SBI net down 46% at Rs 1,584 crore

SBI chairman Pratip Chaudhuri

No more tax-free zones in country: Pranab

Siliguri, August 13
Union Finance minister Pranab Mukherjee today said there would be no more tax-free zones in the country. Tax-free zone status in Himachal Pradesh and Uttarakhand was being withdrawn gradually following opposition by different states, Mukherjee said.

Renewal of tax-free zone status of Sikkim, which would expire in 2017, would be reviewed on the basis of the socio-economic conditions of the state at that time, he told reporters here.

Mukherjee said that instead of tax-free zone, the Centre was considering creating special economic zones in backward districts.

In reply to another question, he said, "India cannot remain unaffected by the negative trend in the global market and it is a reality." — PTI

RCom offers free calls, mobile TV

New Delhi, August 13
Reliance Communications today announced limited period offer of free calls and mobile TV for its 3G customers on 64th anniversary of the country's Independence Day.

Under the offer, RComm's 3G customer can make free local and STD video call for four days, applicable from August 13 to 16, 2011. — PTI

Aviation Notes
Demerge Air India and Indian Airlines
by KR Wadhwaney

New chairman and managing director (CMD) and two independent directors will not be able to rescue a bankrupt Air India (AI) from dying. Mere cosmetic changes at the top will not bring about a turnaround of a heavily debt-ridden national airline. As the root of the tree is diseased, its product will be rotten, no matter what medicines and tonics it is provided with.

Air India and Indian Airlines (forced out of operations) have plenty of resources, technically competent manpower and other wherewithal to translate financial sore spots into "honey". The lesser the interference of the political IAS lobby, the quicker will be the turnaround.

There were independent directors on the Air India Board - Amit Mitra and Anand Mahindra - but they chose to resign to safeguard their self dignity. Highly professional in their actions and independent in their decisions, they rightly resigned as their recommendations were not being heeded to. The situation had dipped to such an abysmal depth that their files could not move from one task to another without "subtle political hint".Under such shocking goings-on could any self-respecting official here agree to function as a director?

Living within means is the best style of living. Needless over-stretching eventually turns counter productive. To stay in permanent debt is a sure signal to fall. Air India has sufficient fleet. They are more than "enough" to reduce losses if judiciously and professionally deployed. The bane of Air India since the merger has been "thoughtless" deployment of the fleet and "mindless" utilisation of routes.

The government should come out of its false notion of prestige. It should learn from its past mistakes. It should immediately announce demerger. Indian Airlines should fly on Indian routes, Air India on international sectors. Two are not too many. One is lonely and it, by design, is offering "gains" to fall in the plate of private operators, who are promoted and sponsored by politicians and bureaucrats.

Delhi International Airport Limited (DIAL) has turned "super government" at the IGIA. It does what it pleases without caring for protocol. Despite Civil Aviation Ministry's categorical directions, the DIAL had already initiated measures to start international operations from 1D. How can a private operator have the audacity of initiating international operations after ministry's "no"?

The starting of international operations is wholly government subject. The immigration and the customs among some other departments, are prerequisites. The DIAL's hasty action is only because the government has granted it too much latitude.

Investor Guidance
Form 15G/H applicable for Resident individuals only 
by A.N. Shanbhag

Q: I am a regular reader of your column in The Tribune. I am a manager of a nationalised bank and want your guidance in the following matter:

There is an FDR of Rs 5 crore for duration of 1 year @ 9% p.a. in the name of village panchayat in my branch. The FDR can be operated by the sarpanch and the Deputy Commissioner of district jointly. There is no PAN number in the name of concerned panchayat. The system is deducting TDS @ 20% on account of PAN not being furnished. No 15G/15H can be obtained. Let me know the fate of TDS deducted so far.

Is there any rule vide which it can be refunded to panchayat concerned. The amount received by panchayat as cost of land on acquisition by HUDA has been kept with us as term deposit. Please guide me by quoting provisions of IT act in this regard. A line in reply will be appreciated.

— B S Sethi

A: 1 Form 15G/H are applicable for only Resident individuals.

2. The Panchayat could have obtained a PAN.

3. If PAN is not quoted by the assessee, the rate of TDS will be higher of - a) the rate prescribed b) the rate mentioned in the Finance Act and c) 20%. These would be the rates even if the assessee has filed Form-15G or 15-H for non-application of TDS. Further, the ITO will not grant any certificate for application of TDS at reduced or nil rate.

Your System has taken the right action in applying TDS @ 20%. The Panchayat can file its tax returns and claim refund if due.

We presume that you must have deposited the TDS in the manner prescribed and issued a TDS certificate to the Panchayat.

Resident status

Q:A friend has informed me that the Government. of India is planning to change the rules (through the new tax code) for the number of days one has to stay out of India to maintain his NRI status. He mentioned that instead of 180 days, now only 60 days will be allowed. Is this true? I shall be glad to get latest information from you.

— I. K. Bajaj

A: The new Direct Tax Code (DTC) which will be replacing the current Indian Income Tax Act is as of now scheduled to be operational from April 1st, 2012. As of now, it is still at a discussion stage and by the time the same gets finalised, there may be additional changes over and above those that have already taken place from the time it was first mooted. Secondly, to answer the question in its entirety, first we need to visit the definition of the term NRI.

A Resident is one who satisfies either one of the following two conditions - a) He is in India for a period or periods amounting to 182 days or more during the financial year OR b) He is in India for a period of 60 days or more in the financial year and for a period or periods of 365 days or more during the four years preceding the current financial year. Now, for an NRI / PIO who is on a visit to India, the period of 60 days above had to be substituted by 182 days - hence in their case, basically it came down to the test of 182 days only. The above is as per the current Income Tax Act.

Now, in the DTC the provision for substitution of 182 days for 60 days has been dropped in the case of persons who are visiting India. However, this does not mean that the test of 60 days has to be applied in isolation. As and when the DTC gets operational, a person who is visiting India will lose his NRI status if his stay in India during any financial year exceeds 60 days AND if he has stayed in India for more than 365 days during the past four years. Therefore, the NRI status stands to be lost only if both the stipulations of 60 days and 365 days are met by a visiting NRI and not only the 60 days one.

The authors may be contacted at wonderlandconsultants@yahoo.com