FM refuses to revisit capital gains tax
Plan panel favours fuel price hike
HSIDC to expand Bawal centre
Dabur patriarch passes away
FM refuses to revisit capital gains tax
New Delhi, May 20
“There is no intention to reintroduce long-term capital gains tax on securities traded on the stock market... The issue of Double Taxation Avoidance Agreement has been debated threadbare. Due to host of economic, political and diplomatic reasons, the treaty cannot be reviewed unilaterally,” he said addressing a press conference today.
After the fall in BSE Sensex by about 1,300 points this week, the CPM had demanded that the government reintroduce long-term capital gains and dividend tax, apart from reviewing the DTAA with Mauritius, which was being increasingly used by FIIs for avoiding tax.
The bear run in the market was partially due to heavy selling by Foreign Institutional Investors (FIIs) on fears that the Central Board of Direct Taxes may levy higher tax from them.
He said on Thursday that no foreign institutional investor (FII) has been assessed as a trader, scotching market talk that tax rates could be raised for them.
The FII withdrawal seems to have prompted the Finance Minister to clarify that no FIIs would be taxed and the fears were based on “uninformed reporting.”
He also allayed apprehensions about the economy, saying economic fundamentals were strong and they did not undergo any change recently.
“The foreign exchange reserves were at $163 billion, inflation reined in below 4 per cent for several weeks, manufacturing sector is growing at over 9 per cent and monsoon has set in, which is expected to be good,” he said.
The markets had tanked nearly 1,300 points on Thursday and Friday, as panicky investors joined FIIs in selling activity.
The Finance Minister said the stock markets go beyond Sensex stocks. “In the last four trading sessions, 420 stocks have risen adding more than Rs 5,200 crore to their market capitalisation.”
He said FIIs influence 10 per cent of volumes in derivatives market and 10 per cent of volumes in cash market.
“FIIs play a significant role in India like in any other market. I believe mutual funds also play an equally important role,” Mr Chidambaram said.
The minister also said: “India growth story continues to be a growth story. It goes beyond stock markets and includes agriculture, services and manufacturing”.
Earlier addressing the state chief secretaries, he said, India’s deficient infrastructure, including roads, power plants and ports, cuts economic growth by as much as 2 percentage points each year.
“India’s infrastructure needs cannot be funded by government’s budgetary resources alone,” Mr Chidambaram said urging them to emphasise on public-privatisation model to finance infrastructure projects.
“One has to reach out to private sector, private savings to fund such ambitious projects.”
Mr Chidambaram said India needs $48 billion by 2012 to build new highways and widen existing ones. Airport modernization would require Rs 400 billion by 2010 while another Rs 500 billion need to be invested to improve the country’s seaports by 2012.
New Delhi, May 20
"Its simply not sustainable to enter into an era of high oil prices without charging economic price," Planning Commission Deputy Chairman Montek Singh Ahluwalia said on the sidelines of the conference of secretaries.
"When we do that (price hike), we will have to identify the customers who need to be protected. The Commission is sure of a few oil products' sensitive nature and price hike there has to be reasonable.
"Subsidies, too, have to be reasonable related to other forms of subsidies... it is a complex balance," he said, while seeking tax cuts for the oil companies to reduce the revenue losses, which they are suffering. — PTI
HSIDC to expand Bawal centre
Chandigarh, May 20
Stating this here today, a spokesman of the corporation said an additional 1,000 acres land in Rewari district on NH 8 has been acquired by invoking the urgency clause of the Land Acquisition Act. This was necessitated not only to meet the growing demand for industrial plots at Bawal, but also to counter the competition from neighbouring Rajasthan. Two industrial complexes of Rajasthan — Bhiwadi and Neemrana — were in close proximity to Bawal.
He said the first phase of Bawal growth centre was set up 15 years ago under the growth centre scheme of the Central Government.
New Delhi, May 20
The 81-year-old Burman was the grandson of the group’s founder S.K. Burman and was its chairman in the ‘80s. Under his leadership, the Dabur group, which was synonymous with traditional ayurvedic medicines, modernised and diversified its business.
Britain’s Eastern Eye, a weekly newspaper for South Asians, had ranked Burman among India’s 10 top billionaires, with an estimated wealth of around Rs.18 billion ($400 million). — IANS
by A.N. Shanbhag
Q : Please tell me something about tax liabilities in case of a private ltd. Co. and mutual fund investment i.e. regarding equity scheme, debt fund, Floating Rate Fund, etc., both income tax applicable, short-term capital gain tax and long-term capital gain tax, including the rate of tax applicable.
A : Long-term capital gains (LTCG) on equity-oriented schemes is tax-free. Short-term capital gains on equity schemes is taxable @10 pc. Longterm capital gains on non-equity oriented schemes is taxed at 20 pc with indexation or 10 pc without indexation whichever is lower. Short-term capital gains on non-equity schemes is taxable at the full rate of tax.
Surcharge and education cess as applicable would be levied on all above tax rates.
The law recognises only two kinds of schemes — equity and nonequity oriented. Equityoriented schemes are those which invest more than 50 pc (65 pc w.e.f June 1st, 2006) in shares of domestic companies) and those that invest less than this amount are nomenclatured as non-equity schemes.
Q : I have one housing loan on my name. I wanted to buy a separate flat/house for my parents as our present flat area is very small. But as I will pay the EMI’s, will I be the owner of the flat. I will not receive any income from both my flats.
Will I be eligible for tax benefits from both the housing loans?
A : Yes, you will be eligible for tax benefits on both loans, within the overall limits applicable. This 2nd house will be deemed to be letout and notional rent will be added to your income. There is no limit on the interest concession in respect of a let-out property.
Q : I have inherited property in India from my parents. I am a US citizen. (1) Can I sell the property? (2) What is tax rate (3) Can I deposit in NRE account. (4) Any other legal implication. Please advise.
A : 1. You can sell the property without requiring permission to do so from any authority in India. You will have to pay tax on capital gains. The tax rate will mostly be 20.4 pc.
2. Circular 67/2003-RB dt 13.1.03 supplemented by the RBI Master Circular dt 1.7.05 makes it possible for an NRI or a PIO to remit as much as $1 million per calendar year for bona fide purposes out of the sale proceeds of assets held in NRO accounts. He should have acquired the assets in question, out of rupee resources when he was in India or by way of legacy/inheritance from a person who was a resident in India.
The following funds/assets are eligible for remittance :
a) Sale proceeds of immovable property.
b) Assets acquired by way of Inheritance/legacy.
c) Deposit with a bank or a firm or a company.
d) Provident fund balance or superannuation benefits.
e) Amount of claim or maturity proceeds of insurance policy.
f) Sale proceeds of shares and securities.
g) Any other asset held in India, in accordance with the FEMA.
In the case of immovable property acquired out of rupee funds, the remittance of sale proceeds is available subject to the condition that the property should have been held for a minimum period of 10 years. If such a property acquired out of Rupee funds is sold after being held for less than 10 years, remittance can be made, if the sale proceeds have been held by the NRI for the balance period in NRO Account (savings or term deposits) or in any other eligible security, provided such investment is traced to the sale proceeds of the immovable property.
For remittance of sale proceeds of assets, both financial and immovable property acquired by way of inheritance/legacy or settlement from a person who was Resident, there is no lock-in. The remittance can be effected only when it is sought for all bonafide purposes to the satisfaction of the AD. An undertaking by the remitter and certificate by a chartered accountant in the format prescribed by CBDT vide their Circular 10/2002 dt 9.10.02 has to be produced.
It is necessary to file Form-A2, FEMA declaration, and certificate from an accountant, and undertaking for payment of income tax, in the specified format. A no-objection certificate from the income tax department will be useful, but not necessary.
3. You can remit this amount abroad but cannot deposit it in your NRE account.
Q : Can the short-term capital gains (STCG) generated out of land, building or any other capital asset be set off against short-term losses booked under equity-related/debt-based mutual funds/shares.
2. Can long-term capital gains (LTCG) by the sale of land, building/capital asset be set off against short-term losses booked under equity related/debt-based mutual funds/shares.
A : 1. STCG can be setoff against STCL, whatever be the source.
2. LTCG which is not exempt can be setoff against STCL from whatever source.
3. Equity-based MF schemes are governed differently from the debt-based schemes. In both cases, dividend is tax-free in the hands of the investor. However, there is a dividend distribution tax @14.025 pc payable by the MF directly to the exchequer in the case of debt-based whereas the equity-based are exempt from this tax.
Equity-based schemes are also exempt from long-term capital gains tax. The short-term capital gains are taxed @10 pc only.
In the case of debt-based schemes, short-term gains are treated as normal income of the assessee and taxed at the rates applicable to the assessee. The long-term gains will attract tax @10% without indexation or @20 pc with indexation, whichever is more beneficial to the assessee.
Q : In one your answers, you have mentioned that only IPI form is required now for having invested in immoveable property.
You have also said that a resident outside India who has been permitted by the RBI to establish a branch or office or place of business in India (excluding a liaison office), can acquire property.
Now, will you please let me know how to get permission for starting a business activity and doing business in India while remaining NRI.
— Rajesh Vashishat,
A : If an NRI desires to purchase a real estate property in normal course, he does not need to file form-IPI.
A person resident outside India, who has a branch, office or other place of business (excluding a liaison office) for carrying out his business activity with requisite approvals in India may acquire an immovable property in India which is necessary for or incidental to carrying out such activity provided that all applicable laws, rules, regulations or directions for the time being in force are duly complied with. The entity/concerned person would have to file a declaration in form IPI with the Reserve Bank, within 90 days from the date of such acquisition. The non-resident is eligible to transfer by way of mortgage the said immovable property to an authorised dealer as a security for any borrowing.
You may apply to the Chief General Manager, Reserve Bank of India, Exchange Control Department, Central Office (External Payments Division), Amar Building, Fort, Mumbai 400 001.
The author may be contacted at email@example.com
by K.R. Wadhwaney
A largely improved economy in recent years has provided a meaningful thrust to India’s thus for eglected twin sectors of aviation and tourism. Almost all leading players from the USA to Europe to far-east Asia are holding, from time to the road-shows in Delhi, Mumbai and other important cities to woo the country’s increasing tribe of travellors.
Regardless of fars structure, the flights on both national and international routes are heavily booked but luckily incidences of off-loading owing to over-bookings have decreased. Jet’s international operations have been widely praised for superb inflight attention, service and facilities.
Based on rapidly growing travel market, Mobissimo, of the most comprehensive travel search engines, has launched its operations ex-India. Ms Beatrice Tarka of Mobissimo said; “We have dramatic growth of users from India searching for domestic and international travel and have seized the opportunity to become the first major US company to enter the Indian market”. MakeMy trip chief Deep Kalra believes that competition in online ventures for expansion of aviation
Germany, ever a favouring hub for travellers, has embarked upon selling the country through 2006 FIFA World Cup by offering variety of packets and facilities to Indian tourists. The German National Tourist Boar (GNTB) has been flooding all concerned agencies with literature and information for the next month’s mega event, which will be held in 12 cities.
”The FIFA World Cup represents a great opportunity for the aviation and travel industries in Germany”, said Petra Hedorfer, of the GNTB. Calling the prestious event as tourism magnets, the GNTB says:”.... holidays are no longer simply about taking things easy. People are increasingly looking to experience the unusual”.
India is not a strong football nation, but the game is popular with masses. Many are reportedly travelling to Germany to watch matches frde on big screens as they cannot afford to buy tickets of important matches.
The motherlands, France, Poland, Switzerland and the Czech Republic, development in aviation and tourism sectors, have luckily qualified for the finals and will also be offering facilities to the Indian tourists.
On domestic front, there is a healthy development as hotels and motels in the remote areas like Assam and Jabalpur are being accorded recognition. They have joined Welcomerheritage to help promote tourism.
On the issue of merger of Indian with Air-India with Air-India, most of the staff, including now directors and above of two airlines are of the firm belief that ‘water may be mixed with oil but they can never blend, no matter how much one tries’.