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IRDA wants LIC on par with private insurers
Rajiv Bajaj makes to Forbes cover
Bharti beats RIL, Infosys in Business Week’s rankings
Hutch under DoT scanner
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Cabinet nod for 24 pc PFC IPO sought
EPFO gears up to go online
UK beer group to set up 3 more plants in India
Global Union
MARKET
UPDATE
Market set for record high
TAX
ADVICE
Rebate up to Rs 50,000 allowed u/s 80U
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IRDA wants LIC on par with private insurers
New Delhi, September 24 Unlike provisions for private players in the insurance sector, the LIC Act provides for setting up subsidiaries through policy holders fund, IRDA Chairman C S Rao said. "Insurance companies are not expected to set up subsidiaries from policy holders fund, but the LIC Act provides for subsidiaries. That is how they have subsidiaries," he explained. LIC has subsidiaries like LIC Housing and LIC Mutual Fund. "These are the things, which are required to be changed," Mr Rao said. When contacted, LIC Chairman T S Vijayan refused to comment on the issue. LIC has just Rs 5 crore of paid-up capital, which is also required to be enlarged to Rs 100 crore to bring the corporation on par with private players. Besides, LIC does not need to seek the approval of the IRDA for opening up offices, Mr Rao said. "Any insurance company has to take the permission of the authority to open offices, but LIC is exempted from that," he said adding the IRDA wants the government to bring the largest life insurer in alignment with other insurance companies. LIC could set up offices even by the consent of regional officers or zonal officers, he added. The LIC Act also does not provide for setting up separate reserves as a cushion against any default, Mr Rao said. LIC does not have any such reserves since 95 per cent of the surplus earned from policy holders money go to them and 5 per cent to the government as dividend. LIC is meeting such a mandatory requirement, technically called solvency margin, from its current assets. The corporation has solvency margin of 130 per cent and would inject Rs 7,000 crore more to take it to 150 per cent as is required by the IRDA within two years, LIC Chairman T S Vijyan said. IRDA has also recommended to the Centre that the government guarantee to LIC policies should be done away with to create level-playing field with private insurers. This is the major provision in the LIC Act that comes in the way of level-playing field in the insurance sector, Mr Rao said. Mr Vijyan, however, did not believe that the government guarantee creates any favourable situation for the largest life insurer, saying the corporation has never invoked the guarantee in the past 50 years. However, he admitted that in terms of marketing the provision did make a difference in the consumers mind in support of LIC.
— PTI |
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Rajiv Bajaj makes to Forbes cover
Singapore, September 24 The Bajaj Auto MD has done it by a turnaround at his family-run automaker and reclaiming the top position in the two-wheeler market, while earning himself a place on the cover page of the Asia edition of Forbes. Besides, Bajaj Auto also finds place in Asia’s Fab 50 list, featured in the same October issue of Forbes Asia — among the companies that the magazine describes as the best of Asia-Pacific’s publicly traded firms. Rajiv is credited with the turnaround, transforming Bajaj from a stodgy scooter manufacturer to a tech-happy motor cycle maker in a country, where two-wheelers account for 80 per cent of all vehicles. However, it has been a long and not-so-easy ride for Rajiv Bajaj. In 2001, a year after Rajiv unofficially took over the reins of the family-run business, he saw Bajaj Auto losing its market lead in the two-wheeler market for the first time in 45 years. Motor cycles took over the market and Hero Honda’s dominance was so great that such bikes, regardless of brand, were known as “Hondas”, the magazine says in its cover story.
— PTI |
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Bharti beats RIL, Infosys in Business Week’s rankings
New Delhi, September 24 The annual ranking, 'Asia Business Week 50', of best companies across all sectors in Asia ranked Bharti ahead of compatriots Reliance Industries (17) and Infosys (23), a company release said. Commenting on the ranking, Bharti Airtel CMD Sunil Mittal said it highlighted the company's pursuit to create a world-clas organisation providing best in class services. Business Week said Bharti's plans to invest $2 billion on network expansion and marketing to reach underserved markets in rural areas was "serious money" and a step towards Mittal's broader ambition to be the most admired brand in India by 2010. "Investors already like what they see. Bharti Airtel delivered 30 per cent total shareholder returns in 2005 and a head-turning 493 per cent over the past three years," the release said quoting Business Week.
— PTI |
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Hutch under DoT scanner
New Delhi, September 24 When contacted, Hutch officials confirmed the receipt of DoT communication and said all information had been sent to them. Last year, even the telecom regulator TRAI had said that Hutch's push-to-talk services were in violation of licence and had recommended to the DoT that an appropriate action be taken against the company. DoT has also sought views from the Telecom Engineering Consultant (TEC) to ascertain whether Hutch violated the service licence. Sources said TRAI was of the view that Hutch's service led to avoidance of levy (ADC) paid by private operators to BSNL and also security concerns were raised as it was difficult to monitor the calls under this
service. — PTI |
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Cabinet nod for 24 pc PFC IPO sought
New Delhi, September 24 “The Power Ministry has moved a Cabinet note that seeks clearance for 24 per cent fresh equity by the PFC in the IPO,” a government source said. The source said the proposal for 24 per cent was an enabling provision to issue up to 25.7 crore shares. Power Secretary R.V. Shahi confirmed circulating the note to the Cabinet. “We have moved the Cabinet note. The IPO will happen within this financial year,” Mr Shahi
said. — PTI |
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EPFO gears up to go online
New Delhi, September 24 The first pilot project of business process re-engineering would be launched in Kota, Rajasthan, on October 2, he said. This would be followed by five other offices - Bangalore, Indore, Hyderabad, Patna and Karnal.
— PTI |
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UK beer group to set up 3 more plants in India
London, September 24 NRI founder and Chief Executive of Cobra Beer Lord Karan Bilimoria said these were being set up in the north, west and east of the country. The group is already running a brewery in Mount Shivalika. “Mount Shivalika, which commenced production in January last year, has already won Gold medal at the Monde Selection - World Quality Awards in Brussels - for its quality of products. Now we have signed up three more breweries,” he said. In addition, he planned to have a greenfield plant in his place of birth, Hyderabad. Speaking about Cobra Beer, Lord Bilimoria said when the brand was launched in Bangalore in 1987, it exported its entire production to the UK where it set up a plant and commenced production in 1997. “This time, we are brewing in India for the Indian market, which has enormous potential.”
— PTI |
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Global Union
New Delhi, September 24 Negotiations with top six oil companies, including private ones, are in the final stage. The firm started its operations earlier this week to provide finance for energy infrastructure projects.
— UNI |
by Lalit Batra
Market set for record high
Bulls consolidated their grip further even as the market continues to inch upwards and gets into the striking range of its all-time high levels hit in May.
The market surged last week on account of a falling crude oil price, strengthening of the rupee, strong FII-buying and on expectations of robust results from corporate India. Sensex gained 227 points to finish the last week on 12,236. Nifty rose 65 points to close the last week at 3,544. The market may stay range-bound and volatility may rule in the next few days ahead of the expiry of September, 2006, derivatives contracts this Thursday. However, continued inflow from FIIs and cheaper oil may cap the downside. The focus of the market will now be on second-quarter results. Generally, market men expect strong second-quarter results from the India Inc. If the results exceed expectations, the market may firm up further. Investors may well stay away from the frontline stocks which have run up ahead of their valuations as of now. A fresh view may be formed once the results pour in. TV 18
TV18 group is India’s premier business and general news broadcaster and a leading media content provider. The company has proposed restructuring and this will result in formation of two separate entites — TV18 and Network 18. TV18 will encompass the business news initiatives of the comapny i.e. ‘CNBC TV18’ and ‘CNBC Awaaz’ and the Internet portals money control.com and commodities. com. Network18 will hold a majority stake in TV18 (51 per cent) and Global Broadcast News (51 per cent). GBN in turn, owns and runs CNN-IBN and IBN-7. After the proposed scheme of arrangement, the shareholders of TV18 will benefit significantly. TV industry accounts for 42 per cent of the total Indian entertainment sector, which is estimated to be $ 7.6 billion. Apart from the distribution channels in India, which are likely to evolve considerably over the next two to three years, television will further gain market share in the total ad spend. I am positive about the long-term growth prospects of the sector in general. TV18 India’s (TV18) Internet arm, Web 18, has acquired three companies in the Internet space www.cricketnext.com, www.compareindia.com and urban eye. With the addition of these three properties, Web18 has now eight properties in Internet space. The acquisition of these portals by TV18 as another step towards the ramp-up and the eventual consolidation of its Internet business. The company is looking at spinning off its investment arm, roping in a strategic/financial investor and eventually listing the Internet business on a stock exchange abroad. In view of the above stated upsides, investors may buy the TV18 stock for decent gains in the medium term. |
by S.C. Vasudeva
Rebate up to Rs 50,000 allowed u/s 80U
Q. (a) I am a retired senior citizen. I am submitting income tax returns regularly. My pension and income from Post Office come to about Rs 2,10,000 in a year. I am living in a rented house and paying Rs 3,000 per month as I don’t have my own house anywhere.
(b) I am suffering from total deafness in one ear for the past about 8 years. (c) Am I entitled for deduction of rent and some amount on account of disability from my total income Rs 2,10,000? If so, how much? After deduction, how much income-tax I will have to pay? — S.K. Sharma, Karnal A. 1. You are entitled to a deduction under Section 80GG of the Act, in respect of the rent paid. On the basis of figures given in the query, the deduction is to be computed as under: Rent paid: Rs 36,000 Less 10 pc of Rs 2,10,000: Rs 21,000 = Rs 15,000 25 pc of Rs 2,10,000 (total income): Rs 52,500 Ceiling amount @ Rs 2,000 p.m.: Rs 24,000 The lower of the above being Rs 15,000, a deduction from total income would be allowable to the extent of the said amount. The deduction would be allowable if you, your spouse or minor child do not own any residential accommodation. You are required to file a declaration in Form No. 10BA (vide Rule 11B of the Income-tax Rules 1962) (The Rules) for claiming this deduction. 2. A deduction of Rs 50,000 is allowable from the total income of a resident individual if he is suffering from a disability as covered within the provisions of Section 80U of the Act. The increased amount of Rs 75.000 is allowable if the person is suffering from a severe disability (i.e. having any disability over 80 per cent). The disability as specified in the said section covers hearing impairment if the loss is of sixty decibels or more in the better ear in the conversational range of frequencies. The tax payer is required to furnish a copy of certificate from a medical authority in Form 10-1A prescribed by the Rules to claim such deduction. Tax liability
Q. I am retired government employee and 70 years old man. In one of the articles of The Tribune dated June 14 it was mentioned that up till now the interest accrued of small savings such as National Saving Certificates, provident funds etc. are exempted for income tax where as my income tax advocate is taking into account the interest of my previous 5 years NSCs as my income for the current financial year. Please clarify. Please also calculate my income tax liabilities for the current financial year as per income given below. It is also intimated that I can save up to Rs 1 lakh in different funds as required during the current financial year. 1. Pension for the year 2005-06: Rs 1,28,403 2. Interest of various savings during 2005-06: Rs 1,62,510 3. Interest accrued of NSCs for the period 3/200 to 3/2005: Rs 22,025 — Krishan Lal Sharma, Solan A.
1. The interest accrued on National Savings Certificates is not exempt from tax but it is considered as a reinvestment in the certificates and, therefore, considered for deduction under Section 80C of the Act within the overall limit of Rs 1,00,000. 2. You can save up to Rs 1,00,000 in the schemes covered under Section 80C of the Act. The amount of Rs 1,00,000 is deducted from the total income so as to arrive at the taxable income. 3. On the basis of figures given by you, your taxable income works out at Rs 3,12,938 for the year 2005-06. After deducting the interest accrued on National Saving Certificates (Rs 22,025) under Section 80C of the Act, the taxable income would be Rs 2,90,913 on which tax and education cess of Rs 25,778 would be payable. SCSS bonus
Q. i) I deposited Rs 3,72,000 under MIS in Post Office on 26.06.1999 and on maturity I received Rs 37,200 as bonus. I re-deposited Rs 3,72,000 + Rs 28,000 (bonus amount) in Senior Citizen Savings Scheme (SCSS) on 28.06.2005. Kindly confirm whether the total amount of bonus Rs 37,200 is taxable or Rs 9,200 is taxable of the assessment year of 2005-06. ii) I purchased NSC for Rs 27,000 on 15.02.2000, I had been declaring the details of NSC in my annual income tax return every year now the date of maturity of these NSC is 15.02.2006. Please clarify how much amount will be added in my income for the assessment year of 2005-06. — Daljit Singh Rosha, Patiala A.
1. The bonus of Rs 37,200 received by you is taxable. 2. Your query does not indicate that investment has been made in National Savings Certificates VIIIth issue. The answer to your query is based on the said presumption. Further, it is also not evident from query whether the accrued interest for each year was included in the total income. Presuming that the accrued interest was declared in the return of income, the amount deductible for the year 2005-06 would be Rs 5,214 being the last year in which the redemption of NSC is to take place. This is in accordance with Rule 15 of NSC (VIIIth Issue) Rules, 1989. PPF account
Q. I am senior citizen. Please advise on the following: A. After deducting maximum exemption of senior citizen, taxable income comes to Rs 14,000. How much amount I should deposit in my PPF A/c so that I do not have to pay tax. B. Rs 2 lakh stands invested in 8 pc Relief Bonds 2002 (tax-free). Its interest i.e. Rs 16,000 needs to be included with my income or not. If this is to be included then my taxable income become Rs 30,000, so how much amount needs to be deposited in my PPF A/c to save tax. — H.S. Sidhu, Patiala A.
The answers to your queries are as under:- A. It is presumed that your income is Rs 1,99,000 (i.e. Rs 14,000 + Rs 1,85,000 being the maximum amount of Rs 1,85,000 not being chargeable to tax in case of a senior citizen). On the basis of this presumption, I would suggest that you may deposit Rs 14,000 in PPF account so as to obviate the necessity of making any payment towards income-tax. I may add that the maximum deduction allowable from total income under Section 80C of the Act is Rs 1,00,000. Therefore, amount of Rs 14,000 suggested to be deposited in PPF account should be within the said limit of Rs 1,00,000. B. The amount of Rs 16,000 earned as interest on tax-free Relief Bonds is not includible in the total income in view of the provisions of Section 10(15) of the Income-tax Act 1961 (the Act). |
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