The Tribune, Chandigarh, India

BSNL may go for listing
To shelve divestment plan for now

New Delhi, September 6
Fearing opposition by employee unions, the government is considering to list telecom major BSNL on bourses by issuing nominal fresh shares and may shelve plans of directly divesting its equity for the time being.

Repeated attempts by the government and also management of the PSU have failed to bring the different associations to consensus on divesting government stake even as they (employees) have been lured with employees stock options at an attractive terms.

"We may first list BSNL on stock exchanges and then go for disinvestment," a senior government official told PTI.

BSNL's valuation has been pegged at about $100 billion and the PSU has a paid up capital of about Rs 5,000 crore.

The PSU has reported a lower net profit of little over Rs 574 crore with total revenues of about Rs 36,000 crore during 2008-09.

Its revenue and net profit in the previous financial year were Rs 38,000 crore and Rs 3,000 crore respectively. The sharp erosion in both revenue and profits is mainly due to lower average revenue per user (ARPU) vis-à-vis the private operators and if the trend continues for few years the company's long term plans may suffer badly. — PTI

RNRL’s Dadri project in troubled waters
Bhagyashree Pande
Tribune News Service

New Delhi, September 6
A major storm is building up in Uttar Pradesh’s Dadri district where Anil Ambani’s RNRL group had announced setting up of a 3,500 MW gas-based power plant at a cost of $2.2 billion.

Farmers of this district are seeking return of their farmlands that were acquired for the proposed project. They allege that they were given a meagre compensation for their highly fertile land.

In 2004, the Mulayam Singh-led government gave RNRL 2,500 acres of land to establish a power plant. But, the farmers whose land was forcibly taken from them are up in arms against the plan.

Thousands of farmers and their family members are planning to come to Delhi soon to convey their grievances to President Pratibha Patil, Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi. A delegation has also asked UP Chief Minister Mayawati to intervene into the matter.

Interestingly, the project does not figure in Mayawati’s recent white paper on the state’s power generation status and future plans.

“We will not allow the company to start work at Dadri under any circumstances, whether Anil gets gas from his brother or not. The farmers were betrayed by the Samajwadi Party,” Rajiv Tyagi, president of the Sahayog Society, which is spearheading the agitation, told The Tribune.

The farmers are eagerly awaiting the outcome of a writ petition in the Allahabad High Court challenging the notification under Sections 4 and 6 of the Land Acquisition Act under which the Mulayam Singh government had acquired the land.

“The manner in which the Mulayam Singh government allotted land to Reliance power clearly shows the nexus between the then state government and Anil Ambani-led company,” Tyagi said. In January 2004, Reliance Power approached the Mulayam Singh government to allot 2,500 acres of land in Dadri for a power project.

Within a month, the state government issued a notification for land acquisition in Dadri, invoking the Urgency Clause - Section 17 of the Land Acquisition Act - which said the land was being acquired for a public purpose. This Section took away the farmers’ right to protest. There was no mention of the company in the said notification.

The state government fixed a price of only Rs 150 per sq yard. Many farmers allege that they were forced to sign the land-selling papers and the police used force against those who resisted.

The government signed an agreement with the company on February 19, 2004, according to which the project was to be completed in three years from the date of handover of the land. At the most, the government could grant three extensions of one year each. As per the agreement, the entire cost of the project was to be borne by the company.

But within few days of signing the agreement, the company wrote to the state government on February 27, 2004, stating that the project was not feasible and it needed government support. The government then amended the state power policy in June 2004, after which the government agreed to share 60 per cent cost of the project.

Between 2005 and 2008, the farmers approached various courts, including the Supreme Court. Following the directions of the SC, they approached Allahabad High Court in March 2008. The high court put a stay on the case in September 2008, and the fight for the land is still going on.

US jobless rate hits 26-yr high

Washington, September 6
The US saw a staggering 2,16,000 job losses in August, pushing the country’s unemployment rate to a 26-year-high of 9.7 per cent even as the country’s recession-hit economy is slowly showing signs of recovery. “Non-farm payroll employment continued to decline in August,” the US Labor Department said in a statement.

Even though the August unemployment rate is the highest since 1983, the pace of job cuts has “moderated in recent months”.

Reflecting the shaky economic situation, as many as 6.9 million “payroll” jobs have evaporated since the nation officially slipped into recession in December 2007.

Last month, the number of unemployed people rose by 4,66,000 to reach 14.9 million.

According to the Labor Department, manufacturing sector and financial businesses shed 63,000 and 28,000 jobs, respectively, in August. — PTI

Tewari seeks early VAT refund
Naveen S Garewal
Tribune News Service

Chandigarh, September 6
Ludhiana MP and Congress spokesperson Manish Tewari has asked the Punjab government to help the business community in the state, especially in times of global recession by pulling up a “slackened state taxation department”, so that the business community get some relief in terms of an early VAT (value- added tax) refund.

Tewari told The Tribune that the government was showing little ingenuity in helping out the industry and business community that was passing through troubled times. He disclosed that he had written to Manpreet Badal to ensure refund of VAT in three weeks instead of 2-3 months at present.

“It is quite a long time for the business community to get their money blocked hence the period should necessarily be reduced to a maximum of 21 days only”, he observed.

Lauding the efficiency and concern of Manpreet Badal towards economic and industrial growth of the state, Tewari said, it would be an important step towards providing relief to the business community.

Only two telcos bid for MTNL’s 3G services
Girja Shankar Kaura
Tribune News Service

New Delhi, September 6
State-run telecom operator MTNL’s plans to rope in a franchisee to run its high-end 3G services seem to have come a cropper with just two telecom companies so far putting in papers to bid for the revenue-sharing agreement.

MTNL, which dominates fixed line telephones in Delhi and Mumbai, invited bids in July to run its 3G mobile services for 10 years after the next generation services it rolled out early this year attracted very few customers.

While inviting bids from global telecom companies MTNL said it would enter into a revenue-sharing agreement with the successful bidder while adding that the franchisee should give an undertaking that it will not take telecom licences in the metro cities of Delhi and Mumbai during this period.

The move came as despite launching 3G services in Delhi nearly six months ago, MTNL had less than 1,000 customers on this technology platform, raising concerns of poor marketing and execution.

However, despite the lucrative offer made by the state-run telco, which has been given a handicap by the government by providing it with the third generation spectrum much before the bidding is to be made by the private telcom operators, there has been a poor response from the telecom operators.

Reports suggest that only Richard Branson’s Virgin Group and BK Modi-run Spice Group have so far applied to be part of the bidding process, leaving the PSU with very little by way of choice.

Apparently, other international telecom companies which were expected to bid have dropped out, as country’s big private telecom operators have the targeted clientele, who are likely to opt for 3G services, as their customers. Although the last date for putting in the bid is September 9, MTNL officials are not very optimistic that there would be more bids.

Tax Advice
Gift to sister is tax-free
by S.C. Vasudeva

Q. I am a UK-based NRI. I had about Rs 24 lakh in my bank account which I wanted to invest in share market. For this I gave a cheque of the said amount to my sister living in India along with a statement that I am giving this as a gift to her. She deposited the money in her account and started buying shares in her name on my behalf. Are we within the limits of gift tax? Does any of us have to pay income tax? If yes, how much? Is there any way we can get away with it?

— TS Khehra

A. a) There is no gift tax liability in respect of the amount gifted by you to your sister. This is because the Gift Tax Act 1958 is not applicable presently in India.

b) The gift made by you to your sister is not taxable under the provisions of the Income-tax Act, 1961 (The Act).

c) This question does not arise in view of reply in (b) above.

IT refund

Q. I am a 30-year old and working in a private company. My monthly salary is Rs 21,000. I have submitted receipt for house rent and tuition fee of my child. They have deducted quarterly Income tax (TDS) from my salary amounting Rs 2,442 from the month of June, 2009, without giving any rebate under Section 80C. Kindly clarify if they are right or wrong. When I objected, they said I should get refund.

— Harjit Singh

A. The Central Board of Direct Taxes has issued a Circular No. 9/2008 dated 29.09.2008 containing detailed procedure for deduction of tax at source from salaries. According to the said circular, an employer is required to take into consideration the deductions allowable under Section 80C and 80GG of the Income-tax Act 1961 (the Act). In case the employer has not taken into consideration the allowable deduction the only course available with you is to file the Income-tax return and seek the refund for the excess tax deducted at source. It should not be a problem for you as you are regularly filing your tax return.

FDRs under Section 80

Q. Please clarify the following points:

1. Whether the FDR deposited in the bank under Section 80 C can be prematurely withdrawn?

2. I have taken a premature retirement on medical grounds from the bank & got ex gratia of Rs 10 lakh at source. Please advise whether any rebate is allowed on this ex gratia amount under the provisions of the Act.

— DK Agarwal

A. (i) The fixed deposits made in a bank in accordance with the requirements of Section 80C of the Act cannot be prematurely withdrawn. This is in accordance with the clause 11(2) of the Bank Term Deposit Scheme 2006, which provides that no term deposit shall be encashed before the expiry of 5 years from the date of its receipt.

(ii) There is no section in the Act which provides for any relief or rebate for the ex gratia amount received by an employee on a premature retirement on medical grounds. The exemption contained is in section 10C of the Act applies is in respect of amount received on the voluntary retirement or termination of the services of an employee in accordance with any scheme or scheme of voluntary retirement or in the case of public sector company, scheme of voluntary separation to the extent such amount does not exceeds Rs. 5 lakhs.

Medical reimbursement

Q. I am a university employee. After an accident, I had to undergo orthopaedic surgery on my right arm for which a consolidated sum was incurred at a private nursing home.

My employer has given me a total of Rs 15,000 as reimbursement of the expenditure incurred by me. I have come to know that medical reimbursement up to Rs 15,000 is tax-free. Please let me know the correct position in this regard.

— SK Sharma

A. Section 17(2) of the Act defines perquisites which are includible in ‘Salary’ for the purpose of taxability thereof. However, proviso to Section 17(2)(vi) exempts any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment so however that such sum does not exceed Rs.15,000 in the previous year. In view thereof, the reimbursement of Rs 15,000 would not be taxable in case the total reimbursement does not exceed Rs 15,000 in respect of the previous year.

Monthly pension from LIC taxable

Q. Please clarify whether monthly pension being received from ‘Jeevan Suraksha Scheme’ of LIC is taxable or exempted from I.T. under Section 10(23AAB). If it is not, which section would be applicable?

— PK Bhardwaj

A. Monthly payments received from LIC under ‘Jeevan Suraksha Scheme’ will be taxable. These are not exempted from tax under Section 10(23AAB) of the Act. The said section deals with the income of a fund which has been set up by the Life Insurance Corporation or any other insurer under a pension scheme to which contribution is made by any person for the purposes of receiving pension from such fund and which is approved by the Controller of Insurance or Insurance Regulatory and Development Authority.