London, August 9
The world has earmarked a staggering $11.9 trillion to wriggle out of the financial crisis, the sum which is enough to finance a £1,779 handout for every person living on the planet, The Telegraph said quoting the International Monetary Fund.

"The cost of mopping up after the world financial crisis has come to $11.9 trillion - enough to finance a £1,779 pound handout for every man, woman and child on the planet," The Telegraph said in a report.

Citing IMF calculations, the news report said, "Most of the cash has been handed over by developed countries, for whom the bill has been $10.2 trillion, while developing countries have spent only $1.7 trillion the majority of which is in central bank liquidity support for their stuttering financial sectors.

The whopping total cost of crisis is equivalent to around a fifth of the entire globe's annual economic output and includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees over debt and liquidity support from central banks.

"Although much of the total may never be called on, the potential outlay still dwarfs any previous repair bill for the global economy," The Telegraph said.

‘Taxmen should start dialogue with financial institutions’

Taxmen worldwide should see the global downturn as a chance to start a better dialogue with financial institutions keeping in view the fact that the economic crisis has made them a risk area for the tax authorities, an IMF paper said.

"Tax agencies may use the financial crisis as an opportunity to enter into a more co-operative relationship with financial institutions...," the paper on 'Collecting Taxes During an Economic Crisis: Challenges and Policy Options' said.

A paper prepared by John Brondolo of the multilateral lending institution said that even before the crisis set in, the financial sector's size and complexity made for a difficult and specialised environment for the tax-collecting authorities.

"During 2008 and into 2009, many financial institutions have experienced large losses, some have collapsed and others are undergoing restructuring or mergers,” the paper said.

In order to have better co-operation with financial institutions, the tax authorities could work on a unilateral statement on how it intends to work with them or a joint charter by tax agencies and stakeholders could help the move, it said.

The major tax-compliance risk for banks and other financial institutions involves tax avoidance schemes. These usually have highly structured financial transactions, circular and cross-border flows of funds, and intra-group exchanges, the IMF paper said.

"Tax agencies will need to carefully evaluate the losses reported by financial institutions," the paper added. — PTI

Ludhiana, August 9
The executive committee of the Northern India Textile Mills' Association (NITMA) met here yesterday. Heads of various textile mills from Punjab, Haryana and Delhi attended the meet.

Talking to The Tribune, Ashish Bagrodia, president NITMA appreciated the efforts of the Textile Minister in getting the allocation of Rs 3,140 crore towards the Technology Upgradation Fund (TUF) scheme and its disbursement, which is expected shortly. He said in the past few seasons, there had been an increase in cotton production.

He, however, said during cotton year 2008-09, the comfortable situation was converted into a crisis by "irrational" decisions of the government, which increased the MSP on cotton by almost 45 per cent and the ad hoc manner in which the Cotton Corporation of India (CCI) sold the procured cotton.

Further, an incentive of 5 per cent was given with retrospective effect on the export of raw cotton, a valuable raw material for the textile industry.

Bagrodia, who is also MD of Winsome Textile Industries, said it was necessary to ensure that the procedures for MSP operations were streamlined. He suggested that in order to bring transparency, representatives from the textile industry should be inducted into the boards of CCI and Nafed.

Hardyal S. Cheema, chairman of Punjab committee of NITMA said the crisis created due to policies of the government was making operations of Punjab textile mills non-viable. He said the entry tax on cotton bales brought from other states had not been exempted.

"Besides, many Punjab spinning mills have been served notices by the Mandi Board for getting the units registered under the Punjab Agricultural Produce Markets Act, 1961 (Punjab Act No. 23 of 1961), whereas mills are buying ginned cotton from ginners. In addition to this, the industry is also facing problems in getting their refund of sales tax paid as VAT while purchasing cotton and entry tax paid while purchasing cotton from outside the state", he added.

Mumbai, August 9
Housing Development Finance Corporation chairman Deepak Parekh has said there is a compelling need to have real estate regulators at state level to deal with issues concerning the housing sector.

"There is a compelling need for state level real estate regulators," Parekh said in an annual report of the company sent to shareholders.

Discussing various aspects of real estate, he said, "It would be a missed opportunity if the government were not able to lay out an institutional framework for a real estate regulator".

According to Parekh, regulators' role would be to monitor the affordable housing agenda, promote real estate reforms, ensure transparency especially by mandating that flats be sold only on carpet area and act as a platform to protect buyers from real estate fraud.

Referring to the affordable housing, Parekh observed that affordable housing is not about box-sized, budget homes in far-flung places where there is no connectivity to work places and little surrounding infrastructure.

"Affordable housing has to be able to cut across all income segments and has to make economic sense in terms of proximity to work place", he said.

About challenges being faced in rural housing, he said challenges of rural housing are vastly different from urban housing and key reform like permitting the mortgage of agricultural land for residential purpose was needed.

Parekh also criticised the tendency of state housing boards to make profits by selling lands.

He said that many housing boards have shifted their focus to merely selling land for profit and sitting on cash surpluses. Such tendency of developing profits should be stopped and deployed only for affordable housing, he said. — PTI 

New Delhi, August 9
Bharti Airtel is working on a revised offer for a possible deal with South Africa's MTN, which may entail higher cash outgo and additional debt to be raised by the Indian company to fund the transaction, sources said.

While there is still no certainty about the closure of the deal, the two sides are believed to be working on finalising the terms and conditions over next few weeks. After their earlier exclusive talks period ended on July 31, the two companies extended it by a month and now have time till August 31.

Bharti Airtel is in talks with MTN group for a share-swap deal to create a $23 billion telecom entity is likely to seek more bank loans to fund the transaction, said sources.

Bharti, which had earlier stated that the terms of the potential deal may be adjusted, is learnt to be working out the revised terms on MTN share price increase and raising the cash component in the deal. The source said in both cases the outgo are likely to be much higher than the originally estimated four billion dollar for which Bharti has already approached the PSU bank State Bank of India for $2 billion. — PTI

New Delhi, August 9
Anticipating to woo a big chunk of mobile subscribers from rivals to its network, BSNL has earmarked a capital expenditure of Rs 1,250 crore to make its network ready for number portability, which allows customers to change service providers without changing numbers.

BSNL is required to make an initial capital expenditure of about Rs 1,065 crore for making its basic and mobile networks MNP compliant, in addition to annual OPEX of about Rs 185 crores for the purpose of MNP service, said a senior company official.

It has asked TRAI to make provisions to ensure parties involved in the operation--donor operators (the subscriber losing operator), fixed line operators, recipient operator and the MNP service provider get a share of the porting charges, which are paid by customers who port their numbers. — PTI 

Q. My son is an NRI and working in the USA for the past 10 years. He invested certain amount in NSCs in November 2002 i.e. before the date of stoppage of investment by the NRIs in NSCs. The NSCs matured after six years and credited to his NRI accounts (Proceeds credited to his NRI account in a nationalised bank in Amritsar as the NSCs were issued out of this NRI account by way of cheques issued in favour of Post Master Amritsar. The maturity proceeds i.e. principal plus interest for 6 years stands credited to his NRI account. Please clarify whether any income tax has to be paid on interest income i.e. maturity proceeds minus principal amount. If no income tax is payable then whether we can file income tax return as of 31/3/2009 as the maturity proceeds stands credited in the account in the year Nov 2008 i.e. between financial year 1/4/2008 to 31/3/2009. As per information collected from banks, no tax is payable by the NRIs on interest earnings in the savings account or term deposit receipts as the bank has not deducted any TDS on term deposits receipts i.e. for the interest earned during the financial year 1/4/2008 to 31/3/2009. They have also mentioned on interest certificate that no TDS has been deducted nor it is applicable. The bank also informed that no income tax was payable on interest income of the NRIs. Please clarify and also inform if NIL return can be filed and also tell section of the Income Tax Act under which the return can be filed i.e. showing interest income on NSCs and bank deposits minus exemption under the Income Tax Act. — Lajpat Rai Thakral

A. (i) The amount of interest accruing for each year in respect of the National Saving Certificates should have been declared in the return of income for the year for which such interest accrued. It seems this was not done. In view thereof, the entire amount of interest received on National Saving Certificates as on the date of maturity would be taxable as your son’s income provided the amount so received and other income, if any of your son, exceeds the maximum amount not chargeable to tax. The return of income in such a case will have to be filed by your son showing such income.

(ii) The interest income earned on NRE accounts of a non-resident Indian is not taxable. However, interest earned on a non-resident rupee account is taxable.