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BSNL plans major expansion Demand-supply gap in cotton hits industry Aviation Notes |
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Investor Guidance
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BSNL plans major expansion New Delhi, September 6 According to BSNL officials here, the rollout of its third generation (3G) mobile services would be completed by the mid-next year after the services are once started by the end of the year. BSNL is looking to start the 3G services in the north and eastern zones by December this year. Subsequently, the pan-India rollout for 3G services would be completed over the next six months, the officials said. Incidentally, BSNL, along with Mahanagar Telephone Nigam Ltd (MTNL), has been given a head-start by the Department of Telecom (DoT) to roll out 3G services in the country by keeping them out of the spectrum auction process which is a must for the private players. The company has placed orders for the equipment required for the rollout of the services and hopes to receive the equipment from Ericsson by December. BSNL will also open the large tender for 93 million GSM lines, of which 25 per cent are for 3G equipment, on September 10. The tender is worth $9 billion and was floated two months ago. According to reports, BSNL is also in talks with private telecom companies to allow their subscribers to use the BSNL network while roaming in the country. While all private telcos have roaming agreements with each other, BSNL, till date, has not opened up its networks for roaming deals. BSNL, incidentally, has the widest network in the country, spreading to some of the remotest regions and as such the private companies have been seeking commercial agreements with the state-owned company. As per industry estimates, BSNL will be able to earn an upwards of Rs 750 crore annually by signing commercial roaming deals with private operators. |
Demand-supply gap in cotton hits industry Chandigarh, September 6 Sources in the textile industry informed TNS that the failure of the government to impose restrictions on the export of cotton has led to a steep rise in export of cotton and a fall in the supply for the domestic industry. It is learnt that total cotton production in the country during this cotton year (which ends in September) is around 315 lakh bales. Almost 100 lakh bales have been exported, even as the local industry requires 250 lakh bales. To meet the shortfall of 35 lakh bales, the industry had to import cotton from outside. “The country exported cotton at the rate of 65 cents a pound, and imported it at a much higher price of 80 cents a pound. We had to incur huge losses in importing cotton. Also, with the government having announced a steep hike in minimum support price (MSP) of cotton this year, the industry will be under tremendous strain. Last year, the MSP for medium stable cotton was Rs 1,990 a quintal and for long staple cotton, it was Rs 2,030 a quintal. To appease a section of farmers in an election year, the government proposes to revise the MSP to Rs 2,500 a quintal and Rs 3,000 a quintal, respectively, for the ensuing cotton year, that begins next month,” said Sunil Kumar Jain, president, Northern India Textile Mills Association (NITMA). It is estimated that in Punjab alone, the total textile production is down by almost 200,000 spindles. Ashish Bagrodia, senior vice-president of NITMA and managing director of Winsome Textiles, said if it was the gap in demand and supply last year that led to the fall in production, this year the high MSP of cotton would lead to reduced production capacity of industry. “With shrinking profit margins and high inflation, the small-scale units will close down, until the government intervenes,” he said. "Drastic reduction in duty draw-back rates will further hit the textile industry," he added. |
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Aviation Notes
Without dispassionately reviewing seniority and merit, and also without taking into consideration notifications and directives, Air India management has promoted as many as 24 officers as executive directors. Of these 24, only six officers belong to the erstwhile Indian airlines. Many officers in National Aviation Company (Air India) maintain that most of these promotions are uncalled for, particularly when the airline has been suffering more losses than before because of hasty merger of two national airlines. These 'partial' promotions have spread unrest in the corridors of the national carrier. Some 'affected' officers are contemplating seeking redressal through court. According to notifications, the interchangeability of department and cadre is not allowed while considering promotions. According to petitions, some junior pilots have been promoted while senior pilots with proven record of ability and reliability have been ignored. Recently, in parked Air India plane, a snake was reportedly sighted. The flight to Mumbai had to be grounded. The airline officials did confirm the incident but none could say how and where 'snake' found its way. Similar scene persists in the directorate-general of civil aviation. The director-general Kanu Gohain has been granted fourth extension of three months from September 1 to November 30, 2008. The extension suggests that the ministry feels that the directorate will 'collapse' without Gohain being at the helm. It also proves that the ministry does not have faith in its two loyal and dedicated joint director-generals, although CAT has been categorical in saying that departmental officers should be considered for promotion. The agitation in air traffic control remains unresolved. They say that they are grossly under-staffed and they cannot cope with an additional burden of handling flights from the new runway. The situation in the aviation sector is, therefore, grim. A team of officials of the International Civil Aviation Organisation (ICAO) was here. The officials went around the runway and terminals. They expressed their complete satisfaction. They were vehement in saying that the runway would ease traffic. They also maintained that doubts were unfounded. According to them, lighting is absolutely alright and most of the commanders have expressed satisfaction in operating flights from the third runway. The aviation fuel price has been slashed. But airlines are unwilling to reduce fares. They say that they are already facing enormous burden of losses and they cannot afford to reduce fares. The statistics show that air fares are more than double of railway fares. The fares in low-cost airlines are less but they have turned stingy in offering facilities to passengers. Many airlines do not provide even snacks to passengers. Like Hyderabad, Bangalore is all set to provide better facilities for air passengers. The construction of the second runway and terminal building will commence sometime early next year. All plans and designs have been finalised. A spokesman of the Bangalore International Airport Limited said Rs 4,000 crore would be spent on the expansion project. |
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Investor Guidance
Q: How does the Indian Income Tax Act treat investments made by an NRI in Life Insurance? Can he get tax-free maturity u/s 10DD? Is their any limit while investing for children’s higher education? Can he convert Rupees in US$ easily or is proof required to be submitted at that time about purpose and use of money? — Pravin Shinde A: Maturity proceeds of all insurance policies are tax-free for Residents and NRIs alike. There is no limit as such upon the quantum of investment. However, tax deduction is available only up to an amount of Rs 1 lakh. It is assumed that in your last question, it is your intention to repatriate the insurance proceeds. In this regard, while insurance proceeds can indeed be remitted abroad up to $ 1 million per year, documentation in terms of a certificate from a Chartered Accountant and undertaking signed by the remitter would need to be submitted to the bank. Home loan rebate
Q: Myself and my father have taken a joint housing loan for our flat. In this regard, Rs 1 lakh is allowed as Sec. 80C deduction in the case of capital repayment. I just wanted to know whether we both can individually claim the Rs 1 lakh each year. Or should we repay Rs 50,000 each to claim the deduction? — Shailesh A: It is not clear from your query whether the property is also held jointly or not. If so, both of you will be individually eligible for a deduction of Rs 1 lakh on the repayment of principal amount provided the total repayment of principal amount throughout the year is equal to or exceeds Rs 2 lakh. Basically, the deduction is available only if property is owned and to the extent of ownership of property. So assuming a joint holding, each can claim equal deduction. However, if your ownership is in any particular ratio, you will have to apply the same ratio to principal repayment to arrive at the amount deductible for each. Capital gains
Q: My question is about capital gains. If we sell our house for, say Rs 50 lakh. Then would we have to purchase another property worth Rs 50 lakh or would we only need to use the amount of capital gains? I was under the impression that only the capital gain amount need be invested in property. However, my neighbour has sold his shop and his CA has advised him to use the entire sale proceeds. — Cherukuri Hari Babu A: The confusion has arisen because you are contemplating the sale of your residential house whereas your neighbour has sold his shop which is a commercial property. Upon sale of residential property, Sec. 54 is applicable for saving capital gains tax. Sec. 54 requires the taxpayer to apply only the capital gain amount in buying the new property. However, when any asset other than residential house is sold, then Sec. 54F becomes applicable which specifies that the net sale proceeds have to be invested for shelter from capital gains tax. Threshold limit
Q: I trade in futures and options. I also earn Rs 50,000 per annum through a part-time job. My income/profit from this would be business income. So am I right in assuming that I will not have to pay tax if this is below Rs 1.50
lakh? — Vidyashekhar A: Yes, that is correct. If your total income, including that from your job and profit from F&O,is below Rs 1.50 lakh for the current year, and Rs 1.10 lakh for the FY 07-08, no tax would be payable by you. MF dividend
Q : My query is that as per SBI they have floated SBI SDS 90 days Mutual Fund in debt series under dividend and growth options. As per SBIMF, if one invests for 90 days in SBI SDS debt series mutual fund under the dividend option the dividend will be totally tax free. Does this mean it will be like GOI tax-free bonds and no tax will have to be paid on the dividend amount credited to my account? Also, the capital will be returned to me after 90 days (in dividend option) and will not attract short-term capital gain tax. Am I correct? — M D Master A: Your capital in the fund that will be returned to you after 90 days is a capital receipt and the same is not taxable. The dividend too is technically not taxable in your hands. However, it is not tax-free in the nature of GOI tax-free bonds are. The reason is that though the dividend per se is tax-free in your hands, the fund pays a dividend distribution tax of 14.1625% to the government before distributing the dividend. In other words, on account of this tax (which is paid by the MF directly) you receive that much lesser dividend. So in effect, it is the investor who bears the tax though paid by the mutual fund. IT return
Q: Till last many years I used to file tax return under my HUF account in which major income was property rentals, bank interests and agricultural income. I disposed of the property, the source of rental income, in financial year 2006-07. During the FY 07-08 the income of the HUF was bank interest of about Rs 1 lakh and agricultural income was Rs 2 lakh. Kindly advise in these circumstances is it necessary for the HUF to file tax return for FY 2007-08. — Sandhu A:
1. Agricultural income is tax-free but is aggregated with the other income only for rate, if it exceeds Rs 5,000. Since the total income exigible to tax is below the tax threshold, the tax payable even with rate purpose happens to be nil. 2. U/s 139(1), returns must be filed if the income chargeable to tax is over the tax threshold, even if it comes below the threshold after claiming deductions on or before 31st July of the next financial year. This is so even if the TDS covers the tax payable liability. Therefore, in theory, you need not file the tax returns for the
HUF. 3. The interest paid by a bank, including a co-operative bank, or a post office in respect of notified schemes suffers TDS @10% if the interest received after 1.6.07 exceeds Rs 10,000; The limit is Rs 5,000 for interest received before this date. This limit is applicable per branch of the bank. 4. If the HUF has suffered TDS and the tax liability is nil, you are entitled to a refund but the only practical way to get the refund is to file the tax returns. 5. Finally, even if you are within your rights not to file any tax return, it is advisable to file it to maintain continuity. You may later write to the ITO stating that since the income of the HUF has been below the tax threshold, the HUF shall not file the income-tax return hereafter. 6. We presume you have accounted for the long term capital gains earned by selling the property during FY 06-07. The authors may be contacted at wonderlandconsultants@yahoo.com |
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