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Duty cut on diesel engines, gearboxes from Japan
Oil firms hike ATF prices
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Payment row with India over crude exports resolved: Iran
Govt lifts curbs on cotton exports
Hafed to set up spot exchange for guar in Adampur
Tax Advice Centrestage WHAT IS THE FUSS ALL ABOUT ‘Politicians have caused the crisis and they must sort it out’
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Duty cut on diesel engines, gearboxes from Japan
New Delhi, July 31 While India will reduce duty on diesel engines to 5 per cent from 12.5 per cent in the next six years, it will cut tariffs on gear boxes to 6.25 per cent from 12.5 per cent in the next eight years. In addition, the country will eliminate duties on car mufflers, which currently stand to 10 per cent, in the next 10 years. Under the CEPA, which was signed in February, the two major Asian economies will eliminate import duties on 94 per cent of their trade items in 10 years. The agreement covers goods, services like telecom and finance, movement of professionals, customs
procedures and cooperation in other areas. The agreement will give a boost to bilateral trade between Indian and Japan, which may touch $25 billion by 2015 from $12.35 billion at present. India and the 27-nation European Union (EU) have been negotiating hard
over a similar pact since June, 2007, which is likely to be concluded by the
end of 2011. While India is seeking greater access to the services sector in the EU, as a quid pro quo, EU wants India to open up the auto sector by lowering import duty on imported cars and components, among other things. However, the Indian auto industry has cautioned that if such a concession was granted, future investments in the sector in the country will be hit.
— PTI Duty Rejig
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Oil firms hike ATF prices
New Delhi, July 31 Prices of jet fuel, which accounts for 40 per cent of an airlines' operating cost, had softened this month. ATF rates were on July 1 cut by over 2.75 per cent and only marginally
raised by Rs 78 per kl from July 16. ATF in Mumbai, home to the nation's busiest airport, will cost Rs 1,597 per kl more at Rs 58,628 per kl from tomorrow, as against the current price of Rs 57,031.66 per kl. No comment could be immediately obtained from airlines on the impact of the price reduction on passenger fares.
— PTI |
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Payment row with India over crude exports resolved: Iran
New Delhi, July 31 The Iranian Oil Ministry's website, SHANA, quoted National Iranian Oil Co (NIOC) Managing Director Ahmad Qalebani as saying that "the problem of India payments for imported oil from Iran has been solved." Refiners like Mangalore Refinery and Petrochemicals Ltd (MRPL) have opened rupee accounts in the New Delhi branch of Union Bank of India, which will route euro payments to state-owned Turkiye Halk Bankasi (Halkbank) in Istanbul. Halkbank will then transfer that money to the account of NIOC, sources involved in the process said here. MRPL and private sector refiner Essar Oil last week transferred a small payment to Halkbank to test the conduit, which will be used to clear over $7 billion in outstanding dues to Iran that have accumulated. Indian Oil and Hindustan Petroleum will make payments next once the test payments are successful. Qalebani on the website was quoted as saying that "part of the arrear payments would be settled this week." SHANA quoted NIOC's Director for International Affairs Mohsen Qamsari saying that "the two sides had reached an agreement on the arrear payments... related bank accounts have been announced to Indian side and the amount deposited into our accounts would be revealed by reopening the international banks on Monday." "Following bilateral negotiations, the two sides agreed to settle the outstanding bills as soon as possible," the NIOC Managing Director said. The Reserve Bank of India (RBI) had on December 23 last year scrapped a long standing mechanism of paying for Iranian trade through a clearing house system run by regional central banks without assigning any reason, winning praise from the US, which is using sanctions to force Tehran to halt its nuclear programme. Sources said Iran, which has been supplying some 400,000 barrels of oil per day on credit since the RBI move, provided no plans for shipping oil in August. Iranian oil makes up for 12 per cent of India's oil imports. Iran had on June 27 written about stopping supplies
from August if the dues are not paid. — PTI |
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Govt lifts curbs on cotton exports
New Delhi, July 31 The cotton season runs from October to September. Cotton exports for the remaining two months (August and September) have now been put under OGL, Commerce Secretary Rahul Khullar said. "Now, exporters only have to register with the Directorate General of Foreign Trade (DGFT)," he said. The issue came in for review at a meeting of Secretaries in the Ministries of Commerce, Textiles and Agriculture, convened by Commerce and Industry Minister Anand Sharma here last week. In October last year, the government had capped cotton exports at 55 lakh bales (170 kg each) to protect the domestic textiles industry in the face of rising raw material prices. An additional 10 lakh bales were permitted for export in June, after prices had corrected sharply. Prices have declined to about Rs 31,000 per candy (356 kg) now from the peak of Rs 62,500 per candy in March-end. The restrictions on cotton yarn were removed from April 1, after the manufacturers found themselves saddled with big inventories following the curbs on exports. Besides the changing dynamics in the market, administering the restriction has proven to be "a big headache" for the Commerce Ministry, especially after the recent allocation of 10 lakh bales, as some exporters have taken the issue to different courts, sources said.
— PTI |
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Hafed to set up spot exchange for guar in Adampur
Chandigarh, July 31 The new spot exchange will be set up at an accredited godown of Hafed. The Board of Directors of the agricultural federation has already approved the setting up of this spot exchange with National Spot Exchange Limited - a spot exchange of the Multi Commodities Exchange (MCX). Officials in Hafed said the spot exchange would be functional when the new crop of guar arrives in mandis by the end of October. Talking to The Tribune, Anil Malik, Managing Director, Hafed, said the idea behind setting up these exchanges is to ensure that the farmers get good remuneration for their produce as compared to prevailing market prices of these crops. “Farmers can not only get a better price for their crop, but can also sell their produce directly, without having to go through any intermediary,” he said. Hafed has already set up two spot exchanges for rapeseed mustard at Rewari and Narnaul in April this year. Malik said more than 2,000 metric tonnes of mustard was purchased through these two spot exchanges. “Since farmers had an option of comparing the mandi prices with the exchange prices, they earned better price for their produce. These farmers earned Rs 30-Rs 50 per quintal over and above the existing market price for mustard (Rs 2,400 per quintal). Based on the oil content in the crop, farmers got a higher remuneration than the minimum support price, and they received the payment on the same day they brought their produce,” he added. |
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Tax Advice
Q. I am suffering from hearing loss and use hearing aid. The certificate issued on 20.12.2010 by the Director, Social Welfare, Chandigarh Administration, on the basis of test conducted by Medical Officer, ENT, Government Hospital, Sector-16, Chandigarh, diagnosed as suffering from severe hearing loss billeted and P.P.A is 75%. How much amount can be claimed as tax rebate for financial year 2010-11 (A.Y. 2011-12)? Can I claim Rs 1,00,000 as tax-free. How many times this certificate can be made use of in the coming years. I am more than 75 years old and had given Rs 5,000 p.m. to my daughter-in-law by cheque as gift for the service rendered during 2010-11. Am I liable to pay income tax on it or is it tax-free. Please clarify.
— Bindra Dutt A. a) You can claim a deduction for Rs 50,000 under Section 80U of the Income-tax Act, 1961 (The Act). Deduction of Rs 1,00,000 is allowed to a person suffering from a severe disability which has been defined to be a disability of 80 per cent or more of one of the disabilities. The disability in your case being 75%, the provision relating to severe disability would not be applicable to you. b) The certificate is required to be issued by a medical authority notified by the appropriate government. I hope Director, Social Welfare, Chandigarh Administration, is so authorised. In case a certificate has been issued so as to require reassessment of the disability after a certain period, the certificate is valid for a period so specified. A new certificate in such cases will be required to be obtained for claiming the deduction. c) A gift to a daughter-in-law is not chargeable to tax either in her hands or in your hands. Upper limit for rebate
Q. Kindly refer to your tax advice column published in The Tribune dt. 27.06.2011. Against tax rebate limit heading following question was asked by a taxpayer and was replied accordingly as under: Q: The rebate limit for approved funds is Rs 1 lakh and for life insurance is Rs 50,000. Does it mean that total investment now eligible under Sec 80C and the maximum tax rebate is Rs 1.5 lakh. A:
Yes, in a way the upper limit for deduction allowable for saving investments has been enhanced to Rs 1.5 lakh. According to my reading, the reply under reference is not justifiable to the extent, primarily, Sec 80 CCE categorically limits the maximum amount eligible for deduction u/s 80C, 80CCC and 80CCD to Rs 1 lakh, in any case. Therefore, the amount in whatever manner invested exceeds Rs 1 lakh does not eligible for deduction u/s 80C. However, alternatively, it can be said that the total deduction under chapter VI-A admissible is Rs 1 lakh u/s 80C, Rs 20,000 u/s 80CCF and Rs 30,000 u/s 80D. — Rohit A. 1 You have not looked into the context in which the reply to the query raised by the reader had been given. The reader had asked about the status of deductibility of amounts paid towards insurance etc. under the Direct Taxes Code. The reply published on 27th June, 2011, should be read with reference to the provisions of Direct Taxes Code and not with reference to the existing law on the subject. PPF account
Q. We have seen in TV news that we can deposit Rs 1,00,000 in PPF. Please inform if it is true and from which date it is applicable. — Ramesh Manohar A. Clause 3 of Public Provident Fund Scheme provides that an individual may on his behalf or on behalf of a minor of whom he is the guardian subscribe to the fund any amount not less than Rs 500 and not more than Rs 70,000 in a year. Presently, the limit of Rs 70,000 remains unchanged. TDS on interest income
Q. I have some fixed deposits, including one amounting to Rs 2,04,609 @ 10% for 21.10.2010 to 21.10.2013 in a nationalised bank. Instead of encashing this FD on due date i.e. 21.10.2013, I got encashed this FD prematurely on 08.06.2011 and the bank paid me interest of Rs 4,618 only (for 21.10.2010 to 08.06.2011)@ about 7% interest rate. The bank has already issued me Form 16A (TDS) by creating the interest @ 10% i.e. Rs 8,995 up to 31.03.2011 for the financial year 2010-11. The TDS was also deducted because interest amount was more than 10,000 from other FDs, including mentioned above. As such the interest credited on 31.03.2011 (i.e. Rs 8,995) was more than I actually received i.e. Rs. 4,618. So, I am in dilemma how to adjust this difference of interest. Please clarify on the following: a) Whether I shall adjust this difference in the income tax return for the Financial Year 2010-11 which is yet to be filed up to 31st July, 2011 or in the income tax return for the next Financial Year i.e. 2011-12. b) How to adjust the excess TDS by bank up to 31.03.2011. — Mohinder Pall A. The facts in the query are not complete. You have not indicated whether you were declaring interest on FD on accrual or receipt basis in your tax return. In case you were declaring interest on accrual basis, the proportionate interest for the period 21.10.2010 to 31.03.2011 will have to be allocated out of Rs 4,618 and declared as income in the return to be filed by 31st July, 2011. The balance amount of interest will be reflected in the return for the year ended 31.03.2012. You will have to claim the amount of tax deducted at source in the return for the year ended 31.03.2011. In case you are declaring interest income on receipt basis, the amount of Rs 4,618 will have to be declared as income in the return for the year ended 31.03.2012. The credit for tax deducted at source will be allowed to you in assessment year 2012-13 (financial year ended 31.03.2012). The credit for tax deducted at source would not be allowed in the assessment for the year ended 31.03.2011 but will be allowed for the assessment for the year ended 31.03.2012. |
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Centrestage This is the problem for the US. Its legislature is struggling to tackle that problem. But it is also a problem for every democracy in the world. The difficulties are more apparent in the fiscally challenged countries, but even those that seem least threatened, such as Germany, are following policies that are unsustainable. Once you accept that this is a global structural problem, rather than a national political one, you can get some perspective on events in the US. The parallel I find most helpful is that of monetary policy in the 1970s and 1980s. Inflation and interest rates soared into double digits and people wrote of democracy itself being under the gravest threat. Gradually, slowly and painfully, inflation was brought under control, leading eventually to giving central banks in much of the world a mandate to curb inflation and the power to set short-term interest rates as their main means of carrying out that mandate. We accept the new model as normal. No one suggests going back to the old system. This separation of power is even more evident in Europe, where politicians have ceded all authority over monetary policy to the European Central Bank. However, the present fiscal challenge does not, in Britain at least, feel quite as serious as the monetary challenge of 30 years ago. That may be because in Britain at least, we have only just begun to tackle it; may be it is because many people still don't quite understand the scale of the problem or, if they do, they still think we will have four or five difficult years and then it will be business as normal. On the other hand, it feels very serious indeed in much of Europe, with borrowing costs for Italy and Spain rising following the Greek bailout, and Spain threatened with a ratings downgrade. And it feels serious in the US. We should see what is happening in the Congress in the context of the efforts in other countries to find a constitutional mechanism for establishing new rules for fiscal policy. In England, we have the Office for Budgetary Responsibility, a body which is still very new. In Europe, there are the first halting steps towards central fiscal control. At the moment this is only being imposed on countries that have to go for a bailout, but things have moved quite fast in the past year. The biggest question of all is how long it will take for the new global framework to evolve. My guess is that it will take another decade before things settle down; we probably have to experience another global downturn first. But if the prospect for this expansion is so gloomy, why have we not seen more of a collapse in share and commodity prices? I know we have had a poor couple of weeks, but the price-earnings ratio on US shares is still well over 20, above the long-term average of 16. The markets, or at least Wall Street, seems to be taking this global fiscal crisis pretty much in its stride. Sure, we have had a decade when share prices have gone sideways, but when you consider the absurd overvaluation of 2000, even higher than the 1929 peak, it would be pretty odd if this were not some sort of bear market. There have certainly been worse bear markets, notably in the 1970s. That leads into a debate about the relationship between stock markets and the world economy. Chris Watling , an economist, believes the present bear market still has some way to run - they normally run for 10 to 20 years and price-earnings ratios typically dip to single figures before a sustained bull market begins. If that is right, we have another decade of, at best, sideways movement in share prices. The policy-makers in the emerging world are doing rather better than those of the developed world, which might justify present price-earnings ratios. If you are Exxon or Apple, you care about the world economy, not national ones. But I am sure of one thing. Share markets cannot stage a secure recovery until fiscal policy in the developed world is on a sound footing. That, sadly, is still some way off. It never rains but it pours. The second-quarter growth figures for the US were disappointing, up only 1.3 per cent annual rate, but more troubling was a nasty downward revision of earlier data. First-quarter growth was only 0.4 per cent annual rate, while further revisions show that the fall in the economy from peak to trough was 5.1 per cent, against earlier estimates of 4.1 per cent. The US economy is still below its previous peak. The gloom for the US may not be overdone. But what is worrying is the jobless nature of the recovery. There will be fiscal retrenchment next year come what may; it is already happening at state and municipal levels. I often feel the preoccupation with data is unhelpful. What matters is that the great US job-creation machine gets moving again - and there is worryingly little sign of that. — The Independent
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The US government faces a legal limit on the total amount of debts it can run up in order to pay its bills - including military salaries, interest on existing loans, and Medicare. The current limit is $14.3 trillion (£8.9tn). The cap was reached in May. Treasury Secretary Timothy Geithner was able to extend the expected day of reckoning to August 2, by various tricks such as postponing payments into government pension schemes and better-than-expected tax revenues. Republicans, and some analysts claim that even after August 2, the government can continue meeting payments at least for a few more days. Why can't the Obama administration borrow more? Because it is not in the President's power. The debt ceiling is set by statute and can only be raised by the Congress. An overall borrowing cap was first introduced by the Congress in 1917 to make it simpler for the government to finance its efforts in World War I. Since then the ceiling has been raised dozens of times and it is usually a formality. Perversely, the Congress or the US Parliament also sets the government's spending commitments and tax-raising powers. This puts the Obama administration in impossible position of being required to spend more than it earns, while also being prevented from borrowing the difference. What is the problem this time round? The financial crisis and the US's fragile economic condition have caused government spending to soar, while tax revenues have suffered. This has caused a big rise in the government's deficit - its rate of borrowing. The Republicans, who control the House of Representatives, say they want to bring the deficit back under control, and have threatened not to raise the debt ceiling unless a deal is reached. How far apart are the two sides? Both sides accept that cutting the deficit is vital. In recent weeks several plans have been floated by one side or another and been batted down. The most recent proposals include:
The chief sticking points have been Republicans' resistance to tax rises and calls for much bigger spending cuts than the Democrats favour, and Democrats' desire to shield healthcare programmes for the poor and elderly and the Social Security pension programme from cuts. Finally, a number of House Republicans - mainly newly elected staunch Tea Party fiscal conservatives - oppose raising the debt limit in any form. What happens if no deal is reached ? The US could be in default, something Tim Geithner has said would be "catastrophic", and President Obama has warned could tip America back into recession. Economists say President Obama's options could include: 1. Stopping payments across the board, including debt repayments. This would be a disastrous outcome for financial markets. 2. Prioritising some payments (particularly interest payments), at least until money completely runs out. Some $23bn of social security payments due on 3 August could in theory be delayed. But these payments are computer-automated and may be technically impossible to stop. Moreover, stopping them would hurt core Democrat voters. And it is not even clear the government has the legal right to prioritise payments like this anyway. 3. Ignoring the debt ceiling and continuing borrowing. Some have argued that the US Constitution gives the President authority to do this. It would certainly spark a Constitutional crisis and possibly impeachment proceedings. What do academics believe will happen if the US defaults? Interest rates on credit cards, car loans and home mortgages could rise sharply, says George Washington University Professor Julius Hobson. He adds that global financial institutions around the world holding AAA-rated US Treasury notes and bonds would see the value drop. Harvard University Economics Professor Jeffrey Miron says foreign creditors could start withdrawing money from US banks. He also says cheques could be delayed to social security beneficiaries. Is it possible for the US to avoid defaulting? So far that has been everyone's assumption.The US has not seen any significant increase in its borrowing cost, in the way that Greece and other indebted Eurozone governments have. The rating agencies are somewhat less relaxed. On 15 July, Standard & Poor's warned it could cut the US's coveted AAA credit rating if no deal is done, which could limit some investors' ability to lend to the US government. Moreover, some analysts point out that a surprisingly large amount of existing debt comes up for repayment in 2011 - some $1.7tn, or 12% of its total debt. They fear that investors could panic and refuse to re-lend the money, forcing a default. — Compiled from Agencies
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‘Politicians have caused the crisis and they must sort it out’
— Compiled from the Internet
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What is happening in the United States is not just narrow party politics but all about how a democracy copes with long-term fiscal challenges. The issues are to what extent should the government have control over decisions that have consequences 10 or more years away and, if the government is not to have full control over fiscal policy, what should take its place? 
What is the debt ceiling?
Stock markets will crash on Tuesday. Better sell your house by then, and cash in your retirement savings. It's nothing, really, nothing at all that you will be left with.