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First pvt mega power plant by Aug 15
Tatas plan electric car on Indica platform
Decks cleared for SAIL unit in HP
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Ethanol-blended petrol: ‘Need to explore new avenues’
Market Update
Tax Advice
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First pvt mega power plant by Aug 15
New Delhi, July 27 The Rs 4,300-crore power complex, which has 4 units of 250 MW each, is already feeding over 800 MW into the grid. Jindal Power is now embarking on a massive expansion programme involving the addition of another 2,500 MW at Tamnar itself and an additional 2,500 MW in Dumka in Jharkhand. The minister exhorted Navin Jindal, executive vice-chairman and managing director of Jindal Power Limited (JPL), to give highest priority to procurement from BHEL or from other Indian private companies with indigenous manufacturing facilities in its expansion programme. Jairam complimented JPL for the excellent manner in which the plant has been designed and laid out and also the great care that has been taken to make it environmentally sustainable. PTI adds: JPL has captive coal mines which is located at a distance of around 8 km from the super thermal power plant and a conveyor tube has been set up for transportation of coal between coalmines and the power plant. Navin Jindal said JPL envisages a capacity creation of 35,000 MW in next 25 years. He said his company was keen on expanding into hydel power and nuclear power as well. |
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Tatas plan electric car on Indica platform
New Delhi, July 27 According to industry sources, the company is currently working on five prototypes of electric vehicles on the Indica platform. "These will use lithium ion batteries for high energy and power density," a source said. It is understood that the electric car, which Tata Motors chairman Ratan Tata said would be delivered by end of this financial year, would have an approximate range of 200 km. Aimed mainly at city driving, Tata Motors' electric car is a part of its larger project on developing eco-friendly vehicles. Ratan Tata had said that the electric car has been developed for Norway and "hope to deliver it by end of this financial year and then it will be available to employ in other markets". —
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Decks cleared for SAIL unit in HP
Shimla, July 27 The state government has decided to hand over land in Kangra district to the steel behemoth by August-end, industries director Manoj Kumar told IANS. “The government is in the process of transferring the land at Kandrori village near Nurpur town, some 300 km from Shimla,” he said. The proposed plant will be close to Punjab and Jammu and Kashmir, and the site was selected with an eye to business prospects in these neighbouring states. Kumar said a SAIL team had already inspected the site and completed formalities. Since all of SAIL's integrated and special steel plants are located in eastern and central India, the Himachal plant will be its first in the north. Kumar said the plant would provide direct employment to more than 200 persons. Using thermo-mechanical treatment technology, the plant will produce 1,20,000 tonnes of steel rods, wire drawings and corrugated sheets per annum. The plant is scheduled to become operational by October next year. The state government had cleared 18 investment proposals worth Rs 166.6 billion this February, which included SAIL's plant and expansion of the Gujarat Ambuja Cements unit at Darlaghat in Solan district. Himachal has 38 industrial areas and 15 industrial estates. The state's industrial sector received a major boost in 2003 following the special industrial package announced by the Atal Bihari Vajpayee-led NDA government at the centre. Lured by the industrial package, more than 900 medium and large-scale units have set up base in Himachal Pradesh since then. —
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Ethanol-blended petrol: ‘Need to explore new avenues’
New Delhi, July 27 Ethanol is a product of by-product of sugar molasses or sugarcane waste. The government has allowed oil companies to supply five per cent ethanol-blended petrol across the country and has set October 2008 as the deadline for increasing the bio-fuel from five per cent to 10 per cent under its Ethanol Blending Programme (EBP). But 10 per cent is a figure that experts are rather skeptical of considering that deficit in sugar production is likely to increase with every year. The sugar production in India is expected to experience a slowdown in next two years with the production likely to be down to 17 MT by 2009-10, thereby forcing India to import around 10 MT to meet domestic requirement. By blending 10 per cent ethanol, India stands to save 10 billion litres of petrol annually. The blend give less mileage than pure petrol, but works out cheaper than conventional fuel. It is also greener because blended petrol emits lesser greenhouse gases. But V.K Bansal of Sugarasia says to to meet the ambitious 10 per cent criterion, it would need 10 billion litres of ethanol, for which around 100 million tonnes of sugar is required. India’s sugar production for 2007-08 is 26 MT against 24 MT in 2006-07 while that for 2008-09, it is expected to be 24 MT. Since sugarcane is no longer renumerative, farmers are shifting to other cash crops, which is the main reason that production will be down to 17 MT in 2009-10. Indian sugar industry is the second largest in the world after Brazil. But the global demand-supply gap is narrowing each year, largely due to lower production in EU and India. The sugar output in 2007-08 is about 25-26 million tonnes. With this capacity India has the potential to produce 2.6 billion litres ethanol from molasses but currently only 10 per cent of the mills are using their capacity for making ethanol, says Bansal. Also because sugarcane is a food crop, rising dependence on ethanol can have another cascading effect. If sugarcane is directly diverted for ethanol, there could be a fall in sugar production, leading to inflationary prices. "The government should explore newer avenues of producing ethanol like jowar and maize. With international crude prices cruising over $130 a barrel, it is imperative for producing ethanol to encourage sugar producers to divert molasses for production of ethanol. The government should provide tax breaks for ethanol producers. It can set oil budget for encouraging production of renewable energy resources. By providing such benefits, those in the business can be persuaded to divert molasses to ethanol," he says. |
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Volatility may rule the roost
by Lalit Batra
Market gained last week on the back of the Congress-led coalition government winning confidence vote in Parliament, sharp correction in crude oil and short covering of derivatives positions. The BSE Sensex gained 639 points to close the week at 14,274. Nifty closed the week at 4,311 gaining close to 219 points.
Going forward, volatility may rule the roost on bourses. The Reserve Bank of India (RBI) is set to review the monetary policy on Tuesday. In our opinion, RBI may further hike short-term interest rates or the repo rate as well as statutory deposit requirements or the cash reserve ratio (CRR). There are expectations that the government may push forward some economic reforms which had been stalled over the past four years due to opposition from the Left parties. Some of the important reforms pending are privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign banks. A sharp fall in the crude from a high of $ 147 augurs well for the market. Swaraj Engines Swaraj Engines Limited (SEL) was promoted in 1986 in technical and financial collaboration with Kirloskar Oil Engines Lt. (KOEL) for manufacture of diesel engines. SEL supplies 5 types of engines from 20 HP range to 50 HP range to PTL. In addition to engines, SEL also manufactures high-tech engine components for Swaraj Mazda. In the last financial year, the operations of the company presented a mixed picture. Engines supplies to Punjab Tractors (PTL) during the first half were restricted to 6,219 engines (previous year — 8,444 engines) because of low orders from PTL. The adverse trend reversed for better in the second half during which the supplies to the tune of 10,189 engines (previous year 9,258 engines) were effected with PTL’s increased requirements. For the year as a whole, 16,408 engines were sold to PTL as against 17,702 engines sold in the previous year. Supply of hi-tech engines components to Swaraj Mazda during the year was to the tune of Rs 20.03 crore as against Rs 17.04 crore in the previous year. This led to a fall in total sales from Rs 129 crore to Rs 126 crore in the last year. Net profit was also lower at Rs 14.36 crore against Rs 14.86 crore in the previous year. As per industry sources, after the takeover of PTL by Mahindras, it has been decided that the entire requirement of engines of PTL would be sourced from SEL (earlier engines were being sourced by SEL and Kirloskar Engines). In such a scenario, the turnover and net profit of SEL is set to jump manifold. Moreover, with PTL reporting increased demand of its tractors, SEL’s demand for engines as it is set to increase. The stock of SEL is currently trading at Rs 180. In the nutshell, we are enthused by the prospects of PTL sourcing 100 per cent of its engines requirement from the SEL and investors may buy the stock in anticipation of forthcoming results, which we believe should provide some impetus to the SEL stock, atleast in the short run. |
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No surcharge, education cess on wealth tax
by S.C. Vasudeva Q. Is the surcharge and education cess leviable on the wealth tax? — S.P. Singh, Haryana A. The surcharge and cess has been levied by the Finance Act. The Finance Act normally prescribes that the Income-tax leviable shall be increased by the specified surcharge and the education cess. The Income-tax rates are also specified by the Finance Act and the surcharge if so leviable is also specified therein. The Act does not lay down rates of tax except in few exceptional cases. However, in such cases the surcharge and education cess becomes leviable in view of the language of the relevant Finance Act. As against this, wealth-tax rates have been prescribed by the Wealth-tax Act 1957. The Finance Act does not provide any surcharge for the levy of surcharge and education cess on the wealth-tax leviable on the basis of the rates provided by the Wealth-tax Act 1957. Therefore the surcharge and the education cess is not leviable in case of wealth-tax. Interest on KVPs
Q. This is with reference to a query by R.S. Bhatia of Faridabad published in The Tribune dated May 12, 2008, in these columns. I would further request you to let me know procedure to calculate interest earned on
KVP. — Agam Bhatnagar A. The Department of Economic Affairs, Government of India, has published a table wherein the rate of interest and maturity amount for Rs 100 denomination of Kisan Vikas Patras is given. In response to the query of R.S. Bhatia, Faridabad, the interest has been computed on the basis of the said table. You should be able to get the table from any post office which sells Kisan Vikas Patras. Tax on charitable trusts
Q. Section 2(15) has been amended laying down that the advancement of any other object of general public shall not be charitable purpose if it involves the carrying on of :- (a) any activity in the nature of trade, commerce or business or, (b) any activity of rendering of any service in relation to any trade, commerce or business for a fee or cess or any other consideration, irrespective of the nature of use or application of the income from such activity, or the retention of such income by the concerned entity. Under such circumstances you are requested to kindly let me know how the hospitals, schools, colleges or other educational institutions which are registered as charitable trusts or the societies shall be taxed after this amendment. — S.S. Kanwar, Amritsar A. The finance minister in reply to the debate in Lok Sabha on the Finance Bill 2008 stated as under: “Clause 3 of the Finance Bill, 2008 seeks to amend the definition of ‘charitable purpose’ so as to exclude any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature or use of application, or retention, of the income from such activity. The intention is to limit the benefit to entities which are engaged in activities such as relief of the poor, education, medical relief and any other genuine charitable purpose, and to deny it to purely commercial and business entities which wear the mask of a charity. I once again assure the House that genuine charitable organizations will not in any way be affected. The CBDT will following the usual practice, issue an explanatory circular containing guidelines for determining whether an entity is carrying on any activity in the nature of trade, commerce or business or any activity of rendering any service in relation to any trade, commerce or business.” It would be observed that the intention is to deny exemption to purely commercial and business entities which wear the mask of a charity. Accordingly, in case the hospitals, schools, colleges and other educational institutions are factually engaged in the charitable activity relating to education and medical relief, the exemption to such institutions should not be denied. Tax on perquisites
Q. What is meant by perquisite for the purpose of taxability in case of an employee? — R.N. Sharma, Jalandhar A The term perquisite is defined in Webster’s New International Dictionary as a gain or profit incidentally made from employment in addition to regular salary or wages, especially one of a kind expected or promised. A combined reading of Section 15 and 17 of the Income-tax Act 1961 (the Act) suggests that the salary would include among other things perquisites. Section 17(ii) of the Act gives an inclusive definition of perquisite as including: (a) the value of rent-free accommodation provided to the assessee by his employer; (b) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; (c) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: (i) by a company to an employee who is a director thereof; (ii) by a company to an employee, being a person who has substantial interest in the company; (iii) by any employer (including a company) to an employee to whom provisions of (i) to (ii) above do not apply and whose income under the head “Salaries” exclusive of the value of all benefits or amenities not provided for by way of monetary benefits, exceeds Rs.50,000; (d) any sum paid by the employer in respect of any obligation which but for such payment would have been payable by the assessee; (e) Any sum payable by the employer, whether directly or through a fund other than a recognized provident fund or approved superannuation fund or a deposit-linked insurance fund, to effect an assurance on the life of the assessee or to effect a contract for an annuity; and (f) The value of any other fringe benefit or amenity as may be prescribed. It may be added that the above definition is only inclusive and any benefit or advantage which has a legal origin would be taxable as a perquisite in the hands of the employee. Perquisites are taxable under the head “salary” only if these (a) are allowed by an employer to his employee, (b) are allowed during the continuance of employment, (c) are directly dependent upon service, (d) result in the nature of personal advantage to the employee, and (e) are allowed by virtue of employer’s authority. If the above conditions are satisfied even a casual and non-recurring receipt can be a perquisite. |
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New Delhi, July 27
