The Tribune, Chandigarh, India

ONGC to lose Navaratna tag
To launch follow-on public offer on April 5

Navaratna status gives power to the company to approve investment in its projects and up to Rs 1,000 crore spending in a joint venture company.

The government is selling its 5 per cent stake of 427.77 million equity shares worth Rs 11,500 crore.

Government to withdraw both of its directors on the ONGC board to meet SEBI norms.

New Delhi, March 6
Oil and Natural Gas Corp (ONGC), India’s most profitable firm, will lose the coveted Navaratna status and the accompanying financial autonomy in its rush to the Rs 11,500 crore share sale scheduled next month.

The government plans to withdraw both of its directors on the ONGC board to meet the SEBI's listing norm of having equal number of functional and independent directors to allow Rs 11,500 crore public offering (FPO) on April 5, sources said.

The move would, however, lead to ONGC losing its Navaratna status that gives the company board autonomy to approve investment in its projects and of up to Rs 1,000 crore spending in a joint venture company.

According to the norms, a Navaratna board can exercise its limitless powers only when it has government-nominated directors on board. Upon withdrawal of such directors, ONGC will have to seek nod of the Public Investment Board (PIB) for any spending of over Rs 100 crore, sources said.

The situation has arisen after a blunder by oil ministry in nominating independent directors on ONGC board.

ONGC has six functional directors, besides the chairman. It also has two government-appointed nominee directors, taking the total strength of functional/promoter directors to nine.

Against this, it has four independent directors and needs five more to meet the SEBI's listing norm.

Sources said last year the ministry under the then minister Murli Deora had selected five persons, including a chartered accountant, an IIT-Mumbai professor and a CEO of private sector lender for nomination to ONGC board.

However, before the names could go to the Cabinet Committee on Appointments (ACC), Deora was replaced by S Jaipal Reddy.

In fact, ONGC was conferred the higher Maharatna status and greater financial autonomy but the state-owned firm could never exercise it as it did not meet the requirement of having equal number of executive and non-executive directors on its board.

Besides giving powers to approve unlimited investment in own projects, the Maharatna status allows PSUs to invest up to 15 per cent of their networth or Rs 5,000 crore, whichever is higher, in joint venture companies.

The ONGC follow-on public offer (FPO) through which the government is selling its 5 per cent stake of 427.77 million equity shares, is slated to open on April 5.

Post the offer, the government's stake in ONGC would come down to 69.14 per cent from the current 74.14 per cent. — PTI

Govt to infuse Rs 4,376 cr in BoB, Union Bank

New Delhi, March 6
The government will infuse Rs 4,376 crore as equity capital in PSU lenders Bank of Baroda and Union Bank of India as part of a recapitalisation package to shore up their equity capital.

The bank has initiated necessary steps to raise capital by offering equity shares of face value of Rs 10 each for cash at a premium of Rs 892.14, aggregating up to Rs 3,280.9 crore on preferential basis, BoB said in a statement.

The capital infusion would raise the government's holding in the bank. Currently, the government holds 53.81 per cent in BoB.

Besides, another Mumbai-based lender Union Bank of India is expected to receive financial assistance of Rs 1,096 crore.

The bank will be issuing 3.08 crore shares at a premium of Rs 344.94 to the government on preferential basis, Union Bank of India said.

The capital infusion in both the banks have to take place before March 31 this year.

Finance Minister Pranab Mukherjee had announced capital infusion of Rs 20,157 crore into public sector banks during the current fiscal to ensure that these entities were able to attain a minimum 8 per cent Tier-I capital by March 31, 2011. — PTI

Separate landline No. for telemarketers hits roadblock

New Delhi, March 6
Telecom Regulatory Authority of India's demand for a separate identifiable landline number series, in line with a mobile series for telemarketers, has hit roadblock with DoT saying that it could breach security at telecom exchange level.

"Most of the work in case of landlines is done manually. Fixed line network is not automatic as mobile network is.

Identification in case of fixed line is done through manual process," a DoT official involved in the process of issuing numbers told PTI.

DoT official explained that in the present situation if any call from landline comes then it can be identified based on STD code-- the initial digits - and then levels (digits following STD codes) which differ from exchange to exchange within a city.

In case identifiable series of '140' is used, it will impact the numbering system being used at present for allocating new connections. Also, it will be difficult for security agencies to track calls as it will display uniform code instead of STD code for connections across the country, the official said.

"Telecom operators will have to install separate RAX (Rural Automatic exchange) to allocate new number series.

C-DOT RAX have option of operating manually and is accessible to employees at lower level," the official said.

The official expressed apprehensions that installing a separate RAX for separate number series will lead to security breach. He explained that a separate RAX will make way for a ill-will person to access telecom network by manipulating an employee at lower level. — PTI

RIL’s plan to develop future leaders

Mumbai, March 6
Mukesh Ambani-run Reliance Industries (RIL) has launched what it calls the Accelerated Leadership Programme (ALP), designed to develop a highly skilled and performance-oriented cadre which will take up very senior positions in the organisation over the next few years.

The ALP, launched recently, is open to professionals in the age-group of 27-34 and will include talent not only from within Reliance but also from other organisations and across geographies, a company spokesperson said. The need for such a leadership cadre stems from the fact that Reliance has grown extremely rapidly in the last decade and is set to replicate the same pace of growth. Since 2001, Reliance has increased its turnover 10 times and has over $44 billion in turnover and over $78 billion in market capitalisation. — PTI

Tax Advice
Rebate allowed on contribution to wife’s PPF account
by SC Vasudeva

Q. If I deposit some amount in my wife’s PPF account, can I claim deduction under Sec 80C for myself.

— Varanasi V Srinvas

A. You would be entitled to claim deduction under Section 80C of the Act in case the contribution to Public Provident Fund is made by you in an account standing in the name of your wife. In this connection, you may refer to the provisions of Section 80C (1) (v) of the Act read with sub-section (4) of the said section.

Advance tax

Q. My query relates to TDS. Banks deduct TDS on paid/ accrued interest above Rs 10,000 on FDRs. When asked to give information quarterly for paying advance tax correctly some banks give while others do not oblige. They provide this information only at the end of the financial year either in April or even much thereafter on repeated visits. Will you enlighten me as to what does the Act say on this quoting reference etc.

— Shiv Kumar

A. The amount of advance tax has to be paid on estimate basis. The rate of interest accruing on the fixed deposit receipt is known to you and therefore it should not be difficult to compute the estimated amount of such interest. The deduction of tax is required to be made @ 10% plus education cess of 3%. Therefore, even the figure of tax deductible at source can be estimated without any difficulty. You, therefore, need not go to your bank to get such figures after every quarter. The bank normally provides interest on half- yearly basis in its books of account and therefore, it may not be possible for the bank to give you the quarterly figures for the amount of interest and of the tax deducted at source.

PPF account

Q. My father is a senior citizen and does not have any PPF A/c. For tax saving, he wants to deposit some amount in PPF A/c. He cannot open any account in favour of his grandson. Since my son who is a minor and being looked after by me has already PPF A/c with Post Office. Kindly advise if my father can deposit some amount from his savings in the a/c of his grandson (being HUF). My elder sister, who is unmarried, also maintain a PPF a/c with post office. Looking to future education programme my father is interested in depositing some amount in grandson’s account. Hope there shall not be any problem in doing so under 80C(4) of the Income Tax Act if my father makes contribution in PPF A/c of his grandson.

— Gulshan, Jodhpur

A. Your father would not be entitled to claim any deduction under Section 80C of the Act in respect of deposit in the Public Provident Fund account of his grandson. Such deposit is not covered within the provisions of Section 80C (4) of the Act. Public Provident Fund Scheme, 1968, presently does not permit an individual to subscribe to the Fund on behalf of a Hindu Undivided Family. The relevant amendment was brought in by virtue of Provident Fund (Amendment) Scheme, 2005, w.e.f. 13th May, 2005.

Family pension

Q. I am a widow as my husband expired on 10th of September 2007. I am drawing family pension in addition to my own salary where I am working. My gross salary will be approximately Rs 3 lakh, family pension Rs 1 lakh and interest on FDRs Rs 50,000 for the financial year 2010-11. I have made an investment of Rs 1 lakh which is deductible under Section 80C. I understand that standard deduction of Rs 15,000 is allowed to a widow on family pension. My queries are as under:

1. The amount of standard deduction which I can avail on my family pension of Rs 1 lakh during financial year 2010-11.

2.What will be my taxable income and the tax liability for the financial year 2010-11?

3. I received Rs 48,000 as family pension for the financial year 2009-10, which had been included in my income tax return for the financial year 2009-10 without claiming standard deductions. Can I claim now Rs 15,000 and submit fresh income tax return (revised).

— Deepika

A. Your queries are replied hereunder:

(i) The maximum amount of deduction allowable in respect of the family pension is Rs 15,000 or 1/3 of the pension, whichever is less.

(ii) Your taxable income for the financial year 2010-11 would work out at Rs 3,35,000. On the basis of the figures indicated in the query, the income tax payable thereon would be Rs 14,935, including education cess @ 3%. The computation is based on the presumption that you are entitled to a deduction of Rs 15,000 for this year also and that you are below the age of 65 years.

(iii) You can file the revised return for the financial year 2009-10 upto 31st March 2011 for claiming the deduction in respect of the family pension received by you.