The Tribune, Chandigarh, India

	G-20 FMs agree to maintain fiscal support London, November 8 The G-20 Finance Ministers have pledged to maintain the stimulus packages until the global economy is fully back on track and committed to work out an "ambitious outcome" at the UN climate change summit next month. In a communique at the end of the two-day conclave at St Andrews in Scotland, the G-20 ministers said: "The recovery is uneven and remains dependent on policy support. High unemployment is a major concern. "To restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured." The communique said they wanted an "ambitious outcome" at December's UN climate change summit in Copenhagen, but there was no agreement on a climate finance figure. "We committed to take action to tackle the threat of climate change and work towards an ambitious outcome in Copenhagen," the Communique said. However, no agreement was made on financing options, nor on how much individual countries would contribute. Britain's Chancellor of Exchequer Alistair Darling admitted that "while there are signs of improvement, we are not out of the woods yet. "Although work is being done on the exit strategy, there is no one that believes the job is yet done." The US Treasury Secretary Tim Geithner said most of the "financial fire" had now been put out, and the global economy was forecast to grow by 3 per cent next year. He said, however, risks remained. "This is still a very tough economy. If we put the brakes on too quickly the costs will be greater," he said. The International Monetary Fund said emergency stimulus measures needed to remain to avoid endangering a "nascent" financial recovery. "An overarching risk is that the recovery stalls" owing to early exits from record-low interest rates and massive state cash injections, the IMF said in a report at the summit. In an unprecedented move, the Finance Ministers agreed to put forward their economic growth plans to be assessed by the G-20, with assistance from the International Monetary Fund and the World Bank. Plans would be evaluated to see whether individual countries were working in line with global objectives for sustainable and balanced growth of the G-20 leaders' summit in Pittsburgh at the end of September. Darling said, "We agreed to put in place mechanisms to monitor what is happening in other parts of the world. The IMF will look for problems that may be developing (in the context of the global economy) which could be headed off. "This is a new approach to economic co-operation and a major step. We have agreed to take dramatic action to ensure we have growth in the future. St Andrews was the third and final meeting of the G-20 Finance Ministers, and will form the agenda for the G-20 in 2010." — PTI
	Tea production, exports decline Bijay Sankar Bora Tribune News Service Guwahati, November 8 In tune with the global trend, tea production in India registered a decline during the current year and what worries the industry more is simultaneous dip in the volume of exports. Tea industry sources informed that tea output in the country has decreased this year, thanks to the changing weather condition and the trend is same with other neighbouring tea-producing countries like Sri Lanka and Bangladesh. However, contrary to the expectation of the industry that decline in global production would spur export of tea from the country, the export volume has come down substantially, according to figures available till August this year. According to figures provided by the Tea Association of India (TAI) secretary Dipanjal Deka, India produced 595.73 million kg of tea till August this year, which is lower by 4.47 million kg compared to corresponding figure of last year. As per records available, the production in Sri Lanka came down by more than 16 per cent. Sri Lanka produced 208.06 million kg of tea till September this year as compared to 250 million kg produced during the same period last year. During the same period this year, Bangladesh produced 38.98 million kg of tea as compared to 39.25 million kg last year, while the production in Indonesia and Malawi recorded marginal increase. However, the production in Indonesia and Malawi is not enough to have an impact on the global tea scenario, the tea industry official said. In the backdrop of decline in production in most of the tea-producing countries, the exports should have been increased, but unfortunately this was not the case as far as Indian tea industry is concerned, as exports of Indian tea also came down. India exported 112.75 million kg of tea till August this year as compared to last year’s corresponding figure of tea against export of 130.72 million kg. A source in the Tea Board of India informed that though the production all over the country was hit by weather conditions, the gardens of the Brahmaputra Valley in Assam managed to make up for the losses suffered during the first few months of the year after the weather condition improved gradually.
	‘Wal-Mart to open 40 stores’ New Delhi, November 8 The world's largest retailer, Wal-Mart Stores Inc, will open 40 more stores in India in the near future, Commerce and Industry Minister Anand Sharma said. "Wal-Mart is very satisfied with the results in India. I was informed by the Wal-Mart CEO that they are looking at opening more stores. He gave a figure of 40 more stores across the country in the immediate future," Sharma told reporters during the India Economic Summit here. Wal-Mart chief S Robson Walton met Prime Minister Manmohan Singh and Sharma last week and discussed the foreign direct investment scenario in the retail sector in India. The government, currently allows 51 per cent FDI in single brand retailing, while foreign players are not allowed to invest in multi-brand format. Wal-Mart has a cash-and-carry joint venture with Bharti Group and runs the 'Best Price Modern' stores. Wal-Mart opened its first cash and carry store in Amritsar in May this year. Meanwhile, Bharti Group chairman Sunil Mittal said the group would take a measured approach to execute its expansion plan and will not go fast on opening new stores. "More cash-n-carrys are under plan every few months, you will see some of them opening. We are not going very fast on this. We have a measured approach as per the plan," Mittal told reporters here. — PTI
	Market Update Lacks strength to maintain growth momentum by Lalit Batra Markets staged a recovery last week on the back of global indices firming up. The Finance Minister’s remarks on disinvestment of PSUs, clarity on implementation of the direct tax codes and a rebound in global markets helped the Indian markets rebound and close the week in a positive territory. The BSE Sensex hit an intra-week high of 16,283 and low of 15,330, while NSE Nifty hit an intra-week high of 4,836 and low of 4,563. Nifty closed the week at 4,796 up 1.8 per cent and Sensex ending the week 1.6 per cent higher at 16,158. Despite the upmove, the Nifty futures closed at a discount of 6 points to the underlying. The global market weakness and the worry of unwinding of US dollar carry trade and the consequent asset bubble burst and dollar appreciation continue to remain. Despite the rally, the market does not signify convincing strength, as is evident from the futures market activity during the past few days. The market does not seem to have the strength required to continue to maintain its growth momentum as fresh bearish position builds up in the Nifty as well as the stock futures and options. Going forward, the activity in the global markets will be the key as the mood there is also gloomy. SREI Infrastructure SREI primarily focuses on financing construction equipment and infrastructure as well as renewable energy projects. Equipment finance forms a major proportion of SREI’s portfolio (85 per cent in 2008) while infrastructure project finance (13 per cent) and renewable energy comprises the rest. Further, through its wholly owned subsidiaries. The company has been tapping emerging business opportunities in venture capital asset management, investment banking and insurance broking. In 2008, SREI entered into a 50.50 joint venture for its equipment finance business with BNP Paribas’ wholly owned subsidiary BNP Paribas Lease Group (BPLG). The company has gone through a rough patch in the past 15 months. SREI’s presence in West Bengal, which was earlier an advantage, turned into a dampener because of the withdrawal of Tata Motors’ ‘Nano’ project from the state. This also halted several other infrastructure related projects planned by the West Bengal government. However, the company is now focusing on other growth areas in the infrastructure project financing and equipment financing space and has won several mandates. Similarly, the financials also took a hit and the stock price has nosedived from Rs 300 to Rs 70. Despite the deteriorating market conditions, the company was able to maintain a reasonable quality portfolio due to close relationship with clients, thorough risk assessment, and innovative structuring. Investors with a penchant for risk may buy SREI at the current levels of Rs 70 for medium term as the prospects of equipment finance look very encouraging. The risk to our recommendation is the increasing penetration of banks in this segment and their cost advantage (due to the ability to raise lowcost deposits) which shall intensify competition for the company.
	Tax Advice Interest on minor’s FDs includible in parent’s income by S.C. Vasudeva Q. I have a son aged 5 years. He has been receiving gift since his birth on the occasion of his birthday as well as on various festivals. The amounts so received are deposited in his bank account. As and when the amount exceeds Rs 5,000 the same is converted into a fixed deposit. A sum of approx Rs 50,000 is held in such fixed deposits. Is the interest earned on such fixed deposits taxable, and if so, who is liable to pay tax thereon? — AK Malik A. The interest earned on fixed deposits of the minor is includible in the income of the parent in accordance with the provisions of Section 64(1A) of the Act. The exclusion to this clubbing provision is in respect of income arising to a minor child on account of any (a) manual work done by a child or (b) activity involving an application of his/her skilled talent or specified knowledge and experience. In view of the above provisions, the interest income in respect of the fixed deposits (comprising of the gifts received) held in the name of the minor would be includible in your income. Fringe Benefit Tax Q. I would like to know more about FBT rules from Finance Ministry for FY 09-10. Have they declared anything? If no, any idea when they will declare? — Mayank A. The levy of Fringe Benefit Tax has been withdrawn for the assessment year commencing on the 1st day of April 2010 i.e. relevant to the financial year 2009-10. In view thereof, there is no question of any rules being prescribed for the levy of Fringe Benefit Tax. Keyman insurance policy Q. I am a chief executive of a company. The company has taken a keyman insurance policy and the insurance premium is being paid by the company. The expense in respect therefore has also been claimed by the said company. Is the amount received on maturity taxable? And, if so, who is liable to pay tax thereon? — KS Nijjhar A. Any sum received under keyman insurance policy is not exempt under Section 10(10D) of the Income-tax Act 1961 (the Act). The amount received on maturity is taxable in the hands of the recipient of the amount. However, the amount received on the death of such a person is not taxable. On the basis of the facts in the query, the maturity amount would be taxable in the hands of the company. Advance tax Q. I am a senior citizen and have income from pension, interest earned on deposits under Senior Citizens Saving Scheme and fixed deposits with banks. My income for the year ended 2010 would be about Rs 4,00,000. The tax is being deducted in respect of my interest income from fixed deposit and Senior Citizens Saving Scheme. Am I liable to pay advance tax? — RC Bajaj A. The advance tax is payable on an estimated income for a particular year. The gross tax computed on the estimated total income is reduced by the estimated amount of tax deductible at source. Accordingly, in your case, the gross income tax will be computed on your total income and after adjusting the tax deductible at source, you would be required to pay advance tax in case the net amount exceeds Rs 10,000. In case the tax payable exceeds the above amount, the first instalment of 30 per cent of such an amount should have been paid by 15th September 2009. You can now pay 60 per cent of the amount so computed by 15th December 2009. The interest for non-payment of first instalment (i.e. 30%) will have to be included in such a payment. The balance 40 per cent on the estimated total income will have to be paid by 15th March 2010. Gift to relative Q. I have an HUF which has large income from property. I have two questions: (1) Can my HUF give gift to my daughter-in-law? (2) Will this gift amount be considered as “income” of my daughter-in-law for the financial year? — Hari Mohan A. Under Section 56(2)(v) of the Act, any sum or money, the aggregate value of which exceeds Rs 50,000 is received without consideration by an individual or an Hindu Undivided Family, in any previous year from any person on or after 1st day of April 2006, the whole of the aggregate value of such sum shall be treated as income of the individual or HUF provided such gift has not been received: (a) From any relative; or (b) On the occasion of the marriage of the individual; or (c) Under a will or by way of inheritance; or (d) In contemplation of death of the payer; or (e) From any local authority as defined in the explanation to clause (20) of Section 10; or (f) From any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution referred to in clause (23C) of section 10; or (g) From any trust or institution registered under Section 12AA. The term relative has been defined as under by the aforesaid section: (i) spouse of the individual; (ii) brother or sister of the individual; (iii) brother or sister of the spouse of the individual; (iv) brother or sister of either of the parents of the individual; (v) any lineal ascendant or descendant of the individual. (vi) any lineal ascendant or descendant of the spouse of the individual; (vii) spouse of the person referred to in clauses (ii) to (vi). As it would be observed from the above definition, HUF of the father-in-law is not treated as a ‘relative’. In my opinion, therefore, the amount received by your daughter-in-law exceeding Rs 50,000 would be treated as her income from other sources. Pension benefits Q. I had joined the service of the Central Government in 1984. I was deputed to a public sector undertaking in the year 2000. I have now opted to retire voluntarily from the government and to be absorbed in the public sector undertaking. I am entitled to pension as also to the commutation thereof. I have received a sum of Rs 2,00,000 as commuted value of the pension. Is the amount received by me taxable? — RK Gupta A. The entire amount is exempt under Section 10(10A)(i) of the Act in view of the decision of the Delhi High Court in the case of C.K. Karunakaran vs. Union of India (41 Taxman 178). The department has accepted the above decision and issued a circular no. 286 dated 17th November 1980 in this regard.