The Tribune, Chandigarh, India

	FM follows what he preached Travels economy class Kolkata, September 12 In the midst of a controversy over austerity measures imposed by his ministry, Finance Minister Pranab Mukherjee today arrived here from New Delhi, flying economy class with a budget airline. “During elections and whenever I travel on commercial flights, I almost (always) travelled economy class. It's nothing new," he told reporters here. His office said in Delhi he would return on Sunday by economy class on an Air India flight. Sources said he might also cancel a visit to Cyprus for a Commonwealth Ministers' meeting to which he had planned to go by a special aircraft. They said even if he flies abroad for a World Bank meeting in Turkey sometime later, he would fly ordinary class. Austerity measures prescribed by Mukherjee's ministry were questioned by his colleagues during a Cabinet meeting on Thursday. The Finance Ministry had asked the ministers to undertake official travel only by economy class, besides avoiding holding meetings in five-star hotels. During a media interaction yesterday, he said the Finance Ministry had only made a request to ministers, MPs and officials - entitled to travel by the executive class - to take the economy class in domestic flights and that in international flights the ministers could travel by executive class. — PTI
	US levies 35% duty on Chinese tyres Washington/Beijing, September 12 US President Barack Obama has imposed a whopping 35 per cent additional import duty on Chinese tyres in a bid to protect the domestic market, drawing the ire of Beijing which described the measure as “protectionist” and violation of WTO rules. The additional import duty would be in force for three years, however, it would decline by five per cent each in subsequent years. “The additional duty to passenger vehicle and light truck tyres — complementing the existing four per cent duty — will be set at 35% ad valorem for the first year, 30% ad valorem the second year, and 25% ad valorem the third year,” the White House said. “In the context of the global economic crisis this sets a very bad example. China reserves the right to retaliate,” a top Chinese official said in Beijing. According to reports within 15 days, the US would add a duty of 35 per cent in the first year, 30 per cent in the second and 25 per cent in the third on passenger vehicle and light-truck tyres from China. The report said the decision came after the US International Trade Commission determined that a surge of Chinese-made tyres had disrupted the domestic market and cost thousands of jobs in the US. The ministry of commerce said on its website today the US lacked basis for the case because tyre products exported to the US from China had actually declined 16 per cent in the first of this year, compared to the same period last year. China’s tyre exports to US in 2008 only rose 2.2 per cent from 2007, the official Xinhua news agency reported. It said the business situation of the US tyre producers has shown no apparent changes after the entry of Chinese products. — PTI
	Investor Guidance NRE accounts subject to Indian tax provisions by A.N. Shanbhag Q My wife and I are NRIs based in the US for the past four years. I am employed and she is a housewife. We file joint tax returns in the US. I have gifted all my earnings in the US to my wife and she holds the money in her separate bank account in the US. She wants to purchase a house in India in her name. My questions are: 1 Can she purchase a house in her name? 2 If yes, will any rental income earned by her from leasing out the house in India be clubbed with my income? 3 We are planning to return to India permanently this year. Will the clubbing provisions change once our status changes from being an NRI to a resident individual? — Chetan A Clubbing provisions as per the Income Tax Act will apply only in those cases where the Act has jurisdiction. You have transferred/gifted your earnings to your wife outside India and, hence, clubbing provisions of India will not apply to this transaction. When your wife buys a house out of capital gifted to her outside of India, as far as India is concerned, it would be her capital and, hence, any rental income will be taxed in her hands only and the same will not be clubbed with your income. These provisions will not change even after you change your status. However, note that your earnings/income have to be transferred to her in her bank account abroad and not to her NRE account in India as NRE accounts are subject to Indian tax provisions. Futures and options Q In case of futures and options, STT will be calculated on the premium amount and not on the value of the premium multiplied by strike price. What does this mean? — Bawa A Your query is related with option contracts where the purchaser of an options contract has an option either to buy or sell a predetermined quantity of a share (or index) at an agreed price within a prefixed future date. For this, the holder pays a one-time, non-refundable fee (option premium). When the holder of exercises the option, he either pays the agreed-upon price if it is a call option or receives payment in the case of a put option. If the holder decides to waive his option, which he can, he only loses the option premium. In contrast, the writer of the option is obligated to make or receive delivery, depending upon whether he wrote a call or a put option. In either case, the writer of the option has no authority or right to determine whether or at what point, will the option be exercised. The right rests only with the purchaser of the option. The potential loss to an option writer is unlimited. In contrast, if the holder chooses not to exercise his right and lets the option expire, his loss is limited to the premium paid. Understandably, the STT is charged on the premium and not on the price of the share or commodity. Tax liability Q I am a US citizen and a resident of India. All my assets and income are earned in India and I pay tax here. My past savings are invested in mutual funds. I have no earnings in the US except whatever small interest I earn on the bank balance I maintain there. All my income and assets are in India and I have been paying my taxes here. While I was in the US, I paid taxes there on my US income. Do I have any tax liability in the US, and if so, what is this? — Rajesh A Note that generally for a citizen of any country, global income is taxable. By that ratio, your Indian income would be taxable in the US. The treaty takes incomes item by item and either gives a particular country the exclusive right of taxation or if it is taxable in both countries, you can take credit for tax paid in the source country while filing your tax return in the country of residence. That said, it would be advisable to consult a tax attorney for the nuances and working out the details. PPF account Q My father had opened a PPF a/c in 2001 in the name of his Hindu undivided family (HUF) consisting of him as karta, my mother, two sisters and me. My mother, father and one sister died leaving a sister and me as the members the HUF. I am the sole inheritor of my father’s property. The post office authorities are neither prematuring the PPF a/c nor transferring the amount to my HUF a/c. — Gupta A The HUF does not come to an end when its karta expires. The next seniormost male member takes over as the karta. This account can be closed only after the expiry of 15 years. Note that a recent amendment to the rules does not permit an HUF to opt for post-maturity continuation or open new PPF accounts. However, an existing account may be continued. The authors may be contacted at wonderlandconsultants@yahoo.com
	Aviation Notes Jet ‘crash’ costs passengers dearly by K.R. Wadhwaney The airlines have shown little concern to the warnings of the Directorate-General of Civil Aviation and the ministry. They are persisting in charging exorbitant fares from the already harassed passengers. An official of a private carrier had the temerity to say: “It is open market and in the event of need, we are leving fares to make up for the losses that we had sustained.” The already vex situation has turned murkier because deadlock between Jet Airways management and pilots has not been resolved. The aviation sector has plunged into further pit of despair with the government, particularly the civil Aviation and Labour ministries, being no more than mere mute observers. In the battle of attrition, Jet Airways Naresh Goyal is more to blame than the pilots. Obsessed by power and influence among politicians, he surprised analysts when he dismissed a couple of pilots for promoting the National Aviation Guild (NAG). The industrialist-turned-aviation supreme Goyal failed to realise that in democracy, trade unions are not unauthorised outfits. Several trade unions have been functioning for years. This was not all. Goyal “compared” pilots and commanders with “terrorists” calling their strike-move as an act of “terrorism”. It is the same man who along with his industrialist-colleague had pleaded for a bailout for his airlines. But the government refused to be brow-beaten and the airlines had to beat a hasty retreat in its blackmail attempt. After prolonged discussion, the Labour Ministry prevailed upon the Jet management that its action of punishing the pilots was illegal. The management, caught in a ticklish situation, agreed to reinstate the “dismissed” pilots but refused to accept the existence of NAG. In the clash of egos, the Jet has lost more than it has gained. Apart from losing losing its image and reputation, the airline's financial belly has been severely affected with the losses amounting to Rs 18 crore a day. Jet's injudicious handling and other airlines' greed and shocking attitude of the officials have forced the passengers to switch their loyalty to trains. With pilots united in their fight against the Jet management and cabin crew also supporting their colleagues, the overall scenario is in a pit of despair.
	Housing project for senior citizens Sanjay Khurana Tribune News Service Chandigarh, September 12 Punjab-based Impact Projects Pvt Ltd - a part of Impact Projects Group promoted by former non-executive chairman of Ranbaxy Laboratories Harpal Singh - and chairman emeritus of Fortis Healthcare is coming up with a residential housing project for senior citizens at Amritsar with an investment of Rs 85 crore. Jaivir Singh, vice-president, Impact Projects, while talking to The Tribune said: “We aim to provide three basic facilities in our housing project - healthcare, security and independent lifestyle - that are crucial in later stages of life. This concept is already there in the West but in India it has been largely neglected. Moreover, there is a great scope of growth in the segment because of lack of organised players.” The project named Isle, a service-enabled community initiative for the aged, will be the first to be set up under the “circle of care” hallmark. Medical care will be available to all Isle residents through an onsite 24-hour medical intervention centre by Fortis Healthcare Ltd. Jaivir further said: “We have finalised the project and plan to break the ground in January 2010 and our target is to give possession of apartments by March 2011.” The project, spread over an area of 10 acres, will have about 220 units of various sizes ranging between 650, 850 and 1,250 sq ft in the first phase. The group also plans to pump in about Rs 1,000 crore in various housing projects in the next 3-6 years. The group has interests in automotive, non-banking finance and housing sectors. The apartment projects will be set up in Punjab, Himachal Pradesh and NCR at a cost of Rs 300 crore in the next six years.
	India ranks 5th in steel production Jamshedpur, September 12 India was the fifth largest steel producer in the world during the last financial year, a Steel Ministry official said today. During financial year 2008-2009 India had produced 55 million tonnes of steel and became the fifth largest steel producer, Goutam Kumar Basak, executive secretary of the Joint Plant Committee, said. “We have produced 22.14 million tonne of steel during April-August this year — a jump by 6.6 per cent compared to the figure of corresponding period last year,” Basak said. He expressed confidence that the steel sector would produce 60 million tonne steel this fiscal. China, which produced 501 million tonne last year, was the leading steel producer in the world followed by Japan (119 million tonne), the US (91 million tonne), Russia (69 million tonne), he said. — PTI
	MS-Yahoo deal under scanner San Francisco, September 12 The US department of justice is looking into the advertising and search alliance between Microsoft and Yahoo, the companies said yesterday. Yahoo and Microsoft, which trail a distant second and third respectively to Google in the Internet search market, announced their deal in July in a bid to combine forces and challenge the web giant. Under the arrangement, Microsoft will provide search and related advertising tools on Yahoo’s pages in return for a 12 per cent revenue cut during the first five years of the deal. Yahoo estimates the pact will add $500 million to annual operating income while cutting capital expenses by $200 million. While the antitrust probe had been expected, analysts say the department of justice is unlikely to block the deal since the two companies’ combined share of the market would still be less than half held by Google. — DPA