The Tribune, Chandigarh, India

	Govt, RBI working to lower banking costs: FM Lauds Indian financial system for its resilience during global economic crisis Mumbai, March 27 Expressing concern over high costs and limited reach of banking services, Finance Minister Pranab Mukherjee today said the government was working in collaboration with the RBI to address these concerns. “The cost of banking intermediaries in India is high and bank penetration is limited to only a few customer segments and geographies,” Mukherjee said here today. “We are trying to address this in collaboration with the Reserve Bank of India, and with the active participation of the banking and non-banking financial entities,” he added. Mukherjee also said that there was a need to “reflect upon possible flaws in our system and address them to withstand adversities. We need to make our financial sector more competitive by enhancing efficiency and transparency.” “While greater competition is welcome, we have to guard against the competitive race to the bottom,” he said, while expressing hope that this perspective would guide the growth of Indian banking system in the coming years. Mukherjee was speaking at Sir Sorabji Pochkhanawala Memorial Lecture 2011 as part of the centenary celebrations of Central Bank of India. The PSU bank was set up by Sir Sorabji Pochkhanawala. The Finance Minister said that PSU banks were playing a very important role in India’s economic growth and they constitute over 72 per cent of the banking sector assets in the country. “While they are expected to improve their outreach and scalability for sustaining high growth of the economy, they are second to none in retail banking practices and profitability. “There are, however, several concerns that need to be fully addressed,” Mukherjee said, in reference to the issues like high costs and need to expand the banks’ reach to more customer segments and geographies. The minister said that most of the financial sector policies in the past few decades were aimed at accelerating the penetration of the banking and financial services. “However, as I said, the outcomes of these efforts are yet to show the desired results. Newer perspectives and approaches towards financial inclusion are the need of the hour. “There is a case for the policy makers and other stake holders to re-strategise the financial policies that are meant to reach the un-reached and the unbanked sections of our country,” he added. To address the issue of capital constraints faced by the PSU banks, Mukherjee said the government had provided over Rs 20,000 crore towards recapitalisation of public sector banks during 2010-11. “An additional amount of Rs 6,000 crore is also being provided for 2011-12. This will enable the PSBs to meet the credit requirements of the growing economy,” he added. Lauding Indian financial system for its resilience during recent global economic crisis, Mukherjee also said that the reforms of international standards needed to be adapted to local conditions. “In the post-crisis period, financial stability and the banking system has become an integral part of policy discussions and macroeconomic objectives in the developed and the developing world. “... The fact that India has not gone through any financial turbulence, as a result of the earlier phase of financial deregulation, is a testimony to our consistent view that reforms in global standards have to be adapted to local conditions,” he added. Mukherjee said that Indian banks were well regulated, vibrant, fast growing and match the global best practices in capital adequacy, risk management and business growth. “Our banks are doing a commendable job in meeting vast banking and credit requirements of an economy growing at close to 9 per cent in the last few years,” he added. Mukherjee said that the global financial crisis also led to India “rethink some of our principles of economic and financial policy making.” “We have seen how unfettered growth of financial sector can have dangerous implications for the real sector, both in the developed and the developing world. — PTI
	Pranab wants industry to invest tax gains Mumbai, March 27 Finance Minister Pranab Mukherjee today sought higher investments from companies in return for boosting their business margins through budget proposals like sparing any hike in excise duty rates. He also sought help from corporate India in pushing further the government’s economic growth and reforms agenda and said this support was necessary for him to meet their expectations. “Just as I have to meet up to your expectations to get you to scale new heights of productivity and growth, you also have to meet my hopes, in the process strengthening my hands,” he said in opening remarks at post-budget conference organised by industry chamber Assocham here today. “Reforms are not a one shot exercise; they have to be pursued continuously in keeping with the changing contexts and the growing aspirations of the people. I can do more, when I have the space to do more. You have to do your bit to create that space for me,” he added. Speaking about this year’s budget proposals, Mukherjee said that he had “the option to roll back the central excise duty to levels prevailing in November 2008. I have chosen not to do so and retain the rates at 10 per cent for two reasons.” “I would like to see improved business margins translated into higher investment rates. I would also like to stay my course towards GST,” he added. Mukherjee said that he wanted to address some “topical and emerging concerns” through his budget proposals. “It is only then that I could hope to bring a convergence in the expectations of our investors, entrepreneurs and consumers on the macroeconomic prospects of the economy, and elicit the required response from them,” he said. — PTI
	Bharti faces Rs 26.92 cr penalty in J&K New Delhi, March 27 Facing a huge penalty of over Rs 26 crore for not following guidelines on re-verification of pre-paid subscribers in the troubled Jammu and Kashmir, Bharti Airtel has asked the J&K division of DoT to take a lenient view and review the penalty. Bharti Airtel has requested the Telecom Enforcement, Resource and Monitoring (TERM cell) of Jammu and Kashmir, which monitors and ensure that service providers adhere to the licence conditions and for taking care of telecom network security issues, to take a lenient view and review the penalty amount to Rs 1,000 per case instead of Rs 50,000. The TERM Cell of J&K has approached the Telecom Ministry in Delhi, seeking its advice whether to consider the amount of penalty of Rs 50,000 or Rs 5,000 for non-compliant case as the total penalty reduces respectively from Rs 26.92 crore to Rs 2.92 crore only, DoT officials. Bharti Airtel, they said, has represented the case to J&K’s TERM cell and termed the Penalty of Rs 26.92 crore as “very harsh”, disproportionate to various judgements pronounced by High Court and TDSAT. The company is facing charges of violating the norms of recharging without re-verification of cases. According to J&K’s TERM cell, the company has violated the guidelines, prescribed wide DoT order dated 20.1.2010, regarding restoration of pre-paid connections upon completion of re-verification. The licencee (service provider) has allowed recharge on the pre-paid numbers on which re-verification flag was not there. The TERM cell has imposed penalty of Rs 50,000 per case (highest slab) which was further revised downward to Rs 5,000 per case. — PTI
	A portal that makes whistle blowing easy! New Delhi, March 27 Against the backdrop of concerns about corporate governance, a whistle blowing website is offering businesses an opportunity to receive confidential information while protecting identity of the whistle blower. The Corporate Whistle Blower Initiative (CWI), a web-based helpline, has attracted corporates including Edelweiss, Bharti Group and Punj Lloyd. Financial services entity Edelweiss Group’s COO Himanshu Kaji said that being part of CWI provides another tool to protect our overall reputation as well as make governance things more transparent. “CWI is an independent portal and it also protects the identity of the whistle blower. These make employees, especially at junior levels, more comfortable (in reporting something),” Kaji noted. He added there have been no complaints so far. The portal (www.cwiportal.com has a system in place whereby the identity of the whistle blower remains anonymous.It also tracks the follow up action taken by the concerned company, according to CWI’s founder Amit Paul. CWI’s advisory board includes M Damodaran, former chief of market regulator Sebi and noted corporate personality Tarun Das. — PTI
	BlackBerry may develop India into export hub New Delhi, March 27 After Nokia, Samsung, LG and other global brands, BlackBerry smartphones-maker Research in Motion is likely to set up an Indian manufacturing facility in view of the potential within the country and the surrounding region and may develop the country into an export hub. “India is an important and strategic market for RIM and its exciting and fast-growing mobile sector offers major potential for further expansion. As part of RIM’s strategy in India, the company has been building its resources in order to support the growing opportunities,” RIM spokesperson said when asked about plans to set up a plant here. Canada-based RIM’s Chief Information Officer Robin Bienfait will be in India to meet with major BlackBerry customers as well as a variety of current and prospective business partners, the company said. “RIM is always evaluating investment opportunities, including manufacturing and logistics, and Robin plans to further explore such possibilities in India during her visit,” it added. The company, however, declined to get into the numbers of how much investment will be made for setting up a manufacturing facility and the volume of handsets to be manufactured, as well as the models. Sources indicated that Robin would be visiting Chennai, Mumbai and Delhi to identify a location for setting up the plant. If fructified, this would be RIM’s first manufacturing facility in the Asia-Pacific region, comprising 18 countries in which BlackBerry has a presence and is growing significantly. The development comes at a time when the company is embroiled in a controversy over security concerns about BlackBerry operations. The company is constant dialogue with the government and the issue of lawful interception of contents sent using smart phones like Blackberry is being looked at as an industry issue rather than an individual case. — PTI
	Tax Advice by SC Vasudeva Relief u/s 89 (1) available to new taxpayers Q: A senior citizen, 84-yr-old, homemaker, a non taxable family pensioner, who has never filed Income-tax return, has become a taxable pensioner after getting Punjab Government arrears w.e.f. Jan 2006 to Feb 2011. Can she can avail relief u/s 89(1) on Form 10 E this fiscal. 1. Will it be original or revised return as she will submitting it for the first time. 2. Form 10E should be submitted to which authority, either the SBI bank or assessing ITO. And when before March 31 so that tax may not be deducted at source, can we avail NSC-VIII. We want to save tax in the current fiscal. — Surinder Gujral A : The lady can claim relief under section 89 of the Income-tax Act 1961 (The Act) by filing form 10E with the Assessing officer. The relief can be claimed in the original return itself. She can also exercise the option of purchasing NSC-VIII before March 31, 2011, so as to reduce her total income. The last date for filing her return for assessment year 2011-12 would be July 31, 2011. TDS Rate Q: TDS @10% + E/C is being deducted from the commission paid to MPKY agents by the postal authorities. My queries are:- 1.Is the above rate of TDS correct? 2.If the income from commission is Rs 1,250 per month and there is no other any income, is TDS to be deducted in that case? 3. What should be the rate of TDS in that case and if S/C and E/C is also to be deducted? — J Gupta A: (a) In accordance with the provisions of section 194H of the Income-tax Act 1961 (The Act), tax @ 10% is to be deducted on any commission or brokerage payable by a person not being an individual or Hindu Undivided Family. The above rate of tax is to be increased by the education cess of 3%. The deduction @ 10.3% has therefore been correctly made by the Post Office. (b) The deduction of tax at source is not required to be made where the amount of brokerage and commission does not exceed Rs. 5000/- in a financial year. Since the amount of commission payable in this case is more than Rs. 5000/-, Post Office is required to deduct tax at source in accordance with the provisions of Act. (a) You can make an application to the Assessing Officer under section 197(1) of the Act for deduction of a tax at nil rate in case you do not have any other income. However, till such time the permission is granted by the Assessing Officer and a certificate is issued by him in this regard is filed with the person responsible for paying commission, he shall have no option but to deduct tax at source @ 10% plus education cess of 3% thereon. CGHS Q: I am a senior citizen having retired from Central Govt. Service way back. I am suffering form a Joint problem. The private doctor has advised me operation. My Govt. pension includes an element of medical allowance. The pension disbursing Bank is PNB. I request clarification on: (i) Am I entitled for free medical treatment? In which hospitals, it is authorised. (ii) Am I entitled for medical re-imbursement? If so, in which office I am supposed to submit my medical reimbursement Bill. — Harbajan Singh A.You have stated in your query that you have retired from Central Government service. You should be covered by the Contributory Health Scheme (CHS) of the Government of India. You should therefore seek the help of a CHS dispensary for the necessary guidance on the issues raised in the query. Health claim Q: I am working as in Govt. Polytechnic Narnaul. My salary income is above Rs 3 lakh per year. I am suffering from Nose disease and had done operation of said disease and spent Rs. One lakh five thousand for said operation. My department (Governmen t of Haryana) provided me Rs 75,000 as medical advance for this operation. Is this income taxable? — Shiv Parkash A:Section 17(2) of the Income-tax Act 1961 (The Act), excludes the following amounts received by an employee from employer from taxable perquisites: - Any sum paid by an employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of the any member of his family; (a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of the medical treatment of its employee; (b) in respect of prescribed diseases or ailments, in any hospital approved by the Chief Commissioner of Income-tax having regard to the prescribed guidelines. The amount of Rs 75,000 received by you would not be taxable, provided you satisfy the conditions prescribed herein above. Disability pension Q: I retired from Army on April 30, 1989 with 50% disability and was granted disability pension and retiring pension (Service element) w.e.f. this date. Till now I have been regularly paying income-tax (I-T) on service element of my pension not knowing that disability pension as well as service element (retiring pension) of my pension is exempted from payment of any I-T, vide CBDT instruction No. 2 of 2001. I recently got a copy of this letter and was surprised to go through its contents. Kindly confirm the above fact, and if it is so, then please advice how do I get the refund of Rs 74,176 paid as I-T during last five years on arrears of VI PC. I have deposited Rs 8,000 now as advance I-T for AY 2011-12 whose refund can be claimed while filing return during June 11. Also confirm, if I am required to file my I-T returns in future as I have no source other than pension as my income. A small portion of my house has been rented for Rs. 3,500 a month less 30% maintenance allowed. This is a very small amount. I am a 74-year-old senior citizen. — Lt Col J S Wadhawa (retd) A: The position as explained by you in the query with regard to the non-taxability of the disability pension is correct. In case you have filed your return on or before the due date, for the relevant assessment year, you can file a revised return for the assessment year 2010-11 before 31st March, 2012 and for assessment year 2009-10 before March, 2011 and claim the refund in respect of the excess income-tax paid by you. However, in case you have paid tax for the earlier years, also, you will have to approach the Central Board Direct Taxes for the grant of refund of tax paid by you. It would not be necessary to file return of income-tax in case your taxable income is below the maximum amount on which tax is not chargeable. SIPs Q Which is more relevant regular SIPs in mutual fund or direct investment in stock market (equity) for long term and any chances of inclusion of LTCG (long term capital gain) under DTC. — Sumeet Gupta A: (a) It is always better to go for SIPs in mutual fund instead of direct investment in stock market. Mutual Fund have a research team which gives guidance to the Fund managers for making investment in equities / debt so as to maximize the return for the unit holders. (b) Direct Taxes Code includes a provision for the exemption of long-term capital gain on the sale of units and equity shares almost on similar lines as it exists in the present Act.