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THE TRIBUNE
 SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Gas Row
Declare Ambani pact null & void: Govt to SC

New Delhi, July 18
Asserting its ownership over gas from KG-D6 fields, the government today hit at the Mukesh and Anil Ambani groups for “surreptitiously” appropriating national resources, treating it as their personal and family property.

Hillary meets business leaders
Mumbai, July 18
US Secretary of State Hillary Clinton today had a breakfast meeting with top honchos of India Inc at the iconic, sea-facing Taj Hotel here. Amongst those from India Inc who were present at the meeting included Ratan Tata, chairman of Tata Group and Reliance Industries' Mukesh Ambani.

5.8 pc projected growth: CMIE
New Delhi, July 18
The economic think tank, Centre for Monitoring Indian Economy (CMIE), has revised down India's growth forecast to 5.8 per cent in the current fiscal from the earlier predicted 6.6 per cent on account of lower agricultural output and slower industrial recovery due to the poor progress of monsoon.

eFiling of IT returns catching up
Chandigarh, July 18
Technology has finally caught up with one of the most cumbersome annual procedures - filing of IT returns. As compared to 10% of the individual income tax assessees in the country going in for electronic filing (eFiling) of IT returns, almost 20 per cent of the assessees are expected to log on for eFiling.

The gold crown, worth Rs 35 lakh ordered by a Malaysian NRI for Abirami Temple, on display at a jewellery showroom in Chennai on Friday.
The gold crown, worth Rs 35 lakh ordered by a Malaysian NRI for Abirami Temple, on display at a jewellery showroom in Chennai on Friday. — PTI

EARLIER STORIES



Bollywood actors Neil Nitin Mukesh and Anushka Sharma walk the ramp to showcase the collection from Jack & Jones, an international clothing brand, at the launch of its store in Bangalore on Friday.
Bollywood actors Neil Nitin Mukesh and Anushka Sharma walk the ramp to showcase the collection from Jack & Jones, an international clothing brand, at the launch of its store in Bangalore on Friday. — PTI

FTP may give sops for exports to new areas
New Delhi, July 18
India's Foreign Trade Policy (FTP) is likely to lay more emphasis on incentivising export diversification to non-traditional areas, while the government is considering a fresh stimulus for the exporters, Commerce and Industry Minister Anand Sharma indicated today. “We will look at diversification.

Aviation Notes
Run-down policies
The recent multitude of unprofessional and non-commercial activities of the civil aviation authorities have played havoc with three vital national organisations. The privatisation of four international airports at Delhi, Mumbai, Bangalore and Hyderabad have caused enormous losses and humiliation to the Airports Authority of India (AAI), while two national carriers - Indian Airlines and Air India - have been rendered “homeless”. The two airlines have been deprived of their workplaces, warehouses and hangars.

Investor Guidance
Abolition of FBT: No good news for employees
Q The Budget has eliminated fringe benefit tax (FBT). However, it was reported in the media that employees will have to pay perquisite tax instead. Can you throw some light on exactly how this will work? —N Bhosle






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Gas Row
Declare Ambani pact null & void: Govt to SC

New Delhi, July 18
Asserting its ownership over gas from KG-D6 fields, the government today hit at the Mukesh and Anil Ambani groups for “surreptitiously” appropriating national resources, treating it as their personal and family property.

Anil Ambani group firm RNRL, on the other hand, in an affidavit accused the government of “blatantly and openly” supporting Mukesh-led RIL’s “unlawful design” to wriggle out of its obligation to supply gas.

Seeking a stay on the June 15 Bombay High Court order on gas supply on the basis of a family agreement, the government said in a petition before the Supreme Court that the MoU between the Ambanis was “blatantly illegal” and in disregard to the provision of the production sharing contract (PSC).

“(The MoU) should be declared null and void,” as it would mean that all the gas from the KG basin would be owned and utilised by RIL and RNRL, said the petition, a day after the Oil Ministry filed an affidavit in connection with cross- appeals by the group firms of the two Ambanis.

“Obviously, the pressing needs of the priority sectors...cannot be allowed to be held hostage to the benevolence and mercy of these two respondents,” the petition said.

In its earlier petition, RNRL wanted immediate supply of gas at $2.34 per mmBtu, which is 44 per cent less than the official rate, while RIL said it could not supply fuel without the government's consent.

Ahead of the hearing on cross appeals of RIL and RNRL on Monday before a bench headed by Chief Justice KG Balakrishnan, the government filed a special leave petition (SLP) apparently to ensure that it was able to raise issues that were not touched by the high court.

Just before the government SLP, RNRL filed the affidavit, its second since Tuesday, seeking to strike off the affidavit filed by the Petroleum Ministry in the capacity of an intervener as named by RIL.

The Bombay High Court judgment does not cause any prejudice to the government or its interest, the RNRL affidavit said and requested: “It is, therefore, submitted that the affidavit dated July 16, 2009, filed by the Petroleum Ministry should be struck off from the record.”

The government petition said under the PSC, gas was its property and RIL as contractor did not have rights to utilise the gas, which could be sold only at a price approved by the administration.

"Knowing fully well that the gas does not belong to them and that... (they) are bound by the terms of the PSC, the respondents (RIL and RNRL) have appropriated through MoU, in a surreptitious and unauthorised manner, the entire gas, treating the same as their personal and family property."

Asserting that gas should be produced without any hindrance in public interest, the government said: "The interim arrangement as approved by the High Court in the order dated January 30, 2009 may be permitted to continue." — PTI

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Hillary meets business leaders

Mumbai, July 18
US Secretary of State Hillary Clinton today had a breakfast meeting with top honchos of India Inc at the iconic, sea-facing Taj Hotel here. Amongst those from India Inc who were present at the meeting included Ratan Tata, chairman of Tata Group and Reliance Industries' Mukesh Ambani.

Others present were the chiefs of India's two largest banks - OP Bhatt of State Bank and Chanda Kochhar of ICICI Bank - Swati Piramal and Sudha Murthy, wife of Infosys Founder NR Narayana Murthy and a leading proponent of corporate social responsibility (CSR) initiatives in the country.

Industrialist Jamshyd Godrej and Tata Group official RK Krishna Kumar also interacted with Clinton along with renowned corporates, including Ashok Ganguly and Amrita Patel.

India Inc is widely expected to discuss the subject of protectionism and outsourcing, issues which are bound to impact them, especially in this period of global economic meltdown, at the meeting with Clinton.

The meeting is also widely expected to focus on CSR, a subject close to Clinton's heart.

Clinton arrived here last night on an official visit to India during which high-level discussions are likely to promote bilateral co-operation in $30-billion Indian civil nuclear power programme and $43-billion bilateral trade. — PTI

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5.8 pc projected growth: CMIE
Tribune News Service

New Delhi, July 18
The economic think tank, Centre for Monitoring Indian Economy (CMIE), has revised down India's growth forecast to 5.8 per cent in the current fiscal from the earlier predicted 6.6 per cent on account of lower agricultural output and slower industrial recovery due to the poor progress of monsoon.

It has also given a grim prospect of the Budget deficit, saying that government’s gross fiscal deficit is likely to overshoot the budgeted estimate of 5.5 per cent in 2009-10 on account of a hike in expenditure and slow pace of increase in tax revenue.

The CMIE also said the ongoing industrial recovery would be impacted and has projected that the industrial production growth at 4.8 per cent in the current fiscal against 5.1 per cent projected earlier.

The think tank said while the Budget is expansionary and conducive to growth, the failure of the monsoon and its significantly adverse impact on agriculture and industry will shave off 0.8 per cent from the GDP growth rate.

The poor progress of the south-west monsoon till the first week of July is expected to adversely affect the prospects of growth in agriculture, in industry and in the GDP of the country as a whole, CMIE said. It said because of the impact of the failed monsoon, production of sugar and edible oils will fall by 3.6 per cent and 2.5 per cent, respectively.

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eFiling of IT returns catching up
Ruchika M. Khanna
Tribune News Service

Chandigarh, July 18
Technology has finally caught up with one of the most cumbersome annual procedures - filing of IT returns. As compared to 10% of the individual income tax assessees in the country going in for electronic filing (eFiling) of IT returns, almost 20 per cent of the assessees are expected to log on for eFiling.

According to the latest data available with The Tribune, a little over 4.8 million assessees filed their returns via the electronic route in the last fiscal (2008-09). This year the number is expected to cross six million. Each year, the number of assesees taking to eFiling of their IT returns is growing by almost 250 per cent. In 2007-08, 2.2 million people had filed their returns electronically.

Though eFiling of returns is mandatory for a company or firm liable to audit (under Section 44AB of the Income Tax Act), it remains optional for other categories of tax-payers. Interestingly, the base of voluntary eFilers is fast catching up and is now more than the mandatory base of eFilers.

As compared to 30 per cent of the mandatory eFiling base in 2008-09, the voluntary eFiling base was 70 per cent. In this year, the voluntary eFiling base is expected to reach 80 per cent.

“The trend towards eFiling of returns is fast catching up, especially with the IT, ITeS and insurance professionals. This year, as many as 80,000 assessees have already registered on our eFiling site (taxsmile.com). As the last date for filing of returns draws near (July 31), we are witnessing an average of 4,000 registrations per day,” said Ravi Jagannathan, managing director and CEO, consumer services division, 3i Infotech.

He said with the IT Department now allowing use of digital signatures for electronically filing return, eFiling has become more convenient.

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FTP may give sops for exports to new areas

New Delhi, July 18
India's Foreign Trade Policy (FTP) is likely to lay more emphasis on incentivising export diversification to non-traditional areas, while the government is considering a fresh stimulus for the exporters, Commerce and Industry Minister Anand Sharma indicated today. “We will look at diversification.

That is what we have been discussing with the industry so that other continents that have not been traditional destinations of Indian exports (are covered). We will be, in fact, putting more emphasis on that," Sharma told reporters here after meeting a delegation of Confederation of Indian Industry ahead of the FTP.

Sharma said the Board of Trade, headed by him, will meet in the first week of August, before unveiling the new FTP. — PTI

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Aviation Notes
Run-down policies
by K.R. Wadhwaney

The recent multitude of unprofessional and non-commercial activities of the civil aviation authorities have played havoc with three vital national organisations. The privatisation of four international airports at Delhi, Mumbai, Bangalore and Hyderabad have caused enormous losses and humiliation to the Airports Authority of India (AAI), while two national carriers - Indian Airlines and Air India - have been rendered “homeless”. The two airlines have been deprived of their workplaces, warehouses and hangars.

This is bad. What is worse is that the staff alleges that 125 acres of prime AI land at Kalina has been “gifted” away to a private player without receiving any compensation.

While the “neglected” IA staff are made to shuttle between Delhi and Mumbai, live in transit from their suitcases, there is a talk of giving away two floors to a private, rival operator in the Airline House off Parliament Street (New Delhi). It is understood that powers that-be have vested interest in that private operator.

Bureaucrats in the ministry have already been suitably rewarded for their 'subtle' efforts in privatisation and merger. In the post-merger scenario, some IAS officials sought premature retirement and joined private players at huge salaries, while one official was sent to the International Civil Aviation Organisation.

Construction of Greenfield airports at Bangalore and Hyderabad has caused manifold problems to the commuters. They are situated far from the cities. Apart from paying heavy amount transportation, they also have to pay hefty users’ fee. Surprisingly, the authorities have okayed the levy of fee while litigations are still pending.

The staff, including directors stationed at Mumbai and Delhi, have written a letter to Prime Minister Manmohan Singh, highlighting wrong-doings of the authorities. The letter says: “In these difficult times, the ministry is living off the resources. About 200 AI staffers of varying categories are deployed in the ministry - both in offices and residences of senior ministry officials. As many as 15 cars with drivers and unlimited petrol are deployed for the use of these officials. The cash-stripped airline was also made to contribute Rs 20 crore advertising campaign for the elections”.

According to the letter, despite scant respect shown to the staff, one of the leading unions has written to the authorities that all officials from directors to peon have agreed to work two hours extra every day without any remuneration. "Despite heaping untold miseries on us, we are not resorting to any disruptive activities,” said senior officials at Delhi. The situation is tense but the airline can still be saved if political strangle-hold on the airline is loosened.

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Investor Guidance
Abolition of FBT: No good news for employees
by A.N. Shanbhag

Q The Budget has eliminated fringe benefit tax (FBT). However, it was reported in the media that employees will have to pay perquisite tax instead. Can you throw some light on exactly how this will work? —N Bhosle

A Abolition of the FBT is good for employers but not so good for employees. The reason is that though the consequential amendments to Rule 3 have yet to be notified, in all probability, many of those items that were taxable as FBT will now be subjected to perk tax in the hands of the employees. Though FBT in most cases was being transferred / borne by the employee, however, such FBT was at the rate of 6.8%. Now since items earlier under FBT will be added to the employees’ income, tax will be applicable at the slab rates which in all cases are above 6.8%.

Gift tax

Q: What is the nature of changes brought about by the Budget so far as gift tax is concerned? — Vidyadhar

A Actually, gift tax has been discontinued since 1998. Now, certain gifts are subject to income tax in the hands of the receiver. As per Section 56, any sum above Rs 50,000 in the aggregate received from non-relatives is taxable as income of the recipient. Since these provisions were applicable to ‘a sum of money’, hitherto, non-cash gifts used to escape this gift tax net. For example, one could gift say shares to anybody else (not necessarily a relative) and yet escape paying any tax on this transaction. The Budget has effectively plugged this loophole. Now, the value of any non cash property such as land or building or shares and securities, jewellery gifted without consideration will be subject to income tax in the hands of the recipient.

For immovable property if the stamp duty valuation less the consideration, if any, is above Rs 50,000 it will be taxable whereas for movable property, the fair market value is substituted for the aforementioned stamp duty value for arriving at the assessable value of the gift.

Note that the there is a specific list of non cash property -- this list has land and building, shares and securities, jewellery, archaeological collections, drawings, sculptures, paintings and works of art.

This means that gifts of any items other than the ones enumerated above will still be tax-free. For example, say your close family friend or any non relative were to gift you a car - since a car is not included in the list and hence this gift would fall outside the purview of this section. Note that these new provisions are applicable from this year from October 1, 2009, unlike most others that are generally applicable from the next financial year.

NRI status

Q 1 I am working in a foreign registered ship that operates from Bombay. We join the ship at Bombay and it sails out and comes back after a month. Before sailing, the crew is stamped out on the passport by the immigration and after a month the immigration stamps us in again. Our salary comes in dollars from our Singapore office and goes directly in our NRE account in India. Is this tenure counted as time for tax-free benefits?

2 As you have mentioned that 182 days time is important for NRI status, are the dates that are stamped on the passport when one leaves India and arrives back in India counted as time spent abroad or time still in India? — P Gill

A In an earlier column, it was mentioned that since as per one of the sections of the Income Tax Act states that money received in India is taxable in India, it would be best if the point of first receipt of the funds could be abroad and then the same may be remitted to India. However, if this is not possible for any reason, then you can claim the funds as tax-free since your employment has been exercised as an NRI. Regarding your other query, both dates of leaving India and arriving in India are counted as days spent in India regardless of the exact time that you leave or enter.

The authors may be contacted at wonderlandconsultants@yahoo.com

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