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Commerce Ministry proposes, FinMin disposes
Re advantage lost, says Mittal
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Petro exports to touch $497 b by 2012: Study
Screening of Applications
Difference of opinion
Tax Advice
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Commerce Ministry proposes, FinMin disposes
New Delhi, October 14 The commerce ministry had last month circulated a draft Cabinet note with a proposal to merge the popular Duty Entitlement Pass Book (DEPB) scheme with the drawback system and to rebate the state taxes to exporters. "The ministry of finance does not support the proposal for reimbursement of state taxes by the central government on grounds that the proposal seeking neutralisation of such taxes is a complete departure from the existing policy and practice," the revenue department conveyed to the commerce ministry. The finance ministry said while it agreed to rebating of central indirect taxes - customs duty, excise duty, service tax on inputs, special additional duty and education cess - through the drawback scheme, the burden of reimbursement of state taxes should not fall on the central government. Such neutralisation of taxes would encourage states to devise more levies that would be loaded on to the Centre. It said if this is done, may lead to "opening up a Pandora's box". It said while the states had agreed to refund VAT for exporters, they would put pressure on the Centre to get reimbursement for the same. The revenue department said that receipts foregone under the existing export promotion schemes were over Rs 61,000 crore a year. In the face of extreme fiscal pressure, the finance ministry would find it "very difficult to support a new scheme which entails additional revenue implications". Revenue targets have already been stretched to the extreme limit in the Budget, it said. Besides, the proposal to refund state taxes to exporters was not in consonance with the recommendations of the 12th Finance Commission relating to sharing of revenue between the Centre and the states, it argued. — PTI
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Punters bet on Sarin’s exit, Vodafone denies
London, October 14 “It was a good day for shareholders of telecom giant Vodafone but a bad one for chief executive Arun Sarin. The stock rose 8.5 pence to 179.5 pence on the back of market rumours that Sarin, whose strategy has been criticised in some quarters, might have decided to resign,” said The Telegraph in one of its market analysis reports on October 12. The paper, however, said that the company had “dismissed the speculation saying that it was wide of the mark.” Shares of Vodafone on FTSE 100, the benchmark index of the London Stock Exchange, grew to 179.5 pence on October 11 from 171 pence the previous day. It remained flat on Friday. The market movement on speculation about his future in the company, followed Sarin’s visit earlier in the week to India where he met Finance Minister P Chidambaram amidst reports about the $1.7 billion tax row that his group company Vodafone Essar is having with Indian authorities. He was on the verge of losing the top job for the amount of investment made by Vodafone in 2005 to acquire Turkey’s Telsim at $4.5 billion. Last year, a group of Vodafone shareholders protested about underperfoming shares and the perceived lack of ability by Sarin to cope with the challenges facing the company. Meanwhile, Vodafone today attributed an 8.5 per cent rise in its share price to positive projections made by its European rival Telefonica, while scoffing at reports that stocks soared because its CEO Arun Sarin was leaving. “I cannot comment on the existence of any rumours, but no one is taking the suggestion that Sarin has resigned seriously, because it is totally incorrect,” a Vodafone spokesperson said. — PTI
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Petro exports to touch $497 b by 2012: Study
New Delhi, October 14 As per its projections, imports of petroleum products in value terms would be to a range of $429.45 billion in the next five years. The Assocham study on ‘Petroleum trade’ for financial year 1999-2000 to 2006-07 has found that petroleum products exported by India have been growing at 73 per cent for last three years. The study analysed that if the same growth trend continues, value of oil exports will surpass its imports in the next six years. In fact, the trend for current fiscal shows that imports grew by 11.4 per cent, while exports went up by 89 per cent in April. Assocham president Venugopal N. Dhoot said: “Petroleum exports were valued at $0.03 billion in the financial year 1999-2000, which increased to $18.53 billion in 2006-07, growing at the compound annual rate of 96.5 per cent. Imports on the other hand, increased from $12.6 billion in the financial year 1999-2000 to $57 billion in 2006-07 recording a CAGR of 32.7 per cent.” Even as the energy requirements of the Indian economy are rapidly increasing, capacity expansion of the refineries, both at public and private level, would help maintain the growth momentum of the exports of petroleum products, he added.
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DoT may seek help from other ministries
New Delhi, October 14 “The processing of these applications will start very soon. Once it starts and during the scrutinisation, it is felt that the actual ownership, shareholding patterns and source of funding are prima facie doubtful and beyond our normal investigation, we will certainly take help of other ministries,” official sources said. Cellular Operators Association of India (COAI) had written to the DoT that some of the applicants may be acting as proxies for existing operators to circumvent the norms. Although officials did not specify which ministry (ies) could be of help in this regard, they said it was the ministry of corporate affairs, which checks into the ownership and funding issues after being referred by another ministry. The FIPB wing of the ministry of finance can check the veracity of only those applications, which have a foreign equity component. The queue of licenses is headed by Switzerland-based ByCell, which has applied for licenses in five circles in January 2006, followed by Spice for 20 circles (August 2006), after which come Swan Telecom, Cheetah and HFCL. Both Swan and Cheetah have been linked to Reliance Communications, AT&T and host of real estate companies. There is an internal committee of the DoT looking into the applications, which would adopt a two-stage screening process. Initial indications from the preliminary meetings of the committee say that spectrum might not come along with the licenses for these new applicants and the DoT may continue with the current first-come-first serve policy, where existing players would stand to get radio waves first to start operations. — PTI
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Tax relief on donation to political party
by S.C. Vasudeva Q. I am a senior citizen aged 73 years. Following income will accrue to me in 2006-07 (assessment year 2007-08) 1. Annual Pension Rs 1,25,000 2. Bank and PO deposits interest Rs 2,00,000 3. Agricultural Rs 2,00,000 4. Purchased NSC during 2005-06 Rs 1,00,000 5. Purchased NSC in 2006-07 Rs 1,00,000 6. Donation to Pingal-wara during 2006-07 Rs 5,000 7. Donation to a national political party during 2006-07 Rs 10,000 TDS deducted Rs 15,175 —Harbans Singh Brar A. Your total income on the basis of figures given in the query works out at Rs 4,32,380. After giving rebate for the agricultural income and considering that the donation to political party is covered under Section 80GGC of the Act for the purposes of 100 per cent deduction, tax payable, including education cess would work out at Rs 14,498. You would, thus, be entitled to a refund to Rs 677 after adjusting the tax deducted at source. Accrual basis
Q. I retired from HPGC (bifurcated from erstwhile HSEB) in June 2005. I am filing my Income Tax return regularly as per prevailing system by taking all emoluments of salary, along with interest on NSCs and bank savings from March to February as the salary/pension of February paid in March and March paid in April. Presently, I am taking my pension and interest income from March to February in my income tax return due to the following reasons. 1. The SBI credited monthly pension in my bank savings account on the last date of every month to which it pertains and can only be withdrawn on 1st or thereafter on any date of the following month of its credit as per bank rules. 2. The banks credited the interest of bank saving accounts half yearly in January and July. The interest of January and February is taken as accrued interest. 3. Interest on NSCs is taken for each completed year as per rate applicable on accrual basis. 4. The post office pays quarterly interest of my SCSS account on the 1st of the following months and after end of each quarter. 5. The SBI credited the interest of my SCSS account quarterly on the last date of each quarter in my bank saving account. But I never withdrew it on the dates of its credit even on March 31 and thereafter too. 6. I intend to open a FD account of 400 days in a nationalised bank from July 7, 2007, after premature closure of my SCSS account from post office. The bank will credit the interest quarterly in the FD account after TDS deduction on the last date of each quarter and on maturity. The quarterly TDS certificate will be issued by bank after its deposit in SBI in the last week of following months. In view of the above, please clarify my following points, so that I may be careful to file a correct Income Tax Return. (i) Whether I should continue as I am taking the period from March to February in respect of item No 1 to 5 above. Or there is required any change in any item. (ii) Whether in respect of Item No. 6 above, the interest will be considered from July to March on accrual basis and from March to June, from Item No. 4 above on cash basis with refund of TDS for March 2008 relevant to the year 2007-08. Or can the period be extended for 13 months i.e. from March to March next year. If I do not claim the refund of TDS for March 2008 for 2007-08, so that the period can be taken as from April to March from the next year i.e. from 2008-09. — A.N. Gupta, Karnal A. On the basis of the facts given in the query, it seems you are declaring pension and interest income from banks and post office on cash basis i.e. declaration is being made as and when the amounts are credited to your bank account. However, as per facts in the query, the interest on the NSCs is being taken on accrual basis. The hybrid system of declaring the income is not in accordance with the provisions of Section 145 of the IT Act, 1961, (the Act). You have the choice of continuing with the present method of declaring income but the income from interest on NSCs should also be declared on the basis of actual receipt of interest. However, I would advise you to follow accrual basis and, therefore, file return in respect of the income due for April to March. The interest on FD for 400 days should also be declared on accrual basis. The claim for tax deduction at source can be made on the basis of certificates issued by the bank and there should be no difficulty in claiming the credit for tax deducted at source. For example, if you have deposited the amount on June 10, 2007, the credit of interest and deduction of tax would synchronise with the three quarters covered for the purpose of return (September; 2007, December; 2007 and March 2008). The credit for such tax deducted at source can be claimed in the return for the assessment year 2008-09 (financial year ending March 31 2008).
Section 80C
Q. Savings up to Rs 1 lakh should compulsory be made from the “taxable income” earned during the financial year or from the “past years savings”. Kindly advise quoting instructions/guidelines/ amendment so as to convince the department. — Harnam Singh, Chandigarh A. The deduction allowable under Section 80C of the Act is limited to Rs 1 lakh. The section does not make a reference to the word “income chargeable to tax”. Accordingly, even if the investment/deposit in specified heads is made out of the past savings, a deduction under Section 80C of the Act would be allowable.
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Appreciation of the rupee has led to loss of comparative advantage for exporters and has also put pressure on margins through cheaper imports, while high interest rate has impacted domestic sales, particularly consumer durables, CII president Sunil Mittal said here today.
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