The Tribune, Chandigarh, India

	Financial Crisis Worst seems to be over: FM Jangveer Singh Tribune News Service Chandigarh, November 28 Finance Minister Pranab Mukherjee feels the beginning of the end of the two-year-old financial turmoil and three growth drivers, domestic demand, demographic dividend and democratic compulsions, will hold India in good stead. Delivering the Haksar Memorial Lecture on the topic, “Asian Economy after the Financial Crisis - An Overview”, at the Centre for Research in Rural and Industrial Development (CRRID) here today, the Finance Minister said the risk of failure of financial institutions and banks had been contained. Mukherjee said though the uncertain future of the US dollar stemming from the large fiscal deficit and a slow return of the risk appetite of international investors was going to remain for sometime, the worst seemed to be over. He said according to an Asian Development Bank (ADB) forecast, growth in developing Asia will be sustained at 3.9 per cent in 2009. He said while Asia looked set to emerge from the downturn sooner and stronger than any other region, India had strong growth drivers of its own. Mukherjee said Indian growth was driven by domestic demand and the country was less vulnerable to external shocks than countries relying on external demand. “The saving rates in India have increased steadily from 23.7 per cent in 2000-01 to 37.7 per cent in 2007-08”, he said, adding that in India there was widespread recognition of the logic that it did not make sense for it to export capital abroad. The minister said the second driver of growth, demographic dividend, was also in the country’s favour with the country having a young population of 58.1 per cent. He said with 34.8 per cent of the population in the age group of 0-14, the country would remain a nation of the young for years unlike many developed countries. Mukherjee said the driver of demographic compulsion was also in the country’s favour with the political system forced to live up to the expectations of the people. Mukherjee, however, called for being careful about systemic risks, including global imbalances, which could undermine the recovery process. He said greater attention was required for macro-prudential supervision and regulation, adding that the solution for furthering Asian growth had to be found in domestic demand and intra-Asia and intra-emerging economy trade. Earlier, CRRID chairman Rashpal Malhotra shared his experiences of working with Mukherjee during his earlier stint as External Affairs Minister. Punjab Finance Minister Manpreet Singh Badal, in a well-received address, said the nation had high hopes from Mukherjee. Union Minister Pawan Kumar Bansal, Rajya Sabha MP and Editor-in-Chief of The Tribune H K Dua, eminent academician R P Bambah and Haryana Finance Minister Capt Ajay Yadav also attended the lecture.
	Export-oriented sectors under review for support: DGFT Tribune News Service Chandigarh, November 28 A sectoral review of export-oriented industry to ascertain government support required to rejuvenate different sectors hit by economic slowdown is being carried out. This was stated by the Director-General of Foreign Trade, RS Gujral, at the open house meet of exporters, here today. Gujral said the report of the same would be finalised in a week after which a decision on the support to the industry would be taken. Maintaining that he had met a number of the representatives of the export promotion councils, he added that the economy was not that badly off. “We should be in a positive terrain by the end of a couple of months and certainly before this financial year ends. In fact, there has been no impact of recession on sectors like man-made yarn, fabric, fruits, vegetables, in dollar terms while a large number of sectors, including spices, oil, marine products have shown a positive growth,” he stated. Gujral said the government was harping on diversifying the market instead of focusing on the US and Europe for exports and their efforts were beginning to pay off. “This is reflective of the government’s pro-active stance which includes stimulus measure especially to cope with recession and the basic resilience of the Indian exporters who have braved difficult times,” he emphasised. Gujral said exports of engineering goods, handicrafts, electronics in October declined by 15 per cent, 8.5 per cent and 16.8 per cent, respectively, which had sharply come down from 27-30 per cent fall in the past few months. On the issue of banning cotton exports, Gujral said the Commerce Ministry had entrusted DGFT the task of evaluating the surplus cotton in the country to decide whether ban should be imposed on overseas shipments of the fibre.
	Dubai Crisis Law to protect realty sector Dubai, November 28 Dubai is considering enacting a law to protect the rights of real estate investors in the Emirate. The city-state’s Real Estate Regulatory Agency (RERA) and the land department are working on new guidelines, which upon the government's approval, will be implemented early next year, Gulf news quoted Sultan Bin Mejren, Director-General of Dubai Land Department, as saying. "Our ultimate goal is ensure justice and set up proper rules and regulations to regulate the relationship between developers and investors," Bin Mejren said. He said the land department is studying the draft law aimed at protecting "the rights of real estate investors". The Emirate's real estate market has bottomed out and the new law is expected to boost the morale of property investors. — PTI
	Aviation Notes Removal of NACIL chief sought by K.R. Wadhwaney Dissatisfied and disillusioned with the goings-on in the National Aviation Company of India Limited (NACIL), three popular unions have demanded removal of the chairman-cum-managing director Arvind Jadav for turnaround in the airline. Analysts are of the view that the CMD took over only recently and he cannot be blamed even for five per cent of the ‘blues’ that plague the airline in comparison to the politicians, who forced merger on the two national carriers, Indian Ailines and Air India. According to observers, both airlines were on the road to turnaround when they were merged. The in-depth study reveals that despite government’s equity and subsidy, the death of the merged entity, NACIL, cannot be avoided. At best, the demise may be deferred, they predict. The study further reveals that re-birth of the two national carriers at this crucial stage in possible only if the airlines function independently on national and international routes, as was the case before the merger was brought about more than two years ago. The series of talks between unions, representing pilots and other staff, and management have failed. The unions, particularly those representing the staff of Indian Airlines, are demanding payment of dues along with salaries and perks without any delay. The notice has already been served on the management and, if the payment is not made forthwith, they threaten that they will translate their threats into reality. If such an eventuality occurs, there is every likelihood of its happening, the passengers will have to suffer when the foggy season is about to start. According to unions and staff, the measures undertaken for the reforms are conducive for ‘happy days’ to start. They claim that there is an urgent need for change on the top, which is entirely to blame for the unprecedented woes of the ‘maharaja’. The Directorate-General of Civil Aviation (DGCA) is contemplating to levy fines on airlines, which deny boarding to passengers holding confirmed and re-confirmed tickets on national and international routes. The DGCA is said to have told the airlines that regardless of their problems, they cannot penalise or punish passengers. In most foreign countries, airlines willingly pay compensation to passengers for denying them boarding. Similar system will be adopted here so that airlines do not indulge in an avoidable practice of excessive over-booking.
	Investor Guidance No IT return required if income below exemption limit by A.N. Shanbhag Q. I am a housewife and have recently earned about Rs 50,000 through tuitions. I want to invest/trade in stocks. Do I have to maintain any records/documents? — Ritu A. It is not clear from your question if the Rs 50,000 that you refer to is your only income. If your total income for the financial year is less than the basic exemption limit, you do not have to file a tax return. However, it would be advisable to maintain records like the broker's note etc. for calculating the trading gains/losses. These will also serve as supporting papers in case asked for by the IT officer. Exemption u/s 54F Q. I got into an agreement to purchase a flat on November 6, 2006. I have decided to sell that flat now that the building has just got completed. I haven’t paid stamp duty or registration charges and neither have I taken possession of the said flat. I am a salaried person and fall in the highest tax bracket. I plan to reinvest the amount from sale of flat into buying another property. In this regard, how will the tax be calculated? As three years have passed since the date of agreement will it still be short-term capital gain tax? If I invest in another property can I avoid paying tax all together? — Baria A. It is our opinion that you have earned a right to own a flat when you pay the very first instalment. The cost of acquisition of this right is the total cost of the flat at which the agreement with the builder is signed. The fact that you did not pay the entire sum in a lump sum is immaterial and inconsequential. If you sell the property before the flat is ready for possession, you would be earning capital gains. The cost of the acquisition of this right is the total contracted price less, the balance instalments to be paid. The long-term or short-term nature will depend upon whether the period of 3 years have elapsed from the date of the contract. The amount paid (although paid in instalments) will be indexed from the date of the contract. After the house is ready and you have taken possession, it becomes a different asset. The clock for long-term or short-term starts once again from the date of your taking possession and the cost of acquisition is the total payments made to the builder. You have to index the total amount from the year of possession of the flat. Yes, you can claim the benefit of exemption u/s 54F from the tax on long-term capital gains by investing the net sales proceeds in buying another residential property (a house) within two years from the date of transfer. If you invest less than the total sales proceeds proportionate exemption will be available. Capital gains Q. I am an NRI based in the US and request you to please advise me on the following points: 1) I own a flat in Kolkata for more than 30 years. I want to sell it now to a friend in Kolkata. Please advise if I had to take a permission letter from the RBI. 2) Also please advise whether I can put the entire money in Govt. Securities to save capital gains tax. 3) How much will be capital gain tax based on the following data: a) Purchased in the year 1976 for a sum of Rs 1,00,500. b) I expect to sell it for a sum of Rs 54,00,000 in a few weeks as negotiations are going on. — BC Mathur A. In the case of assets, acquired prior to 1.4.81, the option of substituting the fair market value (FMV) as assessed by a chartered valuer in place of original cost is open to the investor. In other words, if the actual cost of acquisition is lower than FMV as on 1.4.81, the investor may adopt the FMV to be his cost of acquisition. On the other hand, if the actual cost of acquisition is greater than the FMV as on 1.4.81, the investor may adopt such cost. The CII based on 1981-82 only will be taken into account, whatever is the choice of the investor. The CII for 2009-10 is 632. Even if we take the cost as Rs 1,00,500 the indexed cost will be Rs 6,35,160. The indexed capital gains will be (Rs 54 lakh less Rs 6,35,160= Rs 47,64,840. Since the amount to be invested has to be in multiples of Rs 10,000 you will have to invest Rs 47.65 lakh. You will do well by obtaining the FMV on 1.4.81 from a chartered valuer from your home town. IT refunds Q. I am a US citizen, and have filed income taxes for years 2005-2006, 2006-2007, 2007-2008, and 2008-2009. I have refunds due for each of the years, but have not heard from income tax department so far. Can the refunds (when they come through) be deposited in my NRO account in India? What should I do? — IS Shah A. Refunds of income tax are notoriously late and many others have also had similar experiences. Active follow up has been known to succeed and since as an NRI by definition you will not be physically present in India, you could employ someone, normally a chartered accountant, for following up on the refunds due. The refunds, once they come through, may be credited to the NRO account. PINS permission Q. I am a USA citizen and live in the USA. I also have an Indian OCI card, which I obtained a couple of years ago. I do my stock trading in the USA with a trading company called Charles Schwab, here in the USA. I was wondering if I could open an account at an Indian stock brokerage company to trade in stocks and pay income taxes in India. Is that possible? What would be advantage of paying taxes in India versus USA? — Santokh Sohal A. Indian laws and regulations permit NRIs and PIOs (you would be a PIO in spite of the OCI card) to trade on the Indian stock exchange. However, there is procedure that is put in place for the same. You will have to approach an Indian bank and request them to obtain what is known as the PINS permission for you in order for you to be eligible to transact on the stock exchange. PINS stands for Portfolio Investment Scheme. Under PINS, you have to open a fresh NRE account which has to be exclusively used for trading. This NRE account cannot be used for any other purpose. The only debits allowed in this account are for purchase of shares and the only credits allowed in this account will be from sale of shares. For purchasing, if you are falling short of funds, you may feed this account funds from another NRE account and for remittance abroad or for use for other purposes, you may transfer funds from this account to another NRE account. However the PINS NRE account has to be used for the sole purpose of trading. Normally, banks in India link the PINS NRE account to the brokerage account and the demat account for seamless trading. As far as the tax is concerned, one doesn’t really have a choice in the matter. As a US citizen, your global income is taxable including that from trading shares in India. The authors may be contacted at wonderlandconsultants@yahoo.com