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VAT panel defers CST phaseout
Hewlett-Packard chief resigns amid spying scam
Hyundai to pump in Rs 4,191 crore
Common drug prices set to fall
BSNL offers lower rates for MTNL traffic
Aviation Notes |
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| Investor Guidance SCSS has a ceiling of Rs 15 lakh Q: I am an income tax payee at 30 per cent. My wife does not work but she had shares of a company for almost 20 years. She sold them last year for Rs. 2 lakh.
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VAT panel defers CST phaseout
New Delhi, September 23 The decision was taken after the Centre and state governments failed to reach an agreement regarding compensation package by the Union Government to the states to meet the revenue loss due to reduction in the CST. The CST, imposed on inter-state trade of goods, was originally scheduled to be phased out from the beginning of the current fiscal from the present level of 4 per cent to 2 per cent, but its reduction was diluted to 3 per cent and timing deferred to October 1. “CST and VAT cannot co-exist. CST has to go subject to full compensation package for loss to states on account of CST phase-out being agreed upon by the Union Finance Ministry,” Empowered Committee Chairman Asim Dasgupta told reporters after the meeting of committee. However, CST would have to be phased out to implement the goods and service tax (GST) by 2010, already announced by the Finance Minister. Punjab Finance Minister Surinder Singla told The Tribune, “The Finance Ministry is resisting to provide 100 per cent compensation to the states for loss of CST, and is trying to put all burden on the states. So, until there is some agreement on the issue, the CST phase-out programme would have to be deferred.” CST is likely to touch Rs 20,000 crore this fiscal and is estimated to be Rs 23,600 crore during 2008-09. The CST, a 4 per cent tax on inter-state transactions administered under the Central Act, fetched states a tidy sum of Rs 18,500 crore in 2005-06. The Finance Ministry officials said the plan was to cut the CST from 4 per cent to 3 per cent from October 1. This would have cost states over Rs 2,500 crore. A further cut to 2 per cent proposed in the next stage will cost them another Rs 12,000 crore. The ministry has proposed that VAT rate of 4 per cent could be raised to 6 per cent to compensate states, but the states were not ready for it. The states have also demanded 50 per cent share in service tax from the Centre from the present level of 30.5 per cent, besides permission to impose tax on imports and certain services, and to impose VAT on uncovered goods like sugar and cigarettes. Mr Dasgupta maintained that the CST was scheduled to be reduced to 1 per cent during 2008-09 and then entirely removed during 2009-10. There would be review of CST phase-out before reducing it to 1 per cent during 2008-09, he added. VAT revenue growth up
The switchover to VAT system by the states has yielded positive results with 21 of them, which have joined the new tax system right from the beginning of the last fiscal, experiencing a 30 per cent rise in revenues in the first five months of the 2005-06 over a year-ago period. If all states, including 6 more which switched over to VAT system later, are taken, the rate of growth stood at 26 per cent, VAT panel Chairman Asim Dasgupta said today. Mr Dasgupta has been maintaining that revenue growth under the VAT regime is much more than secular trend in the sales tax regime. He downplayed any apprehension of large-scale variation of VAT rate among the states, saying the deviation is now restricted to 2 per cent of total 703 items against 3 per cent
earlier.— PTI |
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Hewlett-Packard chief resigns amid spying scam
San Francisco, September 23 Dunn had been due to step down in January 2007 but her departure was moved up amid allegations HP’s investigators impersonated board members and journalists to get private telephone records. “On behalf of HP I extend my sincere apologies to those journalists investigated and everyone who was impacted.” Hurd said that his offer to testify with Dunn and HP lawyers before the House of Representatives’ Energy and Commerce Committee in Washington on September 28 had been accepted. Hewlett-Packard is facing a federal investigation. The hearing will focus on whether private investigators hired by HP spied on board members, employees and reporters in a campaign to plug a company leak. At issue was whether the investigators impersonated people to gain access to their telephone records, secretly followed people, and hid tracers in company e-mails to track where they were forwarded. The California attorney general has already signalled HP or its contractors could face criminal charges.— Agencies |
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Hyundai to pump in Rs 4,191 crore
New Delhi, September 23 The announcement comes days after the company's Chairman and CEO Chung Mong Koo called on President A.P.J. Abdul Kalam and Prime Minister Manmohan Singh, sharing Hyundai's investment plans for the country. Hyundai, which currently manufactures cars at its facility near Chennai, has so far invested Rs 3,372 crore in India. The company, which has made India a hub for manufacturing small cars to cater to various geographies, currently has a production capacity of 3,00,000 units which it will double with the addition of the second plant that is likely to be operational by the end of 2007 and involve an investment of Rs 2,429 crore. Hyundai said its vendors would separately invest a total of Rs 2,585 crore for catering to the second plant. It said investments for its second engine and transmission plant would be Rs 1,210 crore while the R & D centre will see inflows of Rs 184 crore.— PTI |
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Common drug prices set to fall
New Delhi, September 23 "Industry has agreed to the government proposal of fixing margins on drugs which are promoted by the trade route from October 2," Union Chemicals and Fertiliser Minister Ram Vilas Paswan told reporters here. Different industrial bodies have said they would fix margins for retail at 35 per cent and 15 per cent on wholesale for those drugs which the companies give responsibility to distributors for promotion without fixing any margins. "As a result of this agreement, we expect a substantial fall in the prices of these commonly used drugs," Mr Paswan said. As per estimates, the prices of these drugs can fall between 0.2 per cent to 70.3 per cent, he added. Commenting on the prices of anti-AIDS drugs, Mr Paswan said a reduction in the prices was expected as two state-owned pharmaceutical units — Rajasthan Drugs and Pharmaceuticals Ltd and Hindustan Antibiotics Ltd — are set to launch their anti-retrovirals (ARVs).— PTI |
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BSNL offers lower rates for MTNL traffic
New Delhi, September 23 According to sources, BSNL will reduce carriage charge to 54 paise from current 65 paise for long distance calls originating from MTNL’s network. It is also likely to reduce rates for the distance below 50 km to 18 paise from 20 paise for MTNL. With this, MTNL will be able to save extra payment to BSNL while the latter would continue to retain its market share in terms of usage of network over the private operators.
— PTI |
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Aviation, tourism sectors eye middle-class clients
by K.R. Wadhwaney
After battling for survival for several years, the civil aviation and tourism industries are on a strong image-building exercise to improve India’s reputation worldwide.
Vastly improved connectivity between metros and remote, far-fetched areas, spacious international and national airports, induction of new aircraft of varying sizes and configuration and ‘time saved is money saved’ are some of the programmes that have already been ushered into the aviation and tourism sectors.
All these programmes and several other far-reaching schemes were spelt out by the Minister of State for Civil Aviation Praful Patel in his characteristic inaugural address to delegates attending 40th session of the United Federation of Travel Agents’ Association (UFTAA) in Delhi last week. An association of associations, with 81 members from 79 countries, the UFTAA was congregating here after 22 years. The first meeting was in 1984 when aviation/tourism were languishing at bottom. The concave’s venue Delhi (India) was rightly chosen to pay tributes to Jimmy Guzder, the only Indian founding father among three still living. Among several positive measures, Mr Patel talked about awareness in masses about the aviation and tourism sectors. He made a pointed reference that even low middle-class persons from tiny areas were now aware of multiadvantages of travelling by air. “If this flying trend is maintained by these people, as they are doing, we will require far more aircraft than we can afford to buy”, declared Mr Patel. Buoyed by Mr Patel’s observations, several Indian delegates, particularly from TAAI C.V. Prasad and Rajji Rai, explained the importance of several associations to work hand-in-hand to promote aviation and tourism in the country. While accepting there was mushrooming of travel agents, the consensus was that agents and operators were important unit between airlines and passengers. “The airlines, facing enormous losses owing to rise in fuel prices, may reduce commission to agents but they can’t keep afloat without agents”, said scores of delegates, foreign and Indian. Some of the foreign delegates, who have had inter-action with Indian agents and operators, were of firm view that India was now an excellent destination to travel for ‘holiday and relaxation’. The UFTAA, a world body, was founded in Rome (Italy) in 1966. It is an affiliate member of the World Tourism Organisation (WTO). It represents about 100 national travel associations. Mr Patel, who substituted his tourism colleagues Ambika Soni, was forthright at the UFTAA Congress that airlines should stagger their flights and use secondary airports. His suggestion showed that not for nothing he was awarded recently Verve Zoom Glam award in Mumbai. But he should make national carriers to stagger their flights first. The Indian civil aviation will wear a bright and shining maharaja-like image only when some sense of discipline is instilled into Air India officials, particularly senior officials. The UFTAA president Joe Olivier’s theme-song was that there should be greater cooperation between airlines and agents. Unfortunately it was not so. For this declining trend, both airlines and agents are to blamed. |
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SCSS has a ceiling of Rs 15 lakh
by A.N. Shanbhag Q: I am an income tax payee at 30 per cent. My wife does not work but she had shares of a company for almost 20 years. She sold them last year for Rs. 2 lakh. She then got a gift from her son (who is a US citizen) in December’05. She kept that money in the bank and as soon as she turned 60 in April she put the money (Rs. 6.5 lakh) in senior citizen scheme. Last month, our daughter (who is also a US Citizen) gifted her $ 5,000 as she wanted her mother to have enough independent income. My son, when he heard that his sister had given $ 5,000 to their mother also wants to send her another $ 6,000. (Total of almost Rs 6 Lakh) 1. How much maximum money can she put in her SCSS A/c without having to pay any income tax on the interest earned? Does her maximum interest have to be Rs. 1.35 lakh or Rs 1 lakh without attracting any income tax? 2. Does she need to file any income tax return if her interest income is below Rs 1.35 lakh. A: First of all, she can invest a maximum of Rs 15 lakh in the Senior Citizen Savings Scheme (SCSS). If she does so, her interest from the same would be around Rs 1.35 lakh. For ladies who are not senior citizens (65 years or more as defined by the Act) the tax threshold is Rs 1.35 lakh. So she won’t have to pay any tax. Also she is not obligated to file tax return if her income is equal to or below Rs 1.35 lakh. ELSS scheme Q: Is the dividend re-invested on ELSS scheme is locked for 3 years from the date of initial purchase or from the date of dividend reinvestment. In case it is from the date of reinvestment then can I get deduction u/s 80C for the dividend reinvested amount? — Purohit A : It is from the date of reinvestment and yes, you can get Section. 80C deduction for the same. Mutual funds Q: Can you please advise me that when investing in a mutual fund I should opt for growth or dividend option. I always opt for dividend option. But lot of brokers insist to opt for growth option as returns are higher in this than dividend option. All the mutual funds I have are equity ones. Except two, all are open ended. — Kunal Kumar A: Returns for growth and dividend options are not different as the dividend is assumed to be reinvested in the scheme. However, in practice, due to market conditions or even lethargy this doesn’t happen. Therefore, in my opinion, the growth option works the best. PPF account Q: My PPF A/C completed its term PPf account of 15 years and now I have got it extended for another block period of 5 years. Kindly advise the tax status of my investments/earnings/withdrawals during the extended period of 5 years after the proposed EET regime is implemented. — Mr Sharma A: As far as PPF maturity goes, the FM clearly stated that it is the intention of the government to move to an EET-based system of taxation. This means, investments like those under Section 80C which enjoy a deduction from income would be taxed upon maturity. As of now, there is no proposal to tax such investments. However, the FM has stated that he has appointed a committee which will devise the structure and form of an EET system and present it to the Parliament. Only when it is passed, there will be a semblance of clarity, hopefully. This includes ELSS (Sec. 10(38)), LIC proceeds (Sec. 10(10D)) etc. Tax on gains Q : I am a salaried individual paying income tax. My wife is a house wife. I want my wife to invest in shares with the money transferred from NRE account. In this case will I be liable to pay tax for the gains she gets. — Jayesh A: Yes, you would be liable to tax on the gains she gets on account of the clubbing provisions. However, since long-term gains on shares and equity MFs are tax-free, such clubbing loses its teeth. Capital gains Q: I would like to know whether there is any Indian income tax or capital gains tax payable on sale of inherited agricultural property in India. Also is the proceeds of the sale allowed to be transferred to a foreign country? — Merchant A: Agricultural land not situated within the jurisdiction of municipality or cantonment board with a population of 10,000 or more according to the preceding census is not a capital asset. Consequently, any gains arising from the sale of an agricultural land outside this area is not treated as capital gains. Otherwise, it is exigible to long-term capital gains tax. The capital gains, if any, are repatriable after payment of tax. The rest of the amount is repatriable under certain conditions. Circular 67/2003-RB dt 13.1.03 supplemented by RBI Master Circular 4/2004-05 dt 1.7.04 makes it possible for an NRI or a PIO to remit as much as US$ 1 million per calendar year for bona fide purposes out of the sale proceeds of assets acquired by way of Inheritance/legacy held in NRO accounts. The remittance can be effected only when it is sought for all bonafide purposes to the satisfaction of the AD. An undertaking by the remitter and certificate by a Chartered Accountant in the format prescribed by CBDT vide their Circular 10/2002 dt 9.10.02 has to be produced. It is necessary to file Form-A2, FEMA Declaration, Certificate from an accountant, and undertaking for payment of income tax, in the specified format. A No-Objection-Certificate from the income tax department will be useful, but not necessary.
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