Sunday, October 7, 2001, Chandigarh, India






THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Tax incentives on savings may go
New Delhi, October 6
Saving taxes could become more expensive for the salaried class from next year if the government implements the report of a Committee on Small Savings which has recommended withdrawal of tax incentives on all small savings schemes with a six year or lower maturity period from the beginning of the next financial year.

Discussion on Punjab development held
Chandigarh, October 6
What should be the future direction of Industrial sector in Punjab? Whether the State Government should play active role or just act as facilitator? What are the handicaps in Industrial growth.? 

Time is ripe to save industry
P
UNJAB is the home of small scale industry. This sector is the most vulnerable of all. Exports are its mainstay. Ongoing uncertainties have rendered exporters and their suppliers helpless.

Film industry cries but banks ignore
New Delhi, October 6
Meri Awaaz Suno— the film industry cries. But you are an Ajnabee— say institutional credit agencies. Institutional financers, despite the guidelines of the RBI to extend credit to the film industry, continue to ignore the film sector even as the producers scream — Main Jhuth Nahin Bolta.


 

EARLIER STORIES
  Markfed to construct four bus stands
Chandigarh, October 6
The Punjab Markfed has been assigned the construction of four bus stands in the state on behalf of the Department of Transport, Punjab, at an estimated cost of Rs 17 crore in the first phase.

TAX & YOU

R.N. Lakhotia
Infrastructure scheme

Q:
I am an employee of the Punjab State Electricity Board, Patiala and working as P.A. I want clarification in regard to the following:-

  • Shares as gift

  • TDS

SALES TAX ISSUES

A.K. Sachdeva
Q:
We are given to understand that the Haryana Government has issued a notification taking away the benefit of concessional rate of tax on the sales of Sunflower seed oil, vegetable ghee and pulses under the provisions of the Central Sales Tax Act, 1956. Kindly advise in detail in this regard with precise date of coming into force of the notification.

Praful R. Desai
Horse riding a ‘shop’

Q:
Establishment engaged in the business of horse riding, whether can be said to be a ‘shop’

AVIATION NOTES

Need to tighten rules for aviation
T
he Punjab Governor Surender Nath some years ago and now Madhav Rao Scindia are among many precious lives that have been lost in air crashes. This is because general aviation, operated by big private companies and affluent industrialists, has been far murkier than civil aviation.


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Tax incentives on savings may go
Tribune News Service

New Delhi, October 6
Saving taxes could become more expensive for the salaried class from next year if the government implements the report of a Committee on Small Savings which has recommended withdrawal of tax incentives on all small savings schemes with a six year or lower maturity period from the beginning of the next financial year.

This would in effect mean that the tax incentives on schemes like Indira Gandhi Vikas Patra, Kisan Vikas Patra, National Savings Certificate and other such schemes would have to go. If the recommendations are implemented then the Public Provident Fund (PPF), which has a longer maturity period, would be the only small savings instrument where tax incentive would be eligible.

The recommendations have been made by the Committee on Small Savings headed by Reserve Bank Deputy Governor, Mr Y.V. Reddy. The Committee in its report to the Finance Ministry said the rate of interest on small savings schemes should be linked to the interest rates on government securities. This would mean that the ad hoc fixing of interest rates on small savings instruments would go and become market determined.

However, to provide for some incentive to depositors, the report said interest rates on their savings can be fixed at 50 basis points above the average yield of government securities of the like maturity period.

In other words if the average yield on a 10-year government paper is 9 per cent for this fiscal, the interest rate on a small savings scheme with a similar tenure opened on April 1, 2002 cannot be more than 9.5 per cent.

Another major recommendation made by the Committee is that the entire small savings collections should be transferred to the state governments.

Presently only 80 per cent of the small savings collection is transferred to the states. With the entire collection being transferred, states would have access to an additional Rs 9000 crore in loans.

This would be beneficial to both the States and the Centre. While the states would have access to cheap credit, the Centre would not have the responsibility of retaining 20 per cent of the small savings for which it pays higher interest than what it pays for money borrowed at treasury rates from the market.

The report is only a recommendation and it can be implemented only if the Centre accepts it. The government is expected to hold wide consultations with the States to evolve a consensus on the report before implementing it.

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Discussion on Punjab development held
Sarbjit Dhaliwal
Tribune News Service

Chandigarh, October 6
What should be the future direction of Industrial sector in Punjab? Whether the State Government should play active role or just act as facilitator? What are the handicaps in Industrial growth.? These were some of the question which came up for discussion at an interaction organised by the Centre for Research in Rural and Industrial Development (CRRID) here today.

The objective of the interaction was to prepare a State Development Report on Punjab by the CRRID for the Planning Commission of India.

Initiating the discussion, Mr T.K.A. Nair, Chairman of the Public Enterprises Selection Board of India, said that a realistic view of the entire issue should be the central part of the report. What could be actually achieved, that should be discussed and included in the report. What was practically impossible, should be avoided.

There were by and large consensus in the country that the government role should be very limited in the entire exercise. It should act as medium of promoter of the industry. Mr Nair said that on the basis of the discussion and re-discussion, final report would be prepared.

Mr Joginder Kumar, speaking on behalf of the Industry, said that it was undisputable fact the for the moment the WTO agreement had created a scare among the small scale industrial sector in the country especially in Punjab which had a large base of such industry. He said that the Industrial sector in the state required a financial and infrastructural help in various ways to attain the double digit growth which was now down to 2.7 per cent.

Mr A.R. Talwar, Managing Director, Punjab Agro Industrial Corporation, said that the State Government was implementing various schemes like food parks, cool chain to promote agro based industries in the state. He said that the Corporation was trying hard to make farmers diversify in new agriculture sectors like floriculture, horticulture, processing of various food grains etc.

Mr Darbara Singh Guru, Director Industries, Punjab, said that he was of the view that financial assistance on the part of the government to the small scale industrial sector should continue. The government would play its role for technological upgradation in this sector and the focus was being shifted to promote “cleaner industry”.

He said that the Government had planned to do away all sort of local taxes to promote industry having export potential.

Presenting the State Government’s view point, Mr Ramesh Inder Singh, Secretary Industries, Punjab said that the industry in state had a very low capital basic and also low technological level. There was a vast scope to develop agro based industry but for doing lot was required to do. There was need to improve the quality of raw material to be used in such industry.

Mr S.K. Tuteja, Development Commissioner, Small Scale Industries, Government of India, said that the Union Government had put its focus to promote industry at rural level and huge investment in this area had been cleared. He said that the role of Government financial institutions to finance the industry had diminished because banks had started providing finances on cheaper terms. The Government would provide 12 per cent capital subsidy on technological upgradation to industries, he added.

Mr Rashpal Malhotra, Director of the CRRID, said that he expected a lot of investment in agro-industries in Punjab from within the country and abroad in days to come. He said that the recession in the mainstream industrial sector would push the industrialists to invest in agro-based industries. There should be stress on the dissemination of steps being taken by the government various level. Sharing of the information with people of the state was a must, he added. He offered the services of CRRID for this purpose.

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Time is ripe to save industry
P.D.Sharma

PUNJAB is the home of small scale industry. This sector is the most vulnerable of all. Exports are its mainstay. Ongoing uncertainties have rendered exporters and their suppliers helpless.

The bicycle industry is the hub of industrial economy of Punjab. It is sustaining mainly on exports. With prospects of exports remaining slow for sometime, manufacturers have started flooding the indigenous market at rates even below the cost price. This undercutting of rates will spell doom for the established brands too.

Plight of the hosiery industry is no better. Lack-luster performance of bicycle parts speaks the plight of this industry. Many Industrialists abstained from going to exhibitions to present their products. Even travel tickets were got cancelled. Empty stalls tell the extent of gloom. These exhibitions were held in Clone and Milan.

Many of Punjab’s industrial units have large stake in exports to the USA. Autoparts are formidable component of Punjab’s exports to the USA. Handtools from Punjab also have wide-spread market in the USA. The crux is that all segments of the industry are suffering. It is difficult to find alternative markets to the USA. Recession is bitting every country. The RBI has done well by reducing interests for exporters.

At this juncture banks have to play a major role in saving the industry. In Punjab credit deposit ratio is gradually coming down. Even with any ratio share off small scale units is abysmally lower. Apart from the quantum of credit banks are charging exorbitant rates of interests from SSI units.

The other side of the coin is still gloomier. Presence of private banks tends to harm the industrial economy. These banks are doing a roaring business by extending easy loans for cars and other consumable goods without any deeper appraisal of borrower. Private banks hardly extend any loan for industrial activity. Their presence is also responsible for vitiating law and order of industrial towns like Ludhiana and others.

The Punjab Government seems to be in deep slumber. Is it not the responsibility of the Chief Minister to intervene and have things sorted out? It is right time for the Chief Minister to exert his pressure on the Finance Minister to save the industry. At its level state has also many things to do. Installments of repayments of interest free loans can be postponed by at least a year.

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Film industry cries but banks ignore
Tribune News Service

New Delhi, October 6
Meri Awaaz Suno— the film industry cries. But you are an Ajnabee— say institutional credit agencies.

Institutional financers, despite the guidelines of the RBI to extend credit to the film industry, continue to ignore the film sector even as the producers scream — Main Jhuth Nahin Bolta.

Banking and credit experts here say the lack of a tangible collateral because of the very nature of film production increases the risk factors in the lending for film production.

The RBI had issued guidelines in May to commercial banks regarding financing of film production.

The guidelines suggest that banks may provide finance to film producers ( corporate as well as non-corporate entities) with good track record in the relative field.

“Unlike in Hollywood, credit rating agencies in India are yet to develop models for rating the creditworthiness of film producers. Therefore, judging the track record of any particular producer becomes difficult for any bank in the absence of a standard model”, a Delhi-based banker said.

As of now, the Board of nine public sector banks and financial institutions, have approved the policy to extend credit for film production.

Responding to a question in Parliament during the last session, Minister of State for Finance Balasaheb Vikhe Patil said mos of the banks are in the process of adopting the guidelines for implementation after due approval of their respective Boards.

Financing experts said the RBI guidelines have not specifically defined the kind of collateral that the banks may seek from film producers.

"The guidelines say collaterals, if necessary, may be obtained at the discretion of banks. It is not made clear what kind of collateral banks should ask for”, a financing expert.

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Markfed to construct four bus stands
Tribune News service

Chandigarh, October 6
The Punjab Markfed has been assigned the construction of four bus stands in the state on behalf of the Department of Transport, Punjab, at an estimated cost of Rs 17 crore in the first phase.

The construction of bus stand at Zira has already been completed within the deadline at an estimated cost of Rs 2.23 crore. It was inaugurated by the Chief Minister on Wednesday.

Other works of construction of bus stands assigned to Markfed at Ferozepur, Moga and Muktsar will also be completed by November 30. The work of construction of modern bus stand at Amritsar at an estimated cost of Rs 12 crore, which is one of the prestigious projects, has also been assigned to Markfed. Construction is likely to start in the first week of November. The architectural and structural planning for the construction of bus stand has been completed.

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TAX & YOU

R.N. Lakhotia

Infrastructure scheme

Q: I am an employee of the Punjab State Electricity Board, Patiala and working as P.A. I want clarification in regard to the following:-

I wish to invest total amount of Rs. 80,000 in the Infrastructure Scheme i.e. ICICI Bonds instead of savings under Section 88 i.e. GPF, PPF, NSC, etc.

Please confirm whether this total of Rs. 80,000 in ICICI Bonds is liable for total rebate of Rs 16,000.

— G.S. Sethi

Ans: On investment of Rs.80,000 under ICICI Bond instead of other investment proposals the tax rebate u/s 88 would be permissible on entire amount of Rs 80,000 @ 20 per cent which comes to Rs 16,000.

Shares as gift

Q: I got some shares as gift from a friend on my eighteenth birth day. I have sold some of these shares. What will be my tax liability? How I can calculate my income for the year from these shares?

— Suman Sharma, Chandigarh

Ans: There is no liability to any tax when you receive shares on gift. Only when you sell the shares there would be arising a liability with regard to capital gain in respect of the shares received by you. For calculating the long-term/short-term capital gain you have to deduct from the sale price the cost of acquisition of the shares. As you have received the shares on gift the cost of the previous owner will be taken as your cost.

Similarly, if the shares are held for more than 12 months, the benefit of Cost Inflation Index would also be available to you. The calculation of capital gains would be done in the same manner as if the person who gifted to you had made the capital gain on selling such shares.

TDS

Q: I am a bank employee dealing in TDS on Term Deposit. Please guide me TDS on term deposit.

Is it compulsory for the bank to deduct tax on term deposit if the amount of interest is more than 50000 in individual account during the financial year in spite of the depositor submit Form 15-H.

Is it compulsory for the bank to deduct TDS if overdue interest is credited during the financial years more than Rs.50000 in spite of the depositor submit Form 15-H.

If the Bank deducted TDS for interest provided during half-year Sept. closing later on the depositor submit Form 15-H.

What is the procedure of depositing TDS, if the TDS is omitted. Can we deposit in next year.

— V.K. Gupta, Gobind Nagar

Ans: If the depositor submits Form No. 15H, then you should not deduct tax at source even when the gross amount of interest is more than Rs 50,000. For example, a senior citizen may have interest income from Bank FDR of Rs 1 lakh but he is not liable to pay income-tax because he is a senior citizen and thus the tax payable is nil due to tax rebate and he submits Form No. 15H. Then you need no deduct tax at source.

If the bank has already deducted tax at source for the half year and later on the said Form No. 15H is submitted to the Bank by the depositor, then the Bank should ignore it as the tax has been deposited. 

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SALES TAX ISSUES

A.K. Sachdeva

Q: We are given to understand that the Haryana Government has issued a notification taking away the benefit of concessional rate of tax on the sales of Sunflower seed oil, vegetable ghee and pulses under the provisions of the Central Sales Tax Act, 1956. Kindly advise in detail in this regard with precise date of coming into force of the notification.

— S.P. Aurora, Sirsa

Ans: It was on March 31, 1995 that the State Government had provided for 1 per cent Central Sales Tax on inter-state sales of sunflower seed oil vide notification No. S.O.34/C.A.74/56/S.8/95. Similarly, rate of tax prescribed for inter-State sales of vegetable ghee (hydrogenated vegetable oil) in the State of Haryana vide notification No. S.O.70/C.A.74/56/S.8/92 dated May 08, 1992 was 2 per cent subject to furnishing of form ‘C’. Another notification No. S.O.80/C.A.74/56/S.8/92 dated June 5, 1992 issued by the State Government had the effect of levying 2 per cent CST on the inter-State sales of pulses .Now the State Government has come out with a notification No. S.O.122/C.A.74/1956/S.8/2001 dated August 21, 2001 repealing, inter alia, the aforesaid notifications which has the effect of withdrawing the benefit of concessional rate of tax, as far as inter-State Sales of pulses, sunflower seed oil and vegetable ghee (hydrogenated vegetable oil) by registered dealers in the State of Haryana are concerned.

The rate of tax in respect of the transactions involving inter-State sales of the aforesaid goods would therefore be 4 per cent subject to furnishing of form ‘C’ as provided under sub-section (4) of section 8 of the Central Sales Tax Act, 1956. The new notification comes into operation from the date of its publication in the official Gazette which is Aug 21.

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LABOUR LAWS

Praful R. Desai

Horse riding a ‘shop’

Q: Establishment engaged in the business of horse riding, whether can be said to be a ‘shop’.

Ans: This question arose in the case of ‘Bangalore Amateur Riders’ Institute v Regional Director, ESI Corporation (2001-II-LLJ.746) before the Karnataka H.C.

From the evidence adduced before the E.I. Court, it is seen that the appellant is engaged in the business of horse riding. If that is so, the question arises for consideration of the Court is “whether the applicant’s firm is a shop or not”?

The State Govt by virtue of the power conferred on it U/s. 1(5) of the E.S.I. Act, has issued a notification extending the application of the Act even to the shops, road transport establishments, cinema including newspaper establishments employing more than 20 persons w.e.f. 21.7.85.

The word ‘Shop’ is not defined under the Act. The notification also is silent in this regard. If that is so, it is just and necessary to depend upon the meaning given in the dictionary and also the definition of the word ‘shop’ under the provisions of the Karnataka Shops and Commercial Establishments Act, 1961.

From the evidence it is seen, noted the H.C. that the appellants establishment is engaged in the business of horse riding. The number of employees are more than the prescribed number under the E.S.I. Act. Therefore, as per the definition of the word ‘shop’ referred to above it has to be held that the appellant’s establishment is a ‘shop’.

Hence, the H.C. held that the provisions of the E.S.I. Act are applicable to the establishment. Therefore, the H.C. was of the considered view that the order passed by the E.I. Court is justified and it does not call for any interference by this Court.

In the result, the H.C. dismissed the present application.

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AVIATION NOTES

Need to tighten rules for aviation
K.R. Wadhwaney

The Punjab Governor Surender Nath some years ago and now Madhav Rao Scindia are among many precious lives that have been lost in air crashes. This is because general aviation, operated by big private companies and affluent industrialists, has been far murkier than civil aviation.

The pilots in general aviation lack in instruments rating flying, that is, flying without visual reference. The planes are poorly maintained. The checks are not undertaken as politicians and proprietors keep flying for their meetings and rallies.

All BJP bigwigs and Congress leaders, like, Sonia Gandhi, obtain aircraft from these industrialists. Many more accidents may take place unless rules for general aviation are tightened.

When an accident took place near Bangalore some years ago, the then chief of Indian Airlines, P.C. Sen, grounded all A-320 aircraft. The airline suffered huge losses but he thought the lives and maintenance of aircraft were far more important than losses.

Following Scindia’s death in the crash in which seven others also perished, all the pilots and aircraft in general aviation should be grounded.

The latest crash should be probed into by eminent pilots, like, Densor Keeler, Shashi Ramdas, S.S. Panesar instead of officials who wear the tag of ‘IAS’. The official in the Indian Administration Service cannot be made to look ‘be all and end all’. Administration is one thing but controlling an intricate subject, like, aviation, is totally different.

If in the All-India Institute for Medical Sciences (AIIMS) and PGI Hospital, for instance, the chief is an administrator and not a doctor, there will be nothing but chaos and confusion. Why depend upon officials who have nothing to do with aviation?

The saddest chapter in Indian aviation is that committees are formed only after accidents take place. Lakhs of rupees are spent and findings/recommendations are made. But no action whatsoever is taken as bulky files lay buried in the store-rooms of the Shastri Bhavan. Why form committees if the recommendations are not heeded?

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BIZ BRIEFS

LSE elections
Ludhiana, October 6
In a meeting of the board of directors of the Ludhiana Stock Exchange held here today, Mr Jaspal Singh was elected president and Dr Rajiv Kalra, vice president for one year term. The Jaspal group had won three seats in an election held on September 29, for three seats of directors. Mr Rajnish Garg, Mr D.P. Gandhi and Mr Harjit Arora of that group had defeated the candidates of Singhal group first time. TNS

Blow Plast
Chandigarh, October 6
Blow Plast Ergonomics Ltd, Leader in office furniture systems, has launched a new concept in desking-the Alfa Desking System. The Alfa Desking System has been specifically created to promote team working and easy communication in an open office environment. TNS

Bank of Punjab
Chandigarh, October 6
Bank of Punjab, today opened its 75th branch at Khanna in G.T. Road. “Khanna is the largest grain market in Asia and we are confident our network of banking and ebank centers will benefit the farmers, traders and commodity brokers,” said Mr Tejbir Singh, Executive Director of the bank. The branch is equipped with ATM for 24 hours cash withdrawal and deposit facility.
TNS

Ozone Ayurvedics
New Delhi, October 6
Ozone Ayurvedics has launched No Marks a herbal formulation that effectively clears scars and marks of hyperpigmentation. OC

Lifespring
New Delhi, October 6
The Minister for Information and Technology Mr Pramod Mahajan inaugurated the fifth Lifesping store in the capital today. Lifespring is a chain of retail stores specialising in health and beauty products. OC

Birla Sunlife
Mumbai, October 6
Birla Sun Life. Insurance has launched a single premium insurance policy called, BSL Bima Kavach Yojna, for the rural population. Birla Sun Life is a joint venture between the Aditya Birla group and Sun Life Financial. UNI

Bikaner bank
Chandigarh, October 6
State Bank of Bikaner and Jaipur has registered a growth of 16.44 per cent in gross profit during the quarter ended June, 2001, over the previous corresponding quarter, bank’s Managing Director N.K. Puri said here today. SBBJ has its business concentrated in Rajasthan with 660 branches spread across the state. PTI

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