New Delhi, October 22
Finance Minister P Chidambaram has asked the industry to come with measures to improve growth and penetration of the general insurance sector. Finance Minister today addressed a meeting of chief executives of general insurance companies here to discuss the problems of the industry.

He said the major challenges before the sector is how to increase its reach to the maximum number of people along with growth of investment in the sector. He asked the participating CEOs to express their concerns about various factors hindering growth of this sector as well as give suggestions to overcome the same.

There is significant room for growth as the penetration in the non-life insurance sector (premium to GDP) is only 0.71 % in 2011, which is far below the international bench marks.

Minister of State for Finance Namo Narain Meena and Secretary, Financial Services, D.K. Mittal were present at the meeting.

The CEOs of general insurance companies expressed various difficulties being faced by insurance firms in the field of motor car insurance, including third party insurance, health insurance, home, fire and group insurance among others. They pointed out that motor vehicle insurance, which has 41% share in the non-life insurance sector, faces major challenges because of regulated tariff, unlimited liability, non-jurisdiction restriction for filing the claim and underinsurance among others.

In the health insurance sector, it was suggested that a proper mechanism must be put in place whereby an appropriate pricing mechanism for a group health insurance is adopted which takes into consideration the existing ICR (Incurred Claims Ratio), management expenses, medical inflation, cost of under-writing the business and other associated problems.

Some of the participating CEOs raised tax-related issues, including non-applicability of MAT for the non-life insurance sector at par with life insurance companies and zero rated service sector on crop insurance, tools, senior citizen policy, RSBY and other exempt categories. Suggestions were also made to further improve the penetration in the home insurance sector and to resolve agents and regulator-related matters.

New Delhi, October 22
By ignoring doomsday signals evident since early 2011 and reacting when it is "too late" for any recovery, the government perhaps allowed Vijay Mallya-promoted Kingfisher Airlines to "get away", and that too at the cost of employees, lenders and shareholders, experts say.

Aviation expert Jitender Bhargava, who has been quite critical of the Ministry of Civil Aviation's response, or rather lack of it, to the Kingfisher crisis, is clear that it is endgame for the KFA as "not even a genius can now save" the cash-strapped carrier whose licence was suspended by aviation regulator DGCA on Saturday.

"The alarm bells should have started ringing when Kingfisher cancelled flights for the first time in November 2011. The action (of suspension of licence) was only taken when employees went on the strike, only then safety became an issue. But what was the ministry doing when the airlines stopped paying its airport and oil dues, when the management started faltering on taxes to the government and stopped depositing the provident fund of its employees. By suspending the licence now, the ministry seems to have done a big favour to KFA," Bhargava says.

In fact, former DGCA EK Bharat Bhushan is alleged to have been dismissed from his job as the aviation regulator when he wanted to cancel the KFA's licence over the management's failure to pay its employees in July. The ministry' tough stance against Bhushan instead of the floundering airline for not paying employees or submitting its recovery plan came as a big surprise.

Incidentally, this is not the first time that an airline would be shutting shop due to losses. Tens of aviation companies across the world have closed down ever since commercial flying became a business. In India aviation companies like East West, Damania, Paramount, MDLR have shut shop in the past two decades.

According to Bhargava, after the open sky policy came into existence, many people with limited experience in the airline business entered the field. As the market was not yet in the growth mode, the airlines incurred losses and closed down. But if the Kingfisher loses its licence, it would go down in the Indian aviation history as the first airline owned by a big corporate to go defunct in a market.

However, the price of the poor business model followed by an owner who failed to adjust to the changing times would now be paid by thousands of hapless employees. "It is sad that employees, shareholders would have to suffer. Mallya came from a business (liquor) where margins of profit are 35 to 40% to an industry where the margin of profit is never more than two per cent. Despite the industry' dynamics, he floated a five-star airline. When you start a five-star airline it means that cost is not an issue. Now, the situation has hit such an impasse that even a genius cannot bring it around," says Bhargava.

Reeling under debts, airport charges and fuel bills, the locked-out airline is saddled with a loss of Rs 8,000 crore and debt burden of another Rs-7,524 crore , a large part of which it has not serviced since January. Apparently, Mallya has pledged almost 95% of his shareholdings in KFA to lenders, meaning thatlenders, the "real owners of the airline", would be the actual sufferers.

Q: I am a senior citizen and filed my tax returns on July 31 this year. However, I made a mistake while calculating my pension income at Rs 18,000 more than the actual amount, on which 20% tax has been deducted. How can I get the error rectified?

— H.S. Sidhu

A: You should file a revised return for assessment year 2012-13 (up to March 31, 2014), which should disclose the correct pension amount. The revised return will replace the earlier one. On the basis of the revised return, an assessment will be done for AY2012-13, which will enable you to get a refund of the excess tax paid by you.

Q: I am working in a private firm that has been in existence for two years only. The company has not deducted any tax at source from my salary as it says this can be done only if it has been operating for at least three years. I have applied for a bank loan for which I need some documents. Is it possible for my employer to issue me Form 16A even if TDS is nil? And, if the firm agrees to do so, would it be a valid document?

— Suresh S.

A: There is no provision in the Income Tax Act, 1961 saying a company is not required to deduct tax at source if it has not been in existence for three years. Your employer therefore should have deducted tax at source. The company should not have issued Form 16A as this is only required where tax has been deducted from sources other than salary. Under the circumstances it would be advisable to obtain a document from your company certifying your total salary income, which then can be filed with a bank for securing a loan.

Mumbai, October 22
Mortgage firm HDFC today reported 19% increase in net profit at Rs 1,151.12 crore for the second quarter ended September 30.

Housing Development Finance Corporation (HDFC) had posted net profit of Rs 970.70 crore for the July-September quarter of the previous fiscal. The company's total income on standalone basis increased to Rs 5,277.2 crore during the September quarter from Rs 4,169.14 crore in the corresponding period last fiscal.

During the first half of 2012-13, the company clocked 19% rise in net profit to Rs 2,153.03 crore, compared to Rs 1,815.23 crore in the same period a year ago.

The total assets of HDFC rose by 20% at Rs 1,80,637 crore at the end of September 30, 2012. — PTI