B U S I N E S S

Gold breaches Rs 28,000 mark
Mumbai, August 20
Gold prices breached the Rs 28,000 mark for 10 grams yesterday mirroring global trends where investors rattled by fears of a recession fled to the safety of the yellow metal. While gold prices in Delhi traded at Rs 28,150 per 10 grams, the price in Mumbai was a tad lower at Rs 27,887.

Glitters at Rs 28,230
New Delhi: Gold prices on Saturday climbed to fresh all-time high of Rs 28,230 per 10 grams gaining Rs 80 on sustained buying by stockists and investors amid firm global trend.

Aviation Notes
Delink aviation sector from politicians
The intensity to garner money has become so intense with airlines worldwide that they are hell-bent on levying fee under one pretext or the other. An Indian former Test player was travelling with his wife on a foreign airline recently. They were allocated seats in different sections. When the wife suggested that it would be great if they were provided seats together, the supervisor said: "Young lady you will have to pay $10 for it".

Investor Guidance
No I-T return needed if salary income less than Rs 5 lakh
Q: I would like to know if the exemption from filing tax return for income below Rs 5 lakh is applicable to salary earners only. What about those taxpayers who are no longer salary earners (having retired) having a pension of Rs 3,756 per annum, besides income on FDRs of around Rs 1.13 lakh (as per return filed for AY 11-12). Please clarify.

Gold breaches Rs 28,000 mark
Shiv Kumar
Tribune News Service

Mumbai, August 20
Gold prices breached the Rs 28,000 mark for 10 grams yesterday mirroring global trends where investors rattled by fears of a recession fled to the safety of the yellow metal.

While gold prices in Delhi traded at Rs 28,150 per 10 grams, the price in Mumbai was a tad lower at Rs 27,887. The surge in gold prices ahead of the festival season has caused a pause in fresh buying by both investors and retail buyers.

"There is hardly any demand as people are expecting a price correction," says Suresh Hundia of the Bombay Bullion Association. He, however, felt that retail buying might resume if gold prices remain at these levels for a while.

Globally, spot gold peaked at $1,868 an ounce before settling at $1,866 an ounce. Punters who are going long on the yellow metal expect international gold prices to touch $1,900 in the coming months.

Gold futures are ruling slightly lower with benchmark gold futures for the October contract on the Multi Commodity Exchange touching Rs 27,500 per 10 gms before falling to Rs 27,464.

Glitters at Rs 28,230

New Delhi: Gold prices on Saturday climbed to fresh all-time high of Rs 28,230 per 10 grams gaining Rs 80 on sustained buying by stockists and investors amid firm global trend.

Silver spurted by Rs 3,500 to Rs 66,300 per kg on increased offtake by industries such as electroplating and other consuming units.

Trading sentiment remained bullish as gold rose to a record, above $1,880 an ounce in New York, rallying on concern over altering US economy and deepening European sovereign debt crisis.

On the domestic front, gold of 99.9 and 99.5 per cent purity added Rs 80 to set fresh peak of Rs 28,230 and Rs 28,080 per 10 grams, respectively.

Sovereign held steady at Rs 22,400 per piece of eight gram. Silver ready spurted by Rs 3,500 to Rs 66,300 per kg and weekly-based delivery by Rs 3,795 to Rs 66,485 per kg. Silver coins surged by Rs 4,000 to Rs 73,500 for buying and Rs 74,500 for selling of 100 pieces. — PTI

Aviation Notes
Delink aviation sector from politicians
by KR Wadhwaney

The intensity to garner money has become so intense with airlines worldwide that they are hell-bent on levying fee under one pretext or the other. An Indian former Test player was travelling with his wife on a foreign airline recently. They were allocated seats in different sections. When the wife suggested that it would be great if they were provided seats together, the supervisor said: "Young lady you will have to pay $10 for it". As the lady showed her concern at the levy, the airline official quipped: "It is a matter of supply and demand. Our financial bellies are empty. We need money to survive".

The concept of payment for preferred seat exists in this country also. Several carriers were charging it. But, on the fervent appeal of the Director-General of Civil Aviation (DGCA), most of the airlines have stopped charging.

There is one rule for foreign carrier and another for Indians. This render trade lop-sided. All this slipper surface has surfaced because the International Air Transport Association (IATA), once a throbbing world body, has lost its clout. It is virtually a dummy international unit which enjoys no more than a 'social utility'.

DGCA Bharat Bhushan is said to be concerned about the existing malady. He is indeed assertive but not enough to bring about discipline in the industry who, despite loud talking of making immense progress in the civil aviation sector, is reeling under corruption, nepotism and favouritism. The scams in pilots’ recruitment and other technical sections continue unabated.

There is a talk of forming autonomous Civil Aviation Authority (CAA). According to reports, it will replace the existing regulatory body, the DGCA. Many experienced pilots, engineers and other technicians are of the firm belief that it is not a healthy move.

Decades ago, two bodies —The International Airports Authority of India (IAAI) and the National Airports Authority (NAA) — were formed by the government to help improve functioning in the aviation sector. What happened? The two bodies were merged to rise as the Airports Authority of India (AAI). Blessed with many competent and selfless workers and officers, the body has fallen on bad days, thanks to politicians. Now, it is virtually playing a second fiddle to the private outfit, Delhi International Airline Limited (DIAL), which is patronised by the politicians. Similar will be the fate of the CAA.

The bright future of the civil aviation and general aviation is possible only if the sector is delinked from the clutches of politicians and bureaucrats. There is no dearth of competent official in the DGCA.

Investor Guidance
No I-T return needed if salary income less than
Rs 5 lakh
by A.N. Shanbhag

Q: I would like to know if the exemption from filing tax return for income below Rs 5 lakh is applicable to salary earners only. What about those taxpayers who are no longer salary earners (having retired) having a pension of Rs 3,756 per annum, besides income on FDRs of around Rs 1.13 lakh (as per return filed for AY 11-12). Please clarify.

— T M Subramanyam

A: Pension is treated as salary for tax purposes and therefore, the notification should have also been applicable to those who earn pension from an ex-employer. However, the exemption in question is only applicable to current salary earners and not to those who receive pension.

PPF account

Q: I want to open a PPF account. Kindly tell me the minimum amount that we can deposit in a PPF account. Moreover, kindly tell me whether we can pay it monthly or yearly? And lastly somebody told me that if we deposit some amount like Rs 10,000 once, the instalment would be same for 15 years. Is it true?

— Updesh Khinda

A: PPF allows varying contribution from year to year to accommodate financial ups and downs. The minimum annual contribution is Rs 500 and the maximum is Rs 70,000. Subscription shall be in multiples of Rs 5, paid in one lump sum or in instalments not exceeding 12 in a year. This does not mean that one cannot make two or more contributions during the same month. In other words, the account can be opened with a contribution of Rs 5 but the additional contributions made during the financial year should take the total contribution at minimum of Rs 500 and maximum of Rs 70,000.

Rebate on home loans

Q: I have a self-occupied flat at Nagpur. I have availed a home loan of Rs 12 lakh and getting exemption for interest as well as principal paid for home loan. Now, I have got possession of my second flat at Ghaziabad in FY 11-12. I had availed a loan of Rs 12 lakh for this in FY 09-10. Interest paid during FY 09-10 and 10-11 were approximately Rs 30,000 and Rs 70,000, respectively. The second flat is presently vacant and not rented out. I am paying Rs 2,000 per month for the maintenance purpose to the builder towards maintenance charges and Rs 4,000 annually towards township maintenance. Both the flats are in my name and EMI paid through my account. My question is:-

i) How is tax calculation to be done for the second flat?

ii) What are the deductions available for this?

iii) What are the rules for interest exemption paid for the pre-possession/construction period for the second flat which is in this case Rs 30000 + Rs 70000 i.e. Rs 1 lakh.

iv) How the interest exemption for both the flats can be calculated if the interest for the FY 11-12 for flat no. 1 is Rs. 0.90 lakh and Rs 1 lakh for flat no.2.

— Shashidhar Kumar

A: Both the concessions u/s 24 for interest and u/s 80C for the part repayment made of the principal amount are available on any number of housing loans. The total concessions are limited by the ceilings of Rs 1,50,000 for interest and Rs 1,00,000 for repayment made of the principal amount.

If an assessee has two or more residential houses, only one of these of his choice shall be treated as self-occupied. Others will be considered as deemed let out. In case of interest related with a let-out (or deemed let-out) house and also a commercial property, the entire interest is deductible. Consequently, you can claim the benefit up to Rs 1,50,000 on the first loan and the entire interest without any limit on the second loan. The second house will be treated as let out even if it is vacant and the standard rent or rent receivable in that area will be treated as your income. Fortunately, the restriction of the holding period of 5 years for deduction of capital repayment u/s 80C is not applicable to deduction of interest.

Finally, the pre-construction interest is to be deductible in five equal instalments beginning from the year in which possession is obtained.

The authors may be contacted at wonderlandconsultants@yahoo.com