The Tribune, Chandigarh, India

PM rules out withdrawal of stimulus packages
Ashok Tuteja writes from Hua Hin (Thailand)

Noting that the global economy was still not out of trouble, Prime Minister Manmohan Singh today ruled out withdrawal or phasing out of the stimulus packages, saying the time was not ripe for such a step.

Addressing a press conference here at the end of the ASEAN and East-Asia summit, he said there was a good deal of discussion about the state of global economy, the performance of the real economy and the role of stimulus packages during the deliberations.

"I think there has to be a balance between the adoption of stimulus packages and their modifications or removal. This has to be a subject matter of detailed investigation multilateral for a like this can deal with these issues only in general terms," the PM said. There was a fair amount of agreement (at the summits) that probably the time was not right to withdraw the stimulus, he said.

The government had announced three stimulus packages to boost the economy, after the global economic crisis erupted.

On the country’s monetary policy, Manmohan Singh said it was the exclusive domain of the Reserve Bank of India. "It is not proper for me to comment on the monetary policy stance that should be adopted. These are matters on which the RBI Governor is competent to take decision. He does not come and brief me from time to time." The RBI is due to unveil its quarterly monetary policy on Tuesday and is expected to retain the soft stance on interest rates.

The PM said he was satisfied that both monetary and fiscal policies in the country were in line with the government’s requirements.

PTI adds: The government had pumped in about Rs 3 lakh crore in the economy in 2008-09 and 2009-10, besides providing host of tax concessions to the industry.

In addition to the fiscal measures, the RBI made available about Rs 2 lakh crore to help the cash-starved industry.

As a result of the packages, the economy has started showing signs of recovery and raised apprehensions about phasing out of the concessions given to the industry. On the bilateral trade between India and Indonesia, Singh said the target of $10 billion two-way trade by 2010 has already been achieved.

"The President of Indonesia and I in 2005 had laid the target of $10 billion as trade turnover by the year 2010. I am glad to report that the target has already been achieved," he said. He also said India has a vast and unsatisfied demand for vegetable oils. "...therefore there is a ready market for Indonesia palm oil in our country and will remain so," Singh added.

CII survey predicts growth between 6-7 pc
Tribune News Service

New Delhi, October 25
In a business confidence survey released by industry chamber CII, it was revealed that the outlook for 2009-10 expect GDP growth in 5 per cent plus range with majority of respondents expecting it to be in 6-7 per cent range, an upward revision from the previous survey range of 5-6 per cent.

However, economic instability remains the top concern. Also, the slackening consumer demand and infrastructural shortages worry Indian firms.

Surprisingly, poor monsoon and high interest rates were among the least of the concerns of the Indian firms who participated in the survey.

The picture of the industry looks bright, with the survey revealing that the levels of capacity utilisation expected for the period October-March (2009-10) looks better with half of the respondents expecting a capacity utilisation between 75-100 per cent and some other expecting capacity utilisation to be more than 100 per cent. Nearly, 80 per cent of the respondents expect their sales to increase in the second half of 2009-10.

On the inflation front, majority of the respondents expect inflation to be below 5 per cent in 2009-10. Given that there are some visible signs of economic recovery, 80 per cent of the respondents expect economy to return to normal growth in the second half of 2009-10 and beyond.

In spite of various efforts taken by RBI to improve liquidity in the system, the actual offtake of credit has not improved. The survey revealed that 74 per cent of the respondents have not witnessed any increase in availability of credit in the past six months and only 38 per cent of the respondents expect credit availability to increase in the second half of 2009-10.

On exports, half of the respondents revealed that exports would expand during the second half of 2009-10.

Regarding employment, half of the respondents expect employment to increase during the next six months.

The survey is based on response from 444 companies covering all industry sectors, including small, medium and large enterprises across the spectrum of industry groups, both in public and private sectors, engaged in primary sector, manufacturing activities and in services sector.

RCom debunks special auditor’s report
Says no irregularities in a/cs

Mumbai, October 25
Anil Ambani group firm Reliance Communications (RCom) today debunked the special audit report and said it has neither inflated revenues nor evaded licence fees to be paid to the government.

"RCom strongly affirms that it anticipates no additional financial liability towards licence or spectrum fee. The Special Auditor's report estimating alleged additional liability of Rs 316 crore is incorrect, hopelessly biased, one-sided and prejudiced," RCom said.

The company has made due disclosures and is fully complaint with listing agreements entered with the Bombay Stock Exchange and the National Stock Exchange and all SEBI disclosure guidelines, the company said in a statement.

The Special Auditor's report is in fact in conflict with industry practice and judgements of telecom tribunal (TDSAT) and Customs Excise and Service Tax Appalette Tribunal (CESTAT) on several issues, it said.

The special auditors appointed by the Department of Telecom has alleged that RCom inflated revenues by over Rs 2,900 crore while under reported the same to TRAI for evading licencing fees of an estimated over Rs 300 crore.

The Special Auditor's report is also liable to be rejected outright, as, contrary to all norms of audit and professional conduct, they did not discuss their findings and observations with the company at any stage.

RCom said the Special Auditors have incorrectly alleged that there is an additional liability of Rs 90 crore towards licence fee on discounts allowed by the company.

"…no licence fee is payable on this item as it is completely in line with industry practice, and this has also been upheld in RCom's own case by a judgement of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT)," it said.

RCom claimed that it has made regular disclosures of all financial and other information, quarterly financial statements, annual reports, and other data as required by stock exchanges, SEBI and other regulations.— PTI

Asia emerging from meltdown faster: IMF

Washington, October 25
Asia, led by China, India and Indonesia, is emerging from the current global economic crisis sooner and stronger, a top IMF official has said.

"Asia looks set to emerge from the downturn both sooner and stronger than any other region," the first deputy managing director of the International Monetary Fund, John Lipsky, said at a conference recently.

"Asia, despite its relatively strong initial condition entering the crisis, was hit hard late last year," he said.

While it was not directly exposed to the financial assets that were at the epicentre of this global crisis, Asia was severely affected by the sharp downturn in the US and Europe as the trade implications of the global downturn reverberated through the Asian supply chain, capital flowed out of the region, and trade finance stalled, he noted.

Measured from peak to trough, real GDP has fallen by nearly four 4 per cent in the United States, but it fell by more than 8 per cent in Japan and by about 7 per cent in emerging Asia (excluding China, India, and Indonesia), he said.

The latest 'World Economic Outlook' of the IMF forecasts global economic contraction of about 1 per cent this year and expansion of around 3 per cent next year. At the same time, Asia is expected to grow by over 2 per cent this year and by around 5 per cent in 2010, Lipsky said.

"Strikingly, the three fastest-growing economies in the G-20 are all from Asia - China, India, and Indonesia - with China projected to grow 8.5 per cent, India 5.5 per cent, and Indonesia 4 per cent this year,” he said.

The recovery also reflects quick and forceful policy actions in the region, including monetary easing, currency flexibility in many countries, and substantial fiscal stimulus - in fact, larger than the G-20 average, he said.

"Asian countries also have provided substantial financial sector support, including blanket deposit guarantees, backstopping the issuance of banks’ wholesale financing, and offering cover for corporations that had borrowed in foreign currency,” Lipsky said. — PTI

Tax Advice
No cap on extension of PPF a/c
by S.C. Vasudeva

Q. I have a PPF account, the 15-year period of which will expire by January 31, 2010. Is it possible for me to continue with the account for some more years?

— Devender

A. According to a clarification issued by the Office of the Regional Director, National Savings Institute vide its letter No.1266/PPF/NSI-CHD/07 dated 18th June, 2007, the PPF account can be extended for any number of block of 5 years without any limit. Therefore in case you so desire, you can extend the PPF account for another five years without any difficulty. You can exercise this option by filing Form H and submitting the same to the bank in which you have your account.

Mediclaim policy

Q. I have been informed that I am entitled to take a mediclaim policy and deduction to the extent of Rs 15,000 is allowable towards the payment of premium. I am working with a limited company and am entitled to the re-imbursement of medical expenses to the extent of Rs 15,000, provided the bills are presented. If the expenditure is not supported by bills, the payment if any made is added to salary and tax is deducted thereon. In case I take medi-claim policy, will I be entitled to the deduction of the amount paid as premium even though I am entitled to the re-imbursement of the medical expenses to the extent of Rs 15,000?

— Ashok

A. The deduction under Section 80(D) of the Income Tax Act, 1961, in respect to the health insurance premium, the payment of which is made by any mode other than cash, in the previous year out of the income chargeable to tax is allowed as deduction against the total income. The deductible amount is Rs 15,000 in case the payment is made to effect or keep in force the insurance on the health of the assessee or his family. An additional amount of Rs 15,000 is also deductible in case the amount is paid to effect or keep in force an insurance on the health of the parent or parents of the assessee. The deduction allowable under the Section is over and above the amount of medical expenditure reimbursed to you.

Conveyance allowance

Q. I receive conveyance allowance of Rs 2,000 per month. My employer has added the said amount to my total salary income and deducted tax thereon. Is the action of my employer correct for deducting tax on such conveyance allowance?

— Dinesh

A. Conveyance allowance is exempted up to Rs 800 per month under Section 10(14) of the Act read with Rule 2BB of the Income Tax Rules 1962. The balance amount of Rs 1,200 would be taxable in your hands and included in the total salary income for the purposes of deduction of tax at source. You can approach your employer and point out that the entire amount of Rs 2,000 is not inclusionary in your salary in view of the provisions of the aforesaid section.

House rent allowance

Q. In case of a Central government employee, whether DA is to be included in the definition of salary for allowing rebate for house rent allowance. I have been informed by my colleagues that DA is not includible for this purpose. Please let me have your opinion on the subject.

— Raj Kumar

A. Rule 2(A) of the Income Tax Rules 1962 prescribes the limits for the exemption of house rent allowance. The said rule provides that for the purposes of computing such exemption, the term salary shall have the meaning as specified in Clause (H) of Rule 2 of part A of the Fourth Schedule to the Act. According to Rule 2(H), salary includes dearness allowance if the terms of employment so provide, but excludes all other allowances and perquisites. You will have to therefore ascertain whether your terms of employment provide for the inclusion of dearness allowance as part of the salary. If so, you will be able to seek the exemption of house rent allowance on the salary inclusive of dearness allowance.

Rebate on education loan

Q. I had borrowed a sum of Rs 2 lakh for pursuing masters degree in economics. Am I entitled to deduction of the said amount from my total income?
— Annand
A. According to the provisions of Section 80E of the Act, a deduction is allowable in respect of the interest on loan raised by an assessee from any financial institution or any approved charitable institution for pursuing his higher education. The deduction is allowable in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier. The term initial assessment year has been defined as assessment year relevant to the previous year in which the assessee starts paying the interest on the loan. Accordingly, you would be entitled to a deduction of an amount of interest payable on the said loan if the same has been paid out of your income chargeable to tax. No deduction is allowable in respect of the amount borrowed for pursuing higher education.

Ban on import of CDMA phones sans unique nos
Tribune News Service

New Delhi, October 25
Security concerns have forced the government to come out with a notification banning the import of CDMA mobile phones that lack unique electronic serial number and mobile equipment identifier. The number helps security agencies to identify and track users.

Directorate General of Foreign Trade (DGFT) said in a notification here, "Import of ‘CDMA mobile phones’ without Electronic Serial Number (ESN)/Mobile Equipment Identifier (MEID) or with all Zeroes as ESN/MEID is prohibited with immediate effect". Most of the CDMA phones without the unique numbers are imported into India from China and Thailand.

There are about 100 million CDMA subscribers in India and around 5.8 million users are being added per month. A large number of them use the Chinese or the Thailand manufactured handsets owing to their cheaper costs.

Earlier in June, the government had banned import of mobile phones that lack unique IMEI identification number for GSM players. IMEI is a 15-digit code which tracks the network of a call made through GSM services.