The Tribune, Chandigarh, India

Toyota rolls out new Prius
Renault unveils compact car Pulse and SUV Duster
Girja Shankar Kaura/TNS

A crowded Harley Davidson pavilion at the Auto Expo.A Tribune photograph

New Delhi, January 7
As the 11th edition of the Auto Expo opened its gates for general public here today, global car makers continued to put their best foot forward and unveiled new models which would hit the Indian roads gradually over the year.

While Japanese giant Toyota brought in a new version of its hybrid sedan Prius priced between Rs 27.39 lakh and Rs 29.41 lakh (ex-showroom Delhi), Renault launched its compact car Pulse and SUV Duster. Duster would be the cheapest SUV to hit the Indian roads.

Toyota had first introduced the world's best-selling hybrid car in 2010.

"The introduction of the new Prius is our sincere effort to bring in advanced hybrid technology to India to develop such market here," Toyota Kirlosakar Motor (TKM) Deputy MD Shekar Viswanathan said.

The new Prius will have solar ventilation system in addition to the exiting battery technology, he added.

Besides the new Prius, Toyota today launched a specially designed seat for Corolla Altis for passenger having leg and knee problems.

The product, Easy Seat, will be available as a retro-fitted accessory and is priced at Rs 29,979.

Renault launched its mass market car Pulse displaying its intent to become a big player in the Indian auto market. Renault and Nissan are alliance partners and Micra and Pulse are a product of the collaborative development that the two companies are capable of introducing in price-sensitive markets like India.

Renault has priced the Pulse at Rs 5.77 lakh for the mid-variant RxL and at Rs 6.25 lakh for the top-end RxZ variant.

The more exciting product that Renault is expected to launch later this year will be the new Duster. This is expected to be positioned as a compact, premium, yet affordable SUV.

The company expects to launch the Duster in the second half of the current year.

M&M launches Reva NXR

Mahindra Group has unveiled Reva NXR, which is next generation concept electric vehicle. The car is expected to be launched in November around Diwali.

Another Mahindra company, Mahindra2Wheelers showcased scooter, Duro DZ and race bike, MGP30.

Hero showcases hybrid scooter

Hero Motocorp has also put on show its hybrid concept scooter that will run on both battery and petrol.

‘Leap’ is the first step taken by the company towards developing hybrid technology to bring environment friendly two-wheelers in the country.

Aviation Notes
DGCA, a ‘paper tiger’
by KR Wadhwaney

The safety of people and property is of paramount concern in the civil aviation sector. This is a vital guideline to all airlines, flying on national and international routes, by the International Civil Aviation Organisation (ICAO).

Sadly, this all-important directive is not being adhered to by the airlines, national and private, in this country, where safety is being compromised by operators owing to feeble financial cushion and vulnerable physical well-being.

Bharat Bhushan, Director-General of Civil Aviation (DGCA), needs to be complimented for undertaking
a financial audit of all domestic airlines.

He has made scathing report of majority of
airlines, scheduled and low-cost, highlighting that they are afflicted with major diseases.

A study reveals that the world-renowned manufacturers have done extremely well to provide ‘unbreakable and un-penetrative’ machinery, which functions robustly in all weather conditions. But safety has been at a discount in this country because most of the men are not as competent and proficient as the situation warrants. Also, many airports in this country continue to be mere air-strips instead of being well-developed flying hubs, equipped with sophisticated gadgets and parameters.

Much as one appreciates the DGCA’s initiative for ‘safety in air’ syndrome, the DGCA itself is plagued with corruption. If an independent audit of the DGCA is conducted, many dark skeletons will be found hidden in the cupboards of its office at Safdarjung. Apart from multiple instances of fudging of ages of pilots and technicians, there are several other incidents of wrongdoings buried in the office. While disciplining airlines, it is essential that the DGCA itself is subjected to audit by an independent committee.

Much before skies were opened in 1990 and merger was forced on two national airlines, there was a lot of discipline in airline trade because regulatory bodies were watchful. Then, the International Air Transport Association (IATA) was a regulatory body and not a ‘social’ outfit, as it is now. Similarly, before the HS Khola’s tenure began in the DGCA, there were strict checks on pilots, engineers and maintenance. Now, there is a virtual ‘jungle raj’. Pilots involved in major incidents go scot free because of their ‘contacts’. There is a continued slide in the functioning of the aviation sector as the DGCA has become a ‘paper tiger’.

Some airlines have gone on record saying that the situation is not as bleak as painted by the DGCA. They say that they are passing through difficult time but they have wherewithal to emerge out of turbulent weather.

Whatever the situation is, the DGCA has to set its own house in order before it hurls stones at others.

Investor Guidance
Bonus on Post Office MIS taxable
by AN Shanbhag

Q: I had invested Rs 3 lakh in the Post Office Monthly Income Scheme (POMIS). The interest was received regularly every quarter and this was shown as income in my income tax return and was taxed as per the tax laws.

The maturity amount has now been received after 5 years with a 10% bonus. I would like to know whether this bonus amount of Rs 30,000 can be treated as long-term capital gain as the same has been received after 5 years, and if indexation cost is applicable for arriving at the tax liability.

Also, how is the maturity amount of Post Office recurring deposit scheme should be treated for income tax purposes?

I am sure this information can be of use to many depositors like me.

— Shaikh

A: DG Posts letter No. 97-7/89-SB dt 20.11.1990 states that the CBDT have clarified that the bonus payable under POMIS shall be treated as interest and will be taxable. Therefore, the same cannot be treated as capital gains. In the case of recurring deposit, the capital amount out of the maturity proceeds would be tax-free whereas the accretion to capital will be treated as interest and taxed accordingly.

Double taxation

Q: When there is an agreement between the US and Indian governments for avoidance of double taxation (DTAA), if I pay taxes in the US on income in the US then I do not have to pay taxes in India on that income and vice versa whether I am an NRI or Resident. Am I correct in drawing this conclusion? Please advise.

— Sartaj Kalsy

A: Depending upon the type of income, the DTAA gives the right to any one country to exclusively tax the income. In such cases, you do not have to submit the same income for taxation in the other country. For example, pension income is taxable only in the country of source and not in the country of residence. So, if you are living in India and getting pension from the US, then you will not have to submit the pension income to tax in India.

IT return

Q: My son is having an NRE account. He has been working outside India only for the past one year or so.

My questions are:

1. Should he file his income tax return from the current financial year?

2. He has an outstanding housing loan for which he pays interest and has been claiming tax rebate. Can he pre-pay this loan using funds from his NRE account?

— S Nakhare

A: Your son need not file a tax return if his Indian income is below the basic exemption limit of Rs 1,80,000. It doesn’t matter how much he earns abroad, as long as his Indian income is below this limit.

Your son is free to settle the housing loan, either from his NRE or NRO account. There will be no income tax or FEMA repercussions.

PPF account

Q: I am 61 years old and having a PPF account for the last over 20 years. Unfortunately, a couple of years back, I stopped contributing to the account and also did not file the prescribed form for continuation of my account. I am informed by the bank that I cannot now deposit any money in this account but I do not have to necessarily close it down, instead, I can continue earning interest till such time that I close down the same. I shall be obliged if you can guide me on the following:

1. Will I continue to get interest on the present account till I close it or the interest ceases after two years of my last transaction?

2. Is there any way I could reactivate the account?

— Farrokh Katgara

A: The bank is right. You have inadvertently opted for post-maturity continuation without contributions. Yes, you can keep this account in its present state as long as you please. The account will continue to earn the 8% tax-free interest until you close the account. During this period, you can withdraw any amount from the account but only one withdrawal in a financial year of withdrawal.

One piece of good news. At the end of the 5 years of its current extended period, you can continue the account with contribution by filing Form-H.

Long-term capital gains

Q: I have two queries about long-term capital gains.

The tax return form mentions two kinds of assets - assets where proviso to Section 112(1) is not applicable and other assets where proviso to Section 112(1) is applicable.

Now, my question is what is this proviso to Section 112(1)? And what are the assets for which this proviso applies and which are the assets to which it does not apply?

- Girish

A: Proviso to Section 112 (1) basically provides the taxpayer with an option of paying long-term capital gains tax (LTCG) @10% without indexation of cost, if the same works out lower than LTCG @20% after indexation of cost. This rule is applicable only to listed securities and units. So for real estate, gold and non-listed securities (shares in a pvt ltd co), the 10% option does not apply. Therefore, the taxpayer is expected to know from his total LTCG, which one should be taken for the 10% taxation and which one for the 20% one and fill the space accordingly.

The authors may be contacted at wonderlandconsultants@yahoo.com