|Sunday, May 21, 2000,
Government to amend IRDA Bill
disinvesting profitable PSUs
ModiCorp clears expansion plan
NPAs of banks in Punjab lowest
SBP Tatkal Rin Yojna
Seminar on NBFCs
US immigration facility in city
NetVersity.com to open new
Government to amend IRDA Bill
NEW DELHI, May 20 The government will bring about certain amendments this year to Insurance Regulatory Development Bill suitable to the changing needs of the countrys economy, said Mr B.K. Chaturvedi, Special Secretary in the Ministry of Finance.
However, it is yet to be decided whether these amendments will be made to the Insurance Act, 1938, the IRDA Bill, other relevant acts or a separate IT-Insurance Bill will be formulated, he told reporters after addressing a seminar on IT for Insurance organised by CII here.
Mr Chaturvedi said the Law Ministry will be consulted in this regard.
He said one of the major lacunae of the Insurance Act is that it does not have any provision for credit cards. The other issue relates to the stamp duty.
In a scenario when one can have insurance policy through the net, the Stamp Duty Act becomes redundant, he said, adding that all these clarifications will be made through amendments this year.
The Special Secretary Finance indicated that the first private insurance player would be able to commence operations by December end.
We want to bring about amendments and clarify the stand in all areas where there is an iota of doubt. By this we want to minimise the disputes landing in court, which are a cause of great worry to consumers and the insurance companies, he said.
Mr Chaturvedi said LIC and GIC have appointed consultants to study the insurance market in the changing scenario.
Earlier, addressing the seminar, the IRDA Chairman, Mr N. Rangachary, observed that insurance companies does not have information on their solvency position as of even March 31, 1999. This has to change in the changing circumstances, he said.
Mr A. Ramamurthy, Executive Director of LIC highlighting the penetration of Information Technology in company, said 2043 branches out of 2048 branches of LIC have been computerised.
Stating that the companys different policies have been successful in different regions, Mr Ramamurthy indicated that LIC could announce new policies which would offer the customers a new and varied choice.
The Chief General Manager of SBI, Mr R. Krishnamurthy, said banks can play a crucial role not only by entering the market as another insurance company, but also acting as agents or brokers for different companies.
disinvesting profitable PSUs
NEW DELHI, May 20 The governments disinvestment policy is primarily mooted at the short term measure of containing mounting fiscal deficit. However, in the long term the government is suffering a net loss, said a study.
The government is proposing to handover profit making PSUs to global and domestic competitors....future profits are being foregone to cover yearly budget deficit, said a study done by Working Group of Disinvestment Issues.
The study has been done by Dr Arun Ghosh, former Member Planning Commission, Prof C.P. Chandrashekhar of Jawaharlal Nehru University, Mr Arun Aggarwal, financial consultant, Mr Prashant Bhushan, Supreme Court advocate, and Mr Prabir Purkayastha, Engineering consultant.
The study said the interest saved on public sector undertakings from 1992-97 would be Rs 946.43 crore as against the return forgone (computed on the net profit after tax, from public enterprises survey 1996-97) is Rs 1783.91 crore. Thus, the government is suffering a net loss of about 50 per cent by selling off profitable public sector undertaking.
The budgetary support provided to PSUs from 1990-91 to 1996-97 was Rs 27,546 crore, dividend earnings and internal resources ploughed back into the PSUs were Rs 87,876 crore, the report said.
The governments move to transfer its shareholding in the National Hydroelectric Power Corporation, which is reportedly surviving on a budgetary support of Rs 450 crore every financial year, to National Thermal Power Corporation, for a princely sum of Rs 4500 crore, would adversely affect the fiscal situation, the report said.
The Union Power Minister, Mr P Kumaramangalam, had stated that NTPC would find the money by government off loading 51 per cent stake to the private sector. The strategic sale was expected to yield the resources to pay the government Rs 2500 crore this financial year and Rs 2000 crore in the next financial year.
The authors of the report argued that what was being privatised at the end of this process was not the NHPC but a segment of the NTPC. It that be the case, the government could have chosen to offload a part of its shareholding in the latter corporation to directly obtain the Rs 4500 crore, so that a truncated NTPC is not left burdened with NHPCs less profitable assets.
The Disinvestment Commission had proposed that the proceeds of the PSUs disinvestment should be used to restore the health of the loss making PSUs, so that they could also then be profitably disposed off.
However, the government by its short-sighted measure, the report said was seeking to achieve two objectives at one go.
First to treat NTPC as a big ticket item which could immediately yield large revenues from equity sales to solve the problems of this years burgeoning fiscal deficit.
Second is to transfer
the money to the government through the devious route of
NHPC acquisition so that the return on the assets
remaining with the NTPC could cover the deficit in the
NHPCs accounts and reduce the governments
future budgetary burden.
CHANDIGARH, May 20 ModiCorp today announced a major expansion initiative to enhance its presence in the cellular market in India.
Merger and acquisition of available cellular operations in India would be at the helm of ModiCorps strategy for expansion. A unique highlight of this strategy would be flexibility and customisation on ownership pattern to suit the interests of the merging operators.
Dr Abid Hussain, Director, ModiCorp Board said to make consolidation meaningful for the merging businesses, all investors and promoters of the consolidated entity will enjoy equal rights and privileges.
The crystallisation of the strategy for expansion of cellular business comes close on heels of ModiCorp inking the deal with Telstra to buy out the latters entire equity in Modi-Telstra joint venture, the cellular service provider for Calcutta.
Dr B.K. Modi, Chairman and CEO, ModiCorp said, Acquisition of Telstras equity is in line with our strategy to become a formidable player in the Indian cellular market. Today, Spice is a high performing and successful company, and it makes business sense to capitalise on our human and technical resources and brand equity, nurtured over years.
Spice Karnataka and Punjab are today amongst the highest valued non-metro networks in the country. The combined subscriber base of Spice is 2.5 lakh. With 14 out of 15 districts networked, Spice Punjab has achieved 90 per cent coverage in the state while Spice Karnataka cover 85 per cent of the state districts.
ModiCorp Governance has
been established against global benchmark processes, and
the group derives its direction from a high profile Board
which has eminent professionals. These include external
members like: Dr Raja Chelliah, renowned economist; Dr
Abid Hussain, former Member Planning Commission; Mr K.L.
Chugh, former Chairman ITC; Mr Vikram Talwar, the former
CEO of Ernsst & Young India.
SHIMLA, May 20 The Northern States are being increasingly marginalised in industrialisation and overall development, particularly in the wake of economic liberalisation and reforms.
This view was shared by a majority or industrialists and Business Editors who discussed the issue at a seminar organised by the CII. The officers, who presented the cases of their respective States, disagreed that the pace of industrial growth had slowed down but the industrialists and the editors thought otherwise.
Mr A.V. Singh, Industrial Development Commissioner of Uttar Pradesh, reeled out a maze of statistics to prove that investment was increasing and with the process reforms underway the State was on the right course. The World Bank had given an assistance of Rs 1,200 crore for expediting the restructuring and reforms.
Mr K.R. Lakhanpal, Principal Secretary, Finance, Punjab, also tried to project a rosy picture of the State. The non performing assets of banks in Punjab were the lowest at 2 per cent which clearly indicated that the industry was doing well in the State. However, the general view was that the State was losing its pre-eminent position with the green revolution reaching a plateau stage and new knowledge based industries overtaking the old ones.
Mr Deepak Sharma, Commissioner-cum-Secretary, Finance, Himachal Pradesh presented a grim fiscal scenario of the overstaffed state which was raising loans to pay salaries. The State had no option but to go for large-scale privatisation, raise additional resources through users charges and taxes and curtail non-merit subsidies.
The Business Editors on
the panel included Mr Siddhartha, a former consultant
Editor of The Pioneer, Mr Subir Roy, Assistant Editor,
Business Standard, Mr Amit Goyal, Business Editor, The
Pineer, Mr Subrangshu Roy, Coordinating Editor, The
Economic Times, Mr Rajesh, Executive Editor, Amar Ujala
and Madhvendra Sinha, Business Editor, Nav Bharat
CHANDIGARH, May 20 (TNS)
Mr A.K. Batra, Managing Director, State Bank of
Patiala, today launched Tatkal Rin Yojna from
the personal segment branch, Leela Bhawan, here. The
occasion was utilised to educate customers for availing
facilities of house loan, car loan, gyan jyoti loan for
higher education, computer loan etc. Loan cheques were
also distributed to the customers. Mr Batra said that
this branch has already been approved for providing Demat
services, by the Stock Holding Corporation of India Ltd.
The bank has upgraded its technology by computerising 33
branches during the year with new software.
CHANDIGARH, May 20 Mr V.S.N. Murthy, Chief General Manager (Non-banking Supervision), RBI, Mumbai, inaugurated a seminar on Non-Banking Financial Companies organised by Punjab and Haryana Finance Companies Association (PHFCA).
Mr Murthy said that in view of the Supreme Court upholding validity of Section 45(S) of RBI Act 1934, the unincorporated bodies were prohibited from accepting public deposits. He said there is need for enactment of State legislation for giving wider definition to term deposit so as to bring all the schemes of deposits acceptance within the scope of deposit. He pointed out that the State Governments functionaries assured him to strengthen economic offences wing for enforcing the provisions of RBI Act.
Syal, General Secretary, PHFCA slated the following
demands to RBI: the firms dealing in hire purchase and
leasing should be given relaxation in mobilising
deposits; chance and time to convert into corporate
sector; and three years time to repay the existing
CHANDIGARH, May 20 Canam Consultants, a company specialising in Canadian immigration and international education has introduced American immigration services facility in Chandigarh in association with an internationally known US immigration law firm of Mr Hardeep Singh Rai which has offices in San Francisco, New York and San Jose. This will facilitate the persons to have information on Intra company transfers and businesses expansion in USA.
Mr Hardeep Singh Rai, a US immigration attorney said that America is now offering global opportunities to businessmen, investors, professionals and employees to migrate and expand their business ventures in America.
Mr Rai is a member of the state bar of California and New York and has already processed hundreds of H-1, L-1 successfuly visa cases from all over the world.
Grewal, Sr Vice President, Canam, a lot of applications
get rejected due to lack of competent legal analysis and
preparations. Canam guides the aspirants on following the
procedures precisely with professional legal assistance
for all type of visa requirements.
to open new vistas
NEW DELHI, May 20 School and college students can uncover their intelligence quotient/emotional quotient, explore several career options along with computers or pursue a free IT course at www.NetVersity.com, the virtual university which opens its doors to visitor on Monday.
Our goal is to set up an NIIT in every home with an Internet connection. The portal will be open 365 days of the year to fulfil the life-long IT learning needs of the users, said NIIT Online Learning Chairman, Mr Rajendra Pawar, in a release.
NetVersity will offer a
platform to enrich their knowledge by using NIITs
state-of-the-art multimedia courses and keep abreast with
the emerging technologies. At present around dozen
courses are available to learners free of cost.
wonderland of investment
Q: Education allowance is tax free for Rs. 600 for one child, and subject to maximum Rs 1200 for two children. Is it necessary to know whether the child is going to school. If the child is between two and three years old, can he/she also claim education allowance?
A: As per rule 2BB children education allowance is admissible @ Rs 50 per month per per child up to the maximum of two children. There are no conditions prescribed for the admissibility of the above allowance. Under the circumstances the benefit of the above rule, in my opinion, be allowed irrespective of the age of the child.
Q: I have made long term capital gain on sale of certain shares. I have investments in certain other shares, which, is sold will incur capital losses. I want to execute sale of those shares and sale the same to my sons wife. (off market transaction). Whether any specific agreement is to be entered into with my sons wife to make the transaction valid legally.
A: As long as a transaction is at the market rate and you can prove this the satisfaction of the Department, you would not face any problems. However, it is safer to go through the proper channels.
Q: I have given my flat at Indore on 2 years lease and entered into agreement at monthly rent of Rs. 4300. The rent is received by me by demand draft and society charges of Rs. 500 are paid by me. Can I deduct society charge from the income from housing property? Last year, while filing returns, my CA told me that it is not deductible and if I claim this deduction and if IT officer notices it he may impose heavy penalty on the payable tax amount.
A: The annual value of a self-occupied property is to be taken as nil. Where the annual value is taken an nil, all the deductions, inclusive of society maintenance charges are not allowed. However, interest on capital borrowed for purchase of the house is deductible upon the ceiling of Rs. 30,000 every year. This ceiling is raised to Rs. 75,000 on capital borrowed after 1.4.99 and the acquisition or construction of the property is completed before 1.4.2001 (raised to 1.4.2003 by the recent Budget).
I am of the opinion that yours is not a self-occupied property and therefore you should be in a position to claim all the deductions, including the deduction of interest, without any ceiling.
Q: My wife and I are NRIs and each one of us own an NRE SB account, with the other spouse as a joint holder. There are several NRE and FCNR FDs of similar nature. My wife is planning to return to India for good, while I shall remain here, may be for a couple of years or more. What are the precautions we are required to take for avoiding any hassles?
A: An NRI is not allowed to hold NRE or FCNR account jointly with a resident. Consequently, you will have to delete her name from all your accounts. You are free to appoint her as a nominee. You can also give her a letter of authority for operating your account. Regarding her accounts, she can run them to their normal maturity dates but thereafter she cannot renew these and will have to close all of them. The interest earned on these accounts after her return will become chargeable to tax.
Q: I. How to get maximum tax benefits out of Housing loan instalments paid and interest paid on such loans?
2. Can I take a loan from my bank against my own deposits/other securities for the purpose of acquiring house and avail the above mentioned tax benefits?
Jaypatel 100 @ yahoo. com
A: 1. If the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the interest payable is deductible. The word used is payable and not paid. Therefore, if the finance company collects the loan first and interest later, the borrower will be able to claim the rebate u/s 88 on a larger amount and also claim deduction of interest u/s24 on accrual basis.
Payments towards cost of construction or acquisition of a residential house property, qualify for rebate u/s 88 with a ceiling of Rs. 10,000 (raised to Rs 20,000 by FA00) provided such payments are instalments or part payment of loans from approved sources.
2. As long as the purpose of the loan is for acquisition of a housing property, you are eligible to claim related deduction and rebate. It does not matter whether the security is your own bank deposit.
Q: I submit the income tax return of my daughter who is an NRI from NRO account. Her income in India is from her flat at Bandra. The deposit she gets is deposited in the FDR with the bank. In your reply to a query you quoted circular No. 18 in AD (MA Series) dt. 19 August, 1994 which permits full repatriation of interest earned on Non-Resident non-repatriable rupee accounts in a phased manner. That the entire income earned during F.Y. 1996-97 and onwards are repatriable.
Mr B.R. Kamad, Mumbai.
A: I cannot make out clearly what you desire to ask. Nonetheless....
Circular ADMA 18 states that any income earned on Indian assets of an NRI in India can now be repatriated only after appropriate tax has been paid thereon. It does not make specific mention of income from immovable property and therefore, the repatriability there is not free from doubt.
As far as your daughter
is concerned, she can certainly repatriate the interest
of NRO FDRs with banks. I am afraid, she has not invested
her funds properly. I request you to read my reply to Mr
Chatterji more carefully and advise her accordingly.
by Praful R. Desai
Q: Whether order of eviction of the tenant, on the ground of demolition of the building, valid, if there is no direction in the order regarding reconstructing the building?
Ans: In Kondeti Suryanarayana v Pinnathi Seshagiri Rao (2000 (1) RCJ 180 (S.C.), the S.C. expressed the view thus:
A perusal of S.12(2) and 1(b) of the A.P. Building Rent Control Act, show that where a building is reasonably and bona fide required by the landlord for the immediate purpose of demolishing it and such demolition is to be made for the purpose of erecting a new building on the said old building, the tenant shall have right of re-entry in the premises on its reconstruction.
The language of S.12(1) (b) is plain and simple and does not suffer from any ambiguity. Therefore, when a landlord requires a building to be demolished, necessarily he has to reconstruct the building on the same site of the building and on reconstruction of new building, the tenant had a right to re-enter in the said premises.
The respondent urged that the word and occurring in sub-section 1(b) is disjunctive and it has to be read as or meaning thereby that after demolition of the building, the landlord is not required to reconstruct the building.
If such interpretation is given, then, according to the S.C., it would encourage the unscrupulous landlord to get eviction of the tenant on the ground of demolition of the building which would be repugnant to the object of the Act which aims to prevent unreasonable eviction of the tenant from the premises.
The S C was therefore, of the opinion that where the landlord requires demolition of the building, he has necessarily to reconstruct the same with a right to the tenant to re-enter in the premises.
Where the Rent
Controller allowed the application and accorded
permission to the landlord to demolish the building
without any direction to reconstruct the building as
required U/s. 12(1) (b), the S C quashed the order. In
that way, it allowed the appeal.
by Pushpa Girimaji
Make large payments only by cheque
LAST week, I discussed the importance of demanding and collecting cash receipts for payments made. This week, I would like to write about one of the earliest cases filed before the consumer courts, which highlights the kind of complications that can arise in what one believes to be a simple transaction. In this case (Electronics and Electronics vs Shri Net Ram and others, decided in 1990), the dispute centered around whether the dealer in electronic goods had collected the money and failed to deliver the goods as alleged by the consumer in his complaint. According to the complainant filed by Mr Net Ram before the Delhi District Forum, he had asked Electronics and Electronics for a quotation for the purchase of a colour television, a refrigerator and a stereo system and on the basis of the price quoted, gave him a draft for Rs 23,300, drawn on State Bank of India. Even though the draft was encashed by the dealer, he failed to deliver the goods.
The dealer, in his reply to this allegation, said he had received a draft drawn on SBI for Rs 23,300 and even delivered the goods to the person who had presented it. But it was not Mr Net Ram. The SBI, in turn said it had delivered a draft, dated May 22, 1989, to Mr Net Ram for Rs 23,300, favouring Electronics and Electronics. The draft had been honoured by the bank on May 25 and the amount had been paid to Electronics and Electronics through their banker.
After hearing all the parties, the District Forum directed the dealer to pay the complainant Rs 23,300 along with interest at the rate of 16.5 per cent annum. The dealer filed an appeal before the State Commission, which considered whether the draft was handed over to the dealer by Mr Net Ram said if so, whether the goods were supplied to him. The Commission said as per the statement of the bank, draft number 920856 dated May 22, 1989, for Rs 23,000, favouring Electronics and Electronics was delivered to Mr Net Ram. Thus it was clear that the draft came into the custody of Mr Net Ram. The dealer in turn had admitted to receiving the draft. However, his contention was that it was brought by a Mr Birbal, to whom he delivered the goods and even got his acknowledgement to the effect. However, the dealer could not produce the delivery note reportedly signed by Mr Birbal nor any other document to substantiate his claim that the goods were delivered to Birbal.
Pointed out the State Commission: If the dealer had delivered the goods to Birbal, then he must have prepared the cash memo, obtained a receipt from the person to whom the delivery of the goods was given and made entries in his books. But he had failed to produce any of these. In the absence of any proof of such delivery to Birbal, the only conclusion that could be drawn was that the draft was handed over to the dealer by Mr Net Ram and the goods were not delivered to him. The Commission also pointed out that Mr Net Ram had not given any letter authorising any Birbal to collect the items from the dealer. Even if it were assumed that the items were delivered to Birbal, that cannot be taken to be a delivery to Mr Net Ram. It therefore upheld the decision of the District Forum.
Admittedly this case leaves quite a few questions unanswered, but it highlights the importance of evidence in any dispute. In this case, if Mr Net Ram had paid by cash and not taken a receipt for it, then he would never have been able to prove that he had paid for the goods which were not delivered to him.
In fact this brings to mind another case decided by the National Commission in 1993 (Sunder Kashyap vs N. Palta), wherein the disputed question was whether the complainant had paid a property dealer, Rs 90,000 as earnest money towards the purchase of a flat in Delhi. While the consumer claimed that he had paid the money by cash, the dealer said he had never received the money. The consumer produced a stamped receipt, signed by the dealer. Unfortunately, there was no witness and the dealer said it was not his signature at all. Eventually, the case was decided in favour of the consumer, but if only the amount had been paid by cheque, the consumer would not have had to fight a long legal battle.
So, whenever you are
paying large amounts, avoid cash payment. Pay through
credit card or issue an account payee cheque. And when
paying by cheque, it is always better to write your name
and address and the purpose for which the cheque is being
issued, on the back of the cheque.
by K.R. Wadhwaney
Experts differ on government stake in AI
THE civil aviation policy has been formulated after prolonged deliberations by experts, bureaucrats and politicians. But its finalisation and implementation will take quite sometime because it has got to be approved by the Cabinet.The meeting was called the other day to deliberate and scrutinise vital clauses that have been incorporated in the policy. But before the members could discuss the all-important clauses, the meeting had to be postponed as Minister for Civil Aviation Sharad Yadav was summoned for Parliament.
The experts on the committee feel that there was no justification for the postponement of the meeting which could have discussed the clauses and the recommendations sent to the Minister for his approval.
One of the important clauses in draft policy is that no more than 25 per cent equity should be allowed to foreign firms in Air India after disinvestment. Non-resident Indians will have 1 per cent more share than foreign firms. There is a difference of opinion as to what should be the stake of the Government. The Minister holds the view that it should not be less than 51 per cent, including the share of the NRIs.
As the policy comes into being, there will be two more bodies styled as the Airport Approval Commission and the Airport Regulatory Board. The commission is likely to be autonomous, while the Board, an appellate body will look into the grievances related to tariff fixation, traffic movement and allotment of space for functioning at airports.
Assocham Chairman Kapil Bhatia took advantage in pointing out to the civil authorities that there was acute shortage of trolleys at several airports and functioning of conveyor belt was erratic resulting in needless delay. The passengers get irritated and they complain to the authorities but no action is taken. He also suggested that all-out efforts should be made to improve infrastructure without any delay at airports. Mr Bhatia also suggested that handicapped passengers should be provided facilities so that their movement was not unduly restricted while being inside the terminal building.
Flights suspended: British Airways will operate from October 30, direct daily service providing a 25 per cent increase in capacity. As a result the five-a-week service from Delhi to Dhaka and the twice-weekly service to Calcutta will terminate at Delhi.
The measures undertaken by the airline will help boost traffic to India from the United Kingdom. There is, however, an agitation in Calcutta for the airlines decision to suspend flights. We regret it but its a carefully calculated decision taken on account of commercial considerations, said an official.
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