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Global turmoil coming, says Paulson
Volvo to launch crash-proof car
Pension regulator seeks equal tax treatment for NPS
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Gold glitters at Rs 11,920
Vijaya Bank cuts lending rates
Andhra grows at 10.37 pc
Aviation Notes
Investor Guidance
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Global turmoil coming, says Paulson
Tokyo, February 9
''The current financial turmoil is serious and persisting,'' Paulson said in prepared remarks after meeting fellow finance chiefs from Group of Seven industrial countries. ''As the financial markets recover from this period of stress, as of course they will, we should expect continued volatility as risk is repriced,'' he added. Paulson said he expected US economic growth to continue in 2008 but conceded the outlook faced risks that had made a fiscal stimulus package absolutely necessary. ''The housing correction, high energy prices and capital market turmoil have combined to weigh on near-term growth,'' Paulson said, adding that he felt the $152 billion fiscal stimulus package that Congress passed just before he flew to Tokyo would help and was vital. ''Given the short-term downside risks, we clearly needed to act,'' Paulson said. The meeting of the G7 — the United States, Britain, France, Germany, Canada, Italy and Japan — took place against a backdrop of rising concern that a crisis that originated last year in US subprime markets was spreading throughout the global economy. Paulson said one lesson to be taken from it was ''the increasing need for frequent communication and close coordination during times of stress'' to try to find policy responses to minimise the damage. He said G7 members had discussed the sensitive issue of rising investments by so-called Sovereign Wealth Funds — many of them in countries like China and the Middle East that have acquired big current account surpluses. Paulson said while their activities needed monitoring, and possibly a code for behaviour, they should not be seen as a reason for pushing protectionist remedies that could slow global trade. — Reuters
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Volvo to launch crash-proof car
London, February 9 The car's laser-guidance system, installed in the windscreen, will spot vehicles in front that are too close or stopping suddenly. The CitySafety system, which kicks in at speeds of up to 32 kmph, has the potential to prevent half of all rear-end collisions, said Volvo. The laser sensor reacts to traffic in front that is either stationary or moving in the same direction. It scans up to six yards ahead and, sensing the difference in speed between it and a vehicle in front, it makes 50 calculations a second to determine the braking force needed to avoid crashing, the Daily Mail reported. Just in case the driver fails to slow, the system brakes automatically and disables the accelerator. The system will be standard in the XC60 car, priced from 25,000 pounds.
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Pension regulator seeks equal tax treatment for NPS
New Delhi, February 9 "We have taken up this issue with the government and I am hopeful that this will receive favourable consideration," Pension Fund Regulatory and Development Authority (PFRDA) chairman D Swarup said at a workshop on NPS here. While contribution, returns and withdrawals under Public Provident Fund (PPF), Employee Provident Fund (EPF) and General Provident Fund (GPF) are exempt from tax, in case of NPS, only contribution and returns do not attract tax. However, withdrawal under NPS attract tax. This is called exempt, exempt and tax (EET) system, unlike exempt, exempt and exempt (EEE) system for PPF, EPF and GPF. "At present, NPS is subject to EET tax regime. On the other hand, EPF, GPF and PPF have a more favourable tax treatment. EEE is available to them. This goes against the basic philosophy of encouraging long-term contractual savings, which provide long-term funds for investment," he said. Swarup clarified that NPS only replaces old pension system and is not a substitute for other retirement benefits like gratuity and leave encashment. A high-level task force appointed by the Union Government is already looking into the matter and is in the process of framing detailed rules in this regard. Under NPS, applicable to central government employees since January 1, 2004, employees have to contribute to their pension funds with matching contribution from the employer. Besides the Centre, as many as 19 states have adopted NPS. North-eastern states have also agreed to opt for the scheme once the architecture for NPS is available. PFRDA has appointed NSDL to keep records, and SBI, UTI Mutual Fund and LIC as manager of the NPS funds. Only the Left-ruled states of West Bengal, Tripura and Kerala have opposed the scheme, which now would have an option to invest 5 per cent of the fund directly into equity and another 10 per cent in equity-linked mutual funds. At present, the funds collected under NPS are parked under public accounts, which yield only 8 per cent returns. However, if part of these funds would have been invested in markets for the past four years, they would have got 14-29 per cent returns, Swarup said. Under the old pension system, that the Left-ruled states are retaining, employees are guaranteed a specific pension amount. This is called assured benefit system unlike defined contribution system or NPS. NPS is just part of interim pension reforms as the bill to open up pension sector and give statutory powers to PFRDA is pending before Parliament. — PTI
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Gold glitters at Rs 11,920
New Delhi, February 9 There
was aggressive buying by jewellers, sparked by reports of firming trend in the international
market. The record level was first reached on January 29. Market sentiment turned bullish after reports that gold futures rose on the New York Exchange as oil rallied boosting demand for the metal as a safe-haven, traders
said. — PTI |
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Vijaya Bank cuts lending rates
Bangalore, February 9 The rate cut across loan schemes will be come into effect from February 15. While the bank has effected a 25 basis points (bps) cut in floating rate on its housing loans up to Rs 20 lakh to 9 per cent, the interest rate on education loan has been brought down by 50 bps to 11.5 per cent. Interest rates on various schemes under the MSME and SGSY sectors have also been brought down in the range of 50-150 bps. Further, the bank has also rationalised interest rates on its corporate vehicle loans at 10.5 per
cent. — PTI |
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Andhra grows at 10.37 pc
Hyderabad, February 9 According to the latest figures released by the Central Statistical Organization (CSO), the most impressive performance was put up by the agriculture sector, which registered a high growth rate of 10 per cent compared to the national average of just 2.59 per cent. The state’s industrial growth rate stood at 9.88 per cent against the national average of 8.9 per cent while services registered 11.57 per cent growth compared to the national average of 10.73 per cent. The per capita income in the state rose to Rs 33,970 against the national average of Rs 33,137.
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Unending passengers’ woes at IGIA
by K.R. Wadhwaney Fog playing havoc with operations of flights is indeed a dodgy phenomenon. Regardless of installation of sophisticated gadgets like Cat IIIB Instruments Landing System (ILS), there is no guarantee for maintaining uninterrupted flow of flights. All depends upon visibility and, if the visibility descends lower than the minima, the commanders cannot compromise with the safety aspects and undertake operations. This all important fact has been accepted by all authorities worldwide. What is not accepted in any civilised country is heaping of avoidable miseries on paying passengers who travel from different corners to avail of flights to honour their commitments. Sadly, this is not being done at the prestigious Indira Gandhi International Airport (IGIA) where stranded and harried passengers are nobody's concern. When hold-in areas from VIP lounges to ordinary halls in domestic and international concourses are jampacked and when upset passengers are denied snacks or tea, the airlines are left with no option except to let them rough it out in parked aircraft. There, the passengers have to suffer in silence in the hope that the flight will soon be air-borne. It, however, does not happen. The worse sufferers in this unhappy episode are the members of the cabin crew. They have to face verbal volleys of the irrate passengers. "It is a hell for us in such distressing situations, like the one on Wednesday (February 6)", said three young hostesses. The woes of the passengers are unending because the governance is virtually non-existent at the IGIA. Each blames the other. The fact is that the Airports Authority of India (AAI) charges hefty amounts from users, including from passengers, and offers precious little facilities in return. It has surrendered its usefulness and it has turned a phoney body. When eight-year-old Jyotsna was crushed to death at the base of the escalator at the IGIA some years ago, for example, any other governing body would have willingly and graciously offered compensation to the grieving mother. But the AAI shamelessly contested the claim and kept contesting until the Supreme Court had to hold it responsible for the utter callousness. The court dismissed AAI's plea as "Without merits". A few days ago, two international passengers died at Mumbai airport 'for want of adequate medical attention'. What kind of AAI it is when it cannot cater to the needs of passengers in distress? It is a body, which has no reputation to lose. Not for nothing, regular flyers say that the name of the AAI be changed as Airports Services of India (ASI). If there is marked deterioration in the functioning of the AAI, no better is the functioning of the GMR's Delhi International Airport Limited. It is equally immune to the needs of the passengers and airlines. The renovation of terminal buildings is meaningless if passengers are throttled in those buildings. Twice in recent weeks, false ceilings have fallen on staff members and culprits in several other misdeeds and mishaps have stayed untraced.
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NRIs can have only one PINS account
by A.N. Shanbhag Q: Please clarify that if an NRI has a PINS account, say, with Apex bank, can he now not have PINS account with Kotak Securities. — A.R. Malhotra A: PINS is the permission that is required for an NRI to trade in the Indian stock market. Normally, the bank obtains this for you. An NRI can have only one PINS account at one time. So, such person will not be eligible to have a PINS account with Kotak if he or she already has one with another bank. Rebate ceiling
Q: What is the rule position regarding upper limit of interest component in respect of home loan - most places it says Rs 1,50,000, but I have also read that in case of rented houses it can be more than Rs 1,50,000 also. Please clarify. — Paniker A: U/s 24, deduction up to Rs 30,000 is available on interest on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing, whereas the enhanced limit of Rs 1,50,000 is applicable on loans taken on or after 1.4.99 only for acquiring or constructing. The acquisition or construction should be completed within 3 years from the end of the year in which the capital was borrowed. It is possible to claim this deduction on two or more loans. In any case, the ceiling on total amount of deduction is Rs 1,50,000 in a year. If the house is rented out, the entire interest payable without any ceiling can be deducted from the rent received. Short-term capital gains
Q: If I buy & sell shares - in which format I am supposed to give the relevant details? The broker’s bill is confusing. It is difficult to arrive at my cost of acquisition. I am told that the entire amount paid to the broker cannot be taken as my cost of acquisition. One more query. I have been dealing for my wife and my son through my trading account with ICICI. How their tax liability shall be passed on to the real beneficiary. Can short-term capital loss be setoff against gains? — Subhash Bhandakkar A: 1. There are no attachments required for the new income tax returns forms. Maintain the record in any format you desire. If and when the authorities ask for the details, you should have them ready with you. 2. Any taxes paid such as Security Transaction Tax, stamp duty, service tax, etc., cannot be taken into account for arriving at the cost of acquisition or sale. 3. You will have to have trading accounts of your wife and son separately. Hope your son is not a minor. 4. Short-term capital loss can be setoff against short-term capital gains but not against long-term capital gains (which are exempt in any case). Such losses neither can be setoff against any other income nor can the deductions under Chapter-VI of the Income Tax Act (contributions to PPF, premium for mediclaim, etc.) be claimed. PAN card
Q: Some shares and mutual fund units are jointly held in a demat account with my wife’s name first and my name second. The shares belong only to me since I have funded for them. Her name is added as a matter of safety. Now, the DP is asking for PAN numbers from both of us. My wife is not a tax payer and therefore, does not have any PAN. In that case, is the DP right in demanding for a PAN card for her? If yes, and I procure the card, will she have to begin filing returns though she does not have any income? — Dr J.K. Sharma A: 1. You have made an error by having her name as the first holder. You can take corrective action by opening another demat account with your name first and her name as the second holder. After opening such an account, transfer all the shares from the old account to the new and close the old account. 2. Yes, she will have to get a PAN, even if she is a second holder and even if she has no income. 3. There is no need for her to file the returns. An apparently wrong notion that is prevailing is that, if a person obtains a PAN, he or she must statutorily file a return of income. There is no such requirement. Gift to spouse
Q: I am a salaried employee. I intend to purchase RBI Savings Bonds of Rs 15 lakh in the name of my wife. She will earn an annual income of Rs 1,20,000. This being below the tax threshold of Rs 1,45,000 applicable to ladies, she does not have to pay any tax. Please advise whether she should file IT returns. — Mohan Gole A: It appears that you intend to use your wife as a name provider for investing your own money. This is illegal. It is better to treat it as a gift to her and club this income in your hands. Normally, this clubbing provision dissuades anyone from giving gift to spouse. But there is nonetheless advantage in giving such gifts for saving tax. In the case of assets gifted to spouse, once you have paid the tax on this first-stage interest, the interest becomes her own asset. When she invests this interest, any income thereon is not clubbed in the hands of the donor. It is taxed in the hands of the donee. For clarity, let us take your case. You are supposed to include the interest received by her of Rs 1,20,000 every year in your tax returns and pay tax thereon at the rate applicable to you. Suppose she invests this amount of Rs 1,20,000 in RBI Savings Bonds. She will earn interest of Rs 9,600. This amount will be exigible to tax in her hands. In other words, you pay tax on the interest earned on the original corpus gifted to her, but the interest on interest is taxable in her hands. Normally, this clubbing provision dissuades anyone from giving gift to spouse. Now, have a look at the Table to get convinced about the great benefit of gifting. You will be surprised to find that your wife will become a taxpayer in about 12 years. Yes, at that stage, she can avoid paying tax by investing certain amounts in PPF. Therefore: 1. Apply for a PAN card for her. 2. Start filing returns right from now, even if she is not required to pay tax at the present stage. This will maintain continuity. Otherwise, after 12 years, it would be difficult for her to explain the source of her income. 3. Open a PPF account in her name. Contribute the minimum amount of Rs 500 to keep the account alive. When she actually begins needing the account for tax saving, she will find that she has an account with a term, much less than 15 years. The authors may be contacted at
wonderlandconsultants@yahoo.com |
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US treasury secretary Henry Paulson said on Saturday the global economy faces a prolonged period of financial market disruption but expressed confidence the United States would not be dragged into recession.
