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China announces $570 b stimulus package
Nath tells India Inc not to cut jobs
‘Export target unlikely to be met’
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MRTPC to probe into Jet-Kingfisher alliance
Indoco Remedies plans exports from Baddi unit
Tax Advice
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China announces $570 b stimulus package
Beijing, November 9 Under the package, the government promised to loosen credit conditions, cut taxes and embark on a massive infrastructure spending programme. The stimulus package estimated at 4 trillion yuan (about $570 billion) will be spent over the next two years to finance programmes in 10 major areas, including low-income housing, rural infrastructure, water, electricity, transportation, environment, technological innovation and disaster relief programmes. The government move comes amid indications that economic growth, exports and various industries are slowing. The policies include a comprehensive reform in value-added taxes, which would cut industry costs by 120 billion yuan. Commercial banks' credit ceilings will be abolished to channel more lending to priority projects, rural areas, smaller enterprises, technical innovation and industrial rationalisation through mergers and acquisitions. The decision was announced today by the State Council after Premier Wen Jiabao presided over an executive meeting of the cabinet on Wednesday, Xinhua news agency reported. The meeting decided that credit expansion must be "rational" and "target spheres that would promote and consolidate the expansion of consumer credit." During the first three quarters this year, China's GDP growth slowed to 9.9 per cent, down 2.3 percentage points from the same period last year and falling to single digit for the first time in five years due to the impact of the global economic crisis. "With the deepening of the global financial crisis over the past two months, the government must take flexible and prudent macro-economic policies to deal with the complex and changing situation," the cabinet meeting noted. China will adopt "active" fiscal and "moderately active" monetary policies and map out more forceful measures to expand domestic demand, speed up the construction of public facilities and improve living standards of the poor to achieve "steady and relative fast" economic growth, the cabinet said. Chinese manufacturers in the export-oriented sectors, including textiles, garments and shoes, toys and gift are feeling the pinch of slackening global demand.
Over the past two months, many labour-intensive factories have shut down, including those run by large Hong Kong-listed manufacturers, leaving huge numbers of workers jobless. — PTI |
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Nath tells India Inc not to cut jobs
New Delhi, November 9 As to the effect of recession on Indian industry and its profit margins, the minister said, “Don’t try and boost your profits by cutting people at this moment, live with smaller profits, but retain the people you have”. “Indian industry must live with 30 per cent profits, they cannot have those huge profits forever,” he said. “I think we would need to pump in Rs 25,000 crore in the next six months to keep this economy oiled, to keep the machine moving,” he said. The minister was confident of the country receiving foreign direct investment (FDI) of $35 billion and achieving growth of 7.5 per cent this year. He, however, cautioned that growth in employment generation would be affected. He promised relief to small and medium enterprises (SMEs) even while stating they have benefited from depreciation of the rupee. |
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‘Export target unlikely to be met’
New Delhi, November 9 The latest study of Assocham on “Realistic exports vs the targeted one” says that seven key export segments such as textiles, apparels, gems & jewellery, diamonds, brassware, handicrafts and leather are already reeling under recessionary trends . These sectors will not be able to generate their previous export momentum, as a result of which Assocham anticipates a minimum of $40 billion exports shortfall for the current fiscal. According to India’s foreign trade policy for current fiscal, the export target fixed for 2008-09 is $200 billion. Though performance of merchandise exports such as grains, raw jute, petrochemicals has not been bad, but the fact is that the merchandise exports do not bring as much foreign exchange as are brought in by high value-added products such as readymade garments, diamonds, jewellery, gems, carpets, handicrafts and brassware etc. Besides the slowdown syndrome, rising ocean freight, weakening rupee dollar exchange rate and deepening recession in the US and European markets will restrict Indian exports, the study says. However, prospects of pharma and chemicals, heavy engineering, metal and marine products, as also of FMCG remains reasonably good as these continue to command demand not only in domestic market but also on export fronts in the economies of West Asia, Far East and African continent and Saarc region, says the study. The other factors that have eroded costs and competitiveness of Indian exports include rising input costs, which are not falling and secondly, power and infrastructure remain a problem for Indian manufacturing. As a result, India is still far behind on logistics and the transaction cost of exports are rising and even reached around 20 per cent, according to the latest estimates. All these factors have also rendered Indian exports non-competitive as India is facing stiff competition on export fronts not only from China but also from countries like Bangladesh, Sri Lanka, Pakistan and even Bhutan. |
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MRTPC to probe into Jet-Kingfisher alliance
New Delhi, November 9 Admitting the petition, Monopolies and Restrictive Trade Practices Commission (MRTPC) Bench headed by Justice O.P. Dwivedi has directed its investigative unit Director-General of Investigations and Registration to look into the matter and submit a preliminary investigation report (PIR). In his petition, Somaiya had requested the Commission to probe the main objective of the alliance between the two domestic airlines which would control around 60 per cent of the business. On October 17, taking suo motu cognisance, the Commission had directed the DGIR to probe if the alliance between the two carriers would lead to
monopolisation. Highly placed sources said the DGIR has already sent probe notices to Jet Airways and Kingfisher Airlines seeking details of commercial arrangement along with pricing strategy and is awaiting responses. If possible, DGIR may attach the two cases together. Somaiya had alleged that the Jet-Kingfisher alliance may lead to "unfair competition" due abuse of dominance in the market by "collusive price fixing, deliberate reduction in output in order to increase price and sales tie-up". He also requested MRTPC to inquire the "aggressive increase" of fare by these carriers in the past 12 months. Both airlines have announced formation of an alliance for cooperation in several areas, including joint fuel management, common ground handling and cross-selling of flight inventories. — PTI |
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Indoco Remedies plans exports from Baddi unit
Chandigarh, November 9 Talking to TNS here yesterday, director, business development, Aditi Kare Panandikar, said by going forward and offering ANDAs, the company’s current revenue will scale up substantially. “We are primarily targeting the USA and UK, and validation batches of our dossiers have already been sent to the USA. We hope to leverage our strength in ophthalmics (drugs for eyes) to tap the market. We have just entered into a joint venture with Amneal Pharmaceuticals to market our range of ophthalmics in the USA,” she said. Panandikar said their Baddi plant, which became operational two years ago, was now being prepared to get an approval from the UK MHRA (Medicine and Healthcare Products Regulatory Authority). “We are expecting a team to visit the plant in the first quarter of 2009, and hope to get the approval later in 2009. Following this, 10 per cent of the total production from this plant would be exported to the UK. In the year thereafter, we will scale the exports to 20 per cent of the total produce and by 2011, 40 per cent of the drugs produced here will be exported,” she added. The director said the company was also strengthening its foray into European markets. |
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Tax Advice
Q. I have been advised by tax adviser that my wealth exceeds the prescribed amount under the Wealth-tax Act and therefore I am liable to file the wealth tax return. This is because I hold certain properties, the value of which is substantial. The wealth-tax payable thereon is quite substantial. However, I am not sure whether the surcharge levied by the Finance Act is payable on wealth-tax. Please clarify.
— Joginder Kumar A. The surcharge and cess has been levied by the Finance Act applicable to a financial year. 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. SCSS rules
Q. Please refer to query raised by Dev Raj Aggarwal of Ludhiana (The Tribune dated 13.10.08) who desired to know whether SCSS a/c can be closed by the co-depositor without penalty on the death of 1st depositor. In this case, sub paras 3 and 5 of rule 8 are applicable and the spouse whether joint holder or as nominee can close without any penalty and to me is also entitled for higher interest and not at post maturity rates. Second provision to rule 8 seems to be irrelevant. Kindly re-examine the issue for correct interpretation as the same is confusing. — V.N. Bhatia A. There are three provisos to Rule 8 of the Senior Citizens Savings Scheme Rules 2004. The second proviso of above rule which may also be referred to as second proviso of sub rule 3 of Rule 8 reads as under: “Provided further that in case the spouse does not continue the joint account, the account shall be closed on an application in Form F and the deposit refunded along with interest as above.” The third proviso to this Rule was inserted on 27.10.2004 and deals with a case where both spouses have opened separate accounts under this scheme. The answer given to Dev Raj Aggarwal referred to the proviso reproduced above and did not refer to the proviso of which you have made a reference. Key man policy
Q. My company bought a key man policy in which I was insured five times the premium paid each year. The company paid premiums for 3 years continuously and before the completion of 4th year the policy got assigned to me. The surrender value was zero at the time of assignment. Now since I have the policy for about 7 months after the assignment on my name, I want to surrender the policy and want to utilise the proceeds for other purposes. I have read a lot about a key man policy which is for your reference/double check/verify the info. Those are as follows: 1. Whether the premium paid by the firm will be “perquisite” in the hands of key man under Para (V) of section 17 (2) of IT act 1961? A) No, if the proposed insurance is affected only for the benefit of the business. Since the key man does not derive any benefit from the insurance on his life, the premium paid will not be treated taxable in his hands. 2. Clause 10D of Section 10 of IT, exempts certain income from tax. The Act amends clause 10D of Section 10 to exclude any sum received under key man insurance, including the sum allocated by the way of bonus on such policy for this purpose. 3. In case of an employee, the surrender value of the policy would be taxed in the hands of the employee under the head salaries as profits in lieu of salary as provided u/s 17 (3) (ii ). Whereas in this case the surrender value at the time of an assignment was zero. My question is: Will I impose any kind of taxes, if I surrender the policy already assigned to me with respect to the time frame to surrender the policy or due to any other technical reasons? Kindly clarify along with the relevant sections of IT act. — Mannu Sehgal A. The position with regard to the taxability of a sum received under the Key Man Insurance Policy was explained by the Central Board of Direct Taxes in a circular no. 762 dated 18.02.1998. According to the said circular, the sum received by an organisation which has taken Key Man Insurance Policy shall be taxable as business profits in view of the premium of such policy being allowable as a business expenditure. The surrender value endorsed in favour of the employee or the sum received by him at the time of retirement be taken as “profits in lieu of salary” for tax purposes. In case the amount received by a person having no employer-employee relationship, the surrender value of the policy or the sum received under the policy would be taken as income from other sources and taxed accordingly. In view of the above position, in case you continue to be an employee of the company, the amount received under the Key Man Insurance policy by you would be taxed as profit in lieu of salary. In case you are not an employee presently, the amount received would be taxed as the income from other sources in your hands. IT return for trusts
Q. I am looking after a charitable trust which is duly registered by the Commissioner of Income-tax under Section 12A of the Act. The charitable trust is running a school and any profits arising thereof are being applied wholly and solely for the purposes of running the educational institution. The gross income of the Trust from the said activity is about Rs 90 lakh. Is it required to file the Income-tax return? — A.K. Chawla A. In accordance with the provisions of Section 139(4A) of the Income-tax Act 1961 (the Act), a charitable trust, if its total income exceeds the maximum amount which is not chargeable to tax without giving effect to the provisions of Section 11 and 12 of the Act, is required to file the Income-tax return by the dates specified by the Act. Further, under Section 10(23C)(iiiad) any income of an educational institution is exempt from tax if such an institution is existing for educational purposes and not for the purposes of profit if the aggregate annual receipts of the educational institution do not exceed Rs 1 crore. In my view, therefore, though the income of your school would be exempt from tax, it would be essential for you to file the return of income under Section 139(4A) of the Act and claim exemption from the taxability under Section 10(23)(iiiad) of the Act. This would be in strict compliance of the provisions of the Act. |
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