such income. Clause (iii) of the said section would be relevant in your case which provides for the deduction of any expenditure (not being a capital expenditure) laid out or expended wholly and exclusively for the purpose of earning such income. The word ‘expenditure’ has been held to be “what is paid out or away and something which is gone irretrievably”. The term “capital” connotes permanency and capital expenditure is, therefore, closely akin to the concept of securing something, tangible or intangible. Books being in the nature of a tangible property would not be allowable as a deduction under the above clause in view of specific mention of “not being a capital expenditure”. In my opinion, therefore, it may not be possible to claim the expenditure on books against the income earned by you from evaluating answer books. Tax liability
Q. I am 83 years old ex-serviceman having yearly pension of Rs 1,10,000 and agriculture income of Rs 1,20,000 during this financial year. No investment has been made in savings. How would my income tax would be calculated. — Bhag Singh, Ropar A.
Your non-agricultural income i.e. pension income of Rs 1,10,000 is less than maximum amount not chargeable to tax i.e. Rs.1,85,000; therefore, even after aggregation the tax liability will be NIL. II
Q. I am a retired government employee. My income for 2005-06 will be as under: 1. Pension - Rs 1,80000 2. Bank interest- Rs 15,000 3. Interest on Monthly Income Scheme for deposit with Post Office(from retiral benefits) - Rs 48,000 4. Payment of premium to LIC (for pension scheme) - Rs 9,890 5. Deposit in PPF-account with Post Office - Rs 70,000 How much income-tax will be payable by me? (ii) I opened PPF-account with Post Office on 08.08.1990. 1. On which date this account will mature and I can withdraw the entire amount? 2. In case this PPF account is to be extended for 5 years, please intimate the last date when this account can be extended? — C.S. Sidhu, Punjabi Bagh, Patiala A.
The answers to your queries are as under: 1. On the basis of figures given by you, your total income for assessment year 2006-07 would be Rs 2,43,000 against which a deduction of Rs 79,890 would be allowable to you. Your taxable income would thus be Rs 1,63,110. In case you are of 65 years of age no tax would be payable by you. However, in case you are below that age a tax of Rs.7,774/- including education cess would be payable on the said income. 2. You can withdraw the entire amount in your Public Provident Fund account after completion of 15 years from the end of the year in which initial subscription was made. 3. The extention for a further block period of 5 years can be made on the expiry of 15 years from the end of the year in which initial subscription was made but before the expiry of one year thereafter. Medical allowance
Q. I am working in the Punjab State Electricity Board as a Junior Engineer. 1. The board is giving me free of cost, 1860 units of electricity costing Rs 5,580 per year. Is it a fringe benefit? Is income tax to be paid by the board or by me, please advise (for the year 2005-06). 2. I am getting Rs 3,000 per year as medical allowance. My yearly expenditure on medical/ medicines is more than Rs 3,000. Can I claim deduction in income tax, if yes, then under which rule and is any document required to be attached? — Kulwant Singh, Patiala A. The answers to your queries are as under: 1. Provision of free electricity of 860 units by the board costing Rs 5,580 per year would be taxable in your hands in view of the provisions of Rule 3 of Income-tax Rules 1962. The said item is not covered within the provisions of Fringe Benefit Tax. 2. Section 15 of the Act provides for the taxability of any salary due from an employer or a former employer, to an assessee in the previous year, whether paid or not. As per Section 17 of the Act, the term “salary” includes any fees, commission, perquisites or profits in lieu of or an addition to any salary or wages. Any fixed allowance paid by employer would definitely be covered within the term ‘perquisites’ or ‘profit in lieu of salary’ and, therefore, in my opinion become taxable as part of the salary. However, in view of the proviso to Section 17 of the Act, any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family other than a medical treatment provided in any hospital so, however, that such sum does not exceed Rs 15,000 in the previous year, is not includible as part of the salary. Accordingly, in my opinion you should be able to get a deduction from your salary for a sum of Rs 3,000, subject to your providing evidence that the said amount has actually been incurred for medical treatment of yourself or for the members of your family. Senior citizen
Q. I am a senior citizen. My total income, including pension, bank interest and from house property is Rs 1,19,830, which is lesser than Rs 1,85,000, the exemption limit for senior citizens, but by adding my agricultural income of Rs 67,900, my gross income comes to Rs 2,52,900, for the year ending 31.03.06. Agricultural income is for rate purpose only. Kindly guide me:- Whether I am entitled to claim any rebate, the maximum amount of rebate admissible of the section of Income-tax Act under which such rebate can be claimed. — Satpal Singh
Pandhu, Patiala A. In view of your total income, excluding agricultural income being less than Rs 1,85,000, there will be no tax liability on account of the addition of agricultural income. |
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IT major Infosys Chairman N.R. Narayana Murthy today retired from the service of the company, which he had launched as a small firm in the city in 1981 and took it to enviable heights.
Mr Murthy turned 60 today and as per the company’s corp- orate
governance policy, he relinquished his executive post. However, he
would continue as its non-executive Chairman from tomorrow.
