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Cash-strapped airlines seek PM's intervention
New Delhi, September 26
Rahul Bhatia, co-founder, IndiGo Airlines, with president Aditya Ghosh (L) after meeting the Prime Minister in New Delhi
Bosses of major domestic carriers today sought Prime Minister Manmohan Singh’s intervention to help them fly out of the “bad operating climate” and financial turbulence with the help of rationalised taxes on jet fuel prices and other measures.

Rahul Bhatia, co-founder, IndiGo Airlines, with president Aditya Ghosh (L) after meeting the Prime Minister in New Delhi on Saturday. Tribune photo: Mukesh Aggarwal

UK strike: AI cancels four flights
New Delhi, November 26
Air India has cancelled four flights to and from London scheduled for Wednesday when a majority of public sector employees in the UK are going on a strike.

Investor Guidance

Aviation Notes



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Cash-strapped airlines seek PM's intervention
Vibha Sharma/TNS

New Delhi, September 26
Bosses of major domestic carriers today sought Prime Minister Manmohan Singh’s intervention to help them fly out of the “bad operating climate” and financial turbulence with the help of rationalised taxes on jet fuel prices and other measures.

The Prime Minister took note of issues plaguing the aviation industry but is believed to have stopped short of making any concrete assurances at the meeting attended by Civil Aviation Minister Vayalar Ravi, Jet Airways owner Naresh Goyal, Indigo promoter Rahul Bhatia, Spice Jet CEO Neil Mill and Go Air owner Jeh Wadia. “The PM did not assure airlines any financial help, he only took note of their concerns,” sources said adding that the PMO might once again ask the states to rationalise taxes on aviation turbine fuel (ATF).

While airlines are seeking some sort of a bailout, sources said it would be tough for the government to grant them any wish without consultations with all stakeholders. “Lowering sales taxes on ATF is states’ prerogative and all that the Centre can do is request them as it has been doing for the past many years now,” officials said.

Interestingly, Kingfisher owner Vijay Mallya, whose financial crisis was the start-up to today’s meeting, was absent. Opening up FDI in airlines, Mallya’s favourite issue, was not discussed at all, sources said, adding that airline honchos preferred to concentrate on high taxes on the ATF besides new ground handling policy and review of bilaterals.

Last week, Mallaya met the PM and other senior leaders in Parliament, seeking help in restructuring loans and securing finance for his airline. Sources said when he met the PM all that he managed to receive was a patient hearing but no promises on allowing FDI in airlines.

Under the current rules, upto 49 per cent FDI is allowed in aviation companies but foreign airlines are not allowed to invest. Recently, the Industry Ministry moved a draft note to allow 26 per cent FDI in the domestic carriers, though the Civil Aviation Ministry wants to cap it at 24 per cent.

While Kingfisher wants this change in the aviation policy, some other carriers like IndiGo are not in favour of such a move.

Collectively, the airlines are in agreement over high fuel cost and other “unreasonable taxes” levied on the sector. ATF prices have increased by 30 per cent since December 2010 and domestic airlines are expected to lose Rs 3,500 crore in the first six months of this fiscal.

The airlines also want the government to review bilateral policy, arguing about anomalies relating to the number of destinations India has allowed to overseas carriers and foreign governments allowing reciprocal rights to operate in those countries. They also want an early resolution of the ground handling policy, claiming that high airport charges was also contributing to their financial ill-health.

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UK strike: AI cancels four flights

New Delhi, November 26
Air India has cancelled four flights to and from London scheduled for Wednesday when a majority of public sector employees in the UK are going on a strike.

"In anticipation of strike by the public sector employees at London on November 30 (Wednesday), Amritsar-Delhi-London (AI-115), London-Delhi (AI-116), Delhi-London (AI-111) and London-Delhi (AI-112) flights have been cancelled," an Air India spokesperson said today.

The move comes as over 7.5 lakh employees out of 26 lakh voted for the strike across four sectors - health, civil service, education and local government.

Immigration officers at Heathrow and other UK airports are also due to join the next week's strike action against planned pension reforms.

"Passengers of the cancelled flights have been rebooked on flight AI-115 and AI 116, AI-111 and AI-112 departing from Delhi and London on December 1 on involuntary basis," the spokesperson said. — PTI 

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Investor Guidance
by AN Shanbhag
Retirement benefits exempt from tax

Q: I want to know how to incorporate the retirement benefits in the first income tax return after retirement. Viz. DCRG, commutation of pension, encashment of leave, GPG & group insurance. There is no column in the income tax return form No.2. Can I enclose photocopies which are in Punjabi language or should I just give a note in the return about the retirement benefits. — Amit Dala

A: The benefits received on retirement are exigible to tax under the head ‘Salaries’. No annexure is required to be attached with the returns. The Department will pick up the data related to you from the TDS returns filed by your ex-employer. The return has to be filed without any extra annexures or photocopies or notes.

Investment in NSCs

Q: Can I reinvest matured NSC without withdrawing the matured amount in order to save the tax on matured NSC? Also, If I buy NSC for a minor (not for 80C purpose), is the maturity amount taxable? — Pawar

A: The proceeds of a matured NSC can be used to reinvest in a fresh NSC for Section 80C benefit. The tax benefit is only for taxable income from all sources up to Rs 1 lakh. It’s not that irrespective of the maturity amount of the NSCs, just because you are reinvesting the proceeds, the entire income would be tax-free. At the same time, note that the maturity amount of NSC is not taxable fully, it is only the interest for the last year that is taxable. That is assuming you have claimed Section 80C deduction for the first five years' interest. Else, all six years' interest will be taxable. The same principle will apply in the case of investment for a minor.

PPF investment

Q: Can I deposit Rs 70,000 in my PPF account and another Rs 70,000 in my minor son’s PPF account? I am not using PPF for 80C purpose. Also, read the recent news that now we can invest up to Rs 1 lakh in PPF and interest rate will be 8.6% p.a. From when is this applicable? Also, will the revised interest rate be applicable to the full accumulated amount in the PPF account or only on the fresh investements? — Shree Nyas

A: Irrespective of whether you are taking the Sec. 80C deduction on PPF or not, you cannot invest more than Rs 70,000 in the aggregate in your own and your minor son’s PPF account.

The new rules regarding enhanced interest rate as well as the increased limit of investment in PPF are just an announcement so far - it will be applicable once the notifications for the same are officially released. As per reports, the notification should come out sometime in December. Though indications are that the revised interest rate of 8.6% should be applicable to the aggregate amount of PPF but we shall have to await the notification for the exact details.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Aviation Notes
by KR Wadhwaney
Civil aviation in dire straits

Fire continues to engulf Indian civil aviation scene as majority of airlines, including scheduled carriers, reporting enormous losses. The fares on the domestic sectors stay unstable and despite the DGCA’s warnings, the airlines continue to 'jack up' fares proving that in the open sky scenario, everything is fair.

The situation at the Indira Gandhi International Airport (IGIA) has hit 'sticky weather' even before foggy season descends on the capital. In the pre-foggy days, the much-touted and sophisticated ILS category-III system worked erratically, forcing airlines and pilots to defer departures or land in nearby airports instead of touching down at the IGIA. The overall situation is murkier and the plight of passengers remains pitiable.

The health of the National Aviation Company (Air India) stays feeble. Amidst private airline's numerous cancellation of flights, pilots of the much neglected Indian Airlines (IA), backed by the Indian Commercial Pilots Association (ICPA), have issued a warning saying that they would be forced to resort to strike if their demand of 'pay parity' is not met by November-end.

Expressing grievance against the former Minister of Civil Aviation, Praful Patel, for forcing unnecessary merger on the two national carriers, the ICPA, in a letter to the current minister, Vajaylar Ravi, has stated that 'enough is enough' and we can no longer bear the atrocities on the Indian Airlines' staff, particularly pilots and cabin crews.

The letter said: "The ICPA's strike in May was called off after promise of resolving IA pilots' issues by setting up a panel and submitting report by November-end". The association president, AS Bhinder, took pains in making detailed reference about 'unfulfilled assurances'. It further said: "The ICPA members are deprived of their lawful rights of equal work, equal pay …upon expiry of deadline of November 2011….."

Before merger of the two airlines came about, the then minister had gone on record saying that both carriers are two arms of the amalgamated entity and there will be no discrimination in pay, perks and other facilities. According to the ICPA's letter, AI pilots get fixed pay for 80 hours irrespective of the actual flying they do, while IA pilots are paid for the number of hours they spend in the cockpit. There are several other anomalies which have caused unrest in the rank and file of 
the IA, which, before the merger, was flying in a 'comfortable zone'.

The staff of Air India, erstwhile Indian Airlines and civil aviation experts believe that the NAC's woes will end only after bureaucrats and politicians, particularly Praful Patel, admit their 'blunder’ and return to original system of IA flying on national routes and Air India on international sectors. The more the delay, the worse will be the welfare of the NAC, which, in addition to rupee-oxygen, needs realistic and professional handling.

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BRIEFLY

FDI in multi-brand retail to ease inflation: RBI 
Jaipur:
The RBI today said FDI in multi-brand retail will cool down inflation which has been hovering around the double-digit mark. "Globally, it is considered that if (FDI in multi-brand retail) effectively implemented then prices decline. And if prices fall, so will inflation," RBI Deputy Governor KC Chakrabarty said. — PTI

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