Monday, November 4, 2002, Chandigarh, India

National Capital Region--Delhi



Y O U R  M O N E Y

Online lottery mania grips youth
Kulwinder, 16, a matriculate student, is waiting at the online lottery counter in Phase 5, S.A.S. Nagar for the past two hours. With Rs 20 in his pocket, he is awaiting for the counter attendant to start the machine, so that he could try his luck twice to win the jackpot. 

  • Growing business

  • Tech dividends

  • A part of Divali buy

  • Impact of media

  • Is it a voluntary tax?

Parameters for buying diamonds
he festival season has seen a rapid increase in the number of people wanting to buy diamonds instead of the traditional gold jewellery. 

  • Look for the pyramid

  • Cut

  • Carat

  • Colour

Inflation rises marginally
New Delhi, November 3
A sharp rise in petrol and diesel oil prices led to a marginal 0.06 per cent rise in inflation to 2.89 per cent for the week ended October 19.


  • Form 15H

  • Senior citizen


Deducting TDS from interest void
onsumer courts often award interest by way of compensation, when they direct for example, a housing board to refund the amount deposited by the consumer or an insurer to pay the amount due to the insured. 


Market to stay range-bound
uring the last fortnight, some important announcements were made. The Cabinet approved two Ordinances, one for restructuring the UTI and the other for arming SEBI with teeth to deal with errant companies. The RBI has announced its Credit Policy cutting bank rate, repo rate and CRR by 25 basic points.Top


Online lottery mania grips youth
Manoj Kumar
Tribune News Service

Kulwinder, 16, a matriculate student, is waiting at the online lottery counter in Phase 5, S.A.S. Nagar for the past two hours. With Rs 20 in his pocket, he is awaiting for the counter attendant to start the machine, so that he could try his luck twice to win the jackpot. Lured by the prize amount, that would be shown on TV, he says, he visits the counter every week along with his friends. Though he has already lost hundreds of rupees, but he still hopes that one day he would also become a crorepati like Sachin Tendulkar.

On the eve of Divali, while other children are buying crackers, toys and sweets, the habitual lottery buyers would not hesitate to sacrifice all these worldly pleasures to get a chance of winning large amount though with a remotest chance. Kulwinder admits that he had started playing lottery just for the sake of fun, but now could not stop himself, as it had already become his habit. Instead of watching movies, playing cricket or reading books, he always dreams of winning handsome prize, that would change his destiny for ever.

This is not a story of an imaginary world, but of real world spreading its wings around us. Despite legal ban on the sale of lottery tickets to children below the age of 18, thousands of young students have been caught in the trap of lotteries. One could see long queues of migrant labourers, government officials and even old people, buying lotteries at bus terminals, railway stations and markets in any part of the Punjab or other states.

Growing business

According to a recent report, the total collections from the lotteries have crossed the interest income of the states. About two million tickets, including paper and online are being sold every day. The total business of lottery industry in India, has already crossed Rs 5,000 crore annually and is likely to touch Rs 10,000 crore in the next two years.

Says an official in the Directorate of Punjab Lotteries, the total income from Paper lotteries in the state is likely to cross the target of Rs 100 crore during the current fiscal, against Rs 61.71 crore collected during last year. Despite adverse impact of online lottery, he says, the retailers of the Punjab State Maa Lakshmi Diwali Pooja Bumper-2002 are likely to sell about 10 lakh lottery tickets of Rs 100 each. Its first prize, to be announced on November 6, would be Rs 1.5 crore along with other prizes.

He admits that the state has decided to tap this unexplored market in a big way. After its initial failure, the state would soon call new tenders to start its own online lottery. Haryana government has already advertised for tenders to start online lottery. At present, 93 counters have been set up by the Playwin online lottery, in Punjab, and a case is still pending in the Supreme Court, for expansion. The Playwin officials admit that they have plans to set up 10,000 counters in the country in next two years.

Tech dividends

Defending the introduction of state online lottery, a spokesperson of the Punjab government says, almost all the developed countries in the world are running their online lotteries that provide financial resources for social welfare programmes. Unlike underworld satta, it is a legal mean to earn money and to help state economy.

He claims unlike paper lottery, the online lottery is aimed at middle and upper middle segment. The online counters would be mostly set up in hotels, markets, beauty saloons and other such places, which are frequently visited by the upper classes. The paper lottery is still aimed at the lower segments of the society, especially the migrant labour. But market trends show that difference is fast diluting and online lottery is catching on the fancy of each section of the society.

A part of Divali buy

Strangely, most of the households are buying lottery tickets as part of the Divali purchase. One could witness hundreds of lottery counters in the markets, villages, small and large towns in the region, selling lotteries like sweet and dry fruits. On asked why one should purchase a lottery ticket? Says a head of the temple here,‘‘ In Hindu religion, playing of gambling on Divali is an auspicious act, since religiously we believe that those who do not play gambling on that day would become ass in next birth. And lottery is nice way of playing gambling.’’

Countering this belief, Prof Jitender Mohan, Department of Psychology at Panjab University here, says: ‘‘I consider all those people as asses, who waste their hard-earned money on lotteries and gambling in the name of religion. I feel God does not play dice and rather works in a systematic way. It is a simple cheating played upon common persons by the state governments and companies.’’

He adds,‘‘Word-wide studies have shown lottery playing develops into an addiction like alcoholism. It conditions one’s mind, and makes oneself fatalistic. Most of these lottery players, who play excessively, simply ruin their families and would never become millionaires. ’’

Impact of media

After the success of ‘Kaun Banega Crorepati’ on Star TV, say media experts, a large section of public is engrossed by the idea, how to earn money through a short-cut method. The companies in lottery business have rightly smelt the greed of public to earn money. No doubt, various TV channels, news-magazines and FMCG companies are promising million of rupees in prizes to viewers and customers as an add-ons, benefitting a small section of society. But wide coverage of these programmes in the media, says Prof Jitender Mohan, have provided social acceptability to the playing of lottery.

The media experts say that everyone cannot participate in these TV shows, which promise heavy amount of prize, People have started turning towards lotteries. Consequently, thousands of youth have already lost their entire savings in online and other paper lotteries. In fact, during the recent past, a craze for gaining windfall amount has been noticed among the youth, and the state governments and lottery retailers are bent upon to encash it — rightly or wrongly.

Is it a voluntary tax?

Whether one likes it or not, the lottery business, especially the online lottery is here to stay. The state governments have found them as an easy way of collecting resources. Besides, Sikkim and Meghalaya, Maharastra, Karnataka and Haryana Governments have also decided to start online lottery in the near future.

Commenting on the online lottery business, Dr Manoj Sharma at the University School, Punjab University, says,‘‘ Noting is wrong in playing lotteries, provided it remains within limits since funds collected from this business are mostly spent on different government schemes. The states would have to otherwise impose taxes. It should be considered as a voluntary payment of taxes besides gaining fun.’’ 


Parameters for buying diamonds
Naveen S. Garewal
Tribune News Service

The festival season has seen a rapid increase in the number of people wanting to buy diamonds instead of the traditional gold jewellery. No wonder then that the sale of diamonds has increased manifold. But unlike most gold buyers, who know exactly what to look for in gold, a few people know how to purchase diamond, leaving them at the mercy of jewellers whose word becomes a deciding factor for the deal.

Diamonds have been mined and sold throughout the world for centuries based on certain norms that have come to be known as the “four-Cs” signifying the cut, clarity, carat (weight) and colour of a diamond. Every parameter can alter the price of a diamond. Experts can generally tell about the quality of a diamond with a naked eye, but reliable verification is generally done after examination under 10 x magnifications.

Look for the pyramid

All diamonds are precious, but what makes one diamond more precious and expensive than the other is determined by its Quality Pyramid which is the manner in which the four Cs are arranged. On the top of the scale is the cut followed by clarity, carat weight and colour. The best combination of these qualities makes a diamond valuable and it is important to note that all qualities are important.

Cut Clarity

The cut of the diamond simply involves the basic principle of optical physics. A well-cut diamond has better angles and proportions that will internally reflect light better from one mirror. A deep cut or a shallow cut diamond on the other hand will not result in a brilliant glow of light making the diamond appear dull. The cut of the diamond also involves its shape.

Common shapes include round, square, pear, or heart. The round diamond is more capable to reflect light. 

Since diamond is a natural product. It may have some inclusions such as minerals or fractures appearing while diamonds are formed in the earth. They may look like tiny crystals, clouds or feathers.

Different jewellers follow the grading system developed by the Gemological Institute of America (GIA) that has a clarity scale, ranging from F (Flawless) to Included (I). But by and large most jewellers will also have categories to include the following: No inclusion visible (under 10 x magnification), minute inclusion (extremely difficult to find under 10 x magnification), minor inclusion (difficult to find under 10 x magnification), noticeable and obvious (visible to naked eye).


Carat refers to the weight of the diamond and not the size as some people mistakenly believe. One carat is equivalent to 200 milligrams. One carat can also be divided into 100 “points.” A 0.75-carat diamond is the same as a 75-points or 3/4 carat diamond. Since bigger diamonds are more difficult to find in nature, a one-carat diamond will be expensive.


Colour of a diamond seems the easiest to see but this is not true, especially for a novice as the slightest change in colour can alter the dent the diamond causes on your pocket. Actually colour of a diamond means how colourless it is. Jeweller normally divide diamonds into colourless, near colourless, faint yellow, very light yellow and light yellow. Again the commonly followed pattern is the one floated by the GIA. Colours are meant to be graded under controlled lighting conditions

The safest way to avoid being duped in buying diamonds is to buy them from a reputed jeweller and to insist on a certificate of authenticity and a receipt detailing all the qualities of the diamond.


Inflation rises marginally

New Delhi, November 3
A sharp rise in petrol and diesel oil prices led to a marginal 0.06 per cent rise in inflation to 2.89 per cent for the week ended October 19.

The surge in the point-to-point price change, measured by Wholesale Price Index, was contained by dip in the price of primary articles including vegetables, eggs, meat and fish, apparently avoiding the “contagion effect” of oil price hike.

Inflation, which had plummeted consecutively for five weeks, was 2.83 per cent in the last reported week and 2.72 per cent in the year ago period.

Primary items became cheaper by 0.3 per cent to 174.4 due to a sharp one per cent fall in the price of non-food articles even as food articles’ price remained firm. The index was 171 a year ago. PTI


by R.N. Lakhotia

Form 15H

Q: Please clarify. One retired employee has pension income of Rs 90,000/- + bank interest Rs 15,000/-. Considering benefit of Section 88B (Senior Citizen), there is no tax liability. By filing Form No 15H bank should not deduct tax. But now bank refused to recognise Form 15H and says the person should seek refund from L.T.O. This will cause harassment and much botheration. The Government has not revoked or cancelled Form 15H. Then why tax deduction from bank interest when there will be no tax liability. Can you not ask Government to review its instructions?

— Kuldip Rai, Chandigarh

Ans: The government has neither revoked or cancelled the erstwhile Form No 15H but the contents of the said form have now been amended to the Income-tax Act, 1961. Now if your net taxable income is in excess of Rs 50,000 pa. then you cannot submit Form 15H. The above would be the position even when no tax is payable by you consequent to tax rebate.

Senior citizen

Q: I am a senior citizen aged 83 years. My annual income is about Rs 96000/- from pension and about Rs 40,000/- from bank interest. I have to seek a little clarification. In your reply to Mr R.D. Arora in the ‘Tribune’ dated 15.7.02 it was stated that if anybody’s net taxable income is in excess of Rs 50,000/- he cannot submit Form 15H even if the tax payable may be nil. I want to know whether this provision is applicable to senior citizen who are entitled to tax rebate upto Rs 15000/- u/s 88B. I shall be grateful for an early reply through the ‘Tribune’.

— K.C. Aggarwal, Ludhiana

Ans: On the facts stated by you as per the amendment of the Law you cannot submit Form No 15H to the bank for non-deduction of tax at source. Even if the tax payable after tax rebate is nil, still under the law you cannot submit the said Form No 15H because your net taxable is in excess of Rs 50,000 per annum.



by Pushpa Girimaji

Deducting TDS from interest void

Consumer courts often award interest by way of compensation, when they direct for example, a housing board to refund the amount deposited by the consumer or an insurer to pay the amount due to the insured. In many of these cases, the interest thus calculated is quite substantial. Recently, an interesting issue came up before the apex consumer court in respect of such interest awarded in a housing case. And that was, whether such interest attracts taxation by way of TDS (tax deduction at source)? And whether such award comes under the definition of “interest” as in Section 2 (28A) of the Income Tax Act.

This question arose in the first place because the Ghaziabad Development Authority (GDA) deducted TDS from such interest paid to the consumer in response to a consumer court verdict and argued that it had only complied with its statutory obligations under the Income Tax Act. After examining the issue in detail, the National Consumer Disputes Redressal Commission concluded that it was wrong on the part of the GDA to have deducted TDS from the interest paid to the consumer.

The case has its origin in the complaint of Dr N.K. Gupta filed against the GDA, seeking refund of the amount paid by him, besides compensation. His case was that first of all GDA promised him a plot, and after two years, offered a flat with “star infrastructure facilities” including a swimming pool, health club, badminton court, car parking, besides basic facilities such as 24-hour electricity supply, two double lifts in each block, telephone line in every flat, multi-channel antenna, etc. Here again, after a delay of two years when it offered to give him possession of the flat, he found that let alone star infrastructure facilities, GDA had not even provided basic amenities.

The Uttar Pradesh State Consumer Disputes Redressal Commission directed the GDA to refund the amount within one month, along with interest calculated at the rate of 18 per cent per anum from the dates of various deposits of installments till the date of payment. Failure to pay within the month would attract further interest at the rate of 18 per cent on the entire amount from the due date of payment till the date of actual payment, the Commission said. It also asked the GDA to pay the consumer Rs 2000 by way of costs.

Following this order, the GDA refunded the amount to Dr Gupta , but out of the interest amounting to Rs 46,711 that was required to be paid by it, deducted Rs 8656 towards TDS, deposited the amount in the account of the central government and issued Dr Gupta a certificate towards it. Here, the State Commission was of the view that since the consumer court order did not direct the GDA to cut TDS, it had no business to do so. It should therefore refund the amount deducted towards the TDS to the consumer and also pay 18 per cent interest on it.

The GDA challenged this before the National Commission on the ground that there was a statutory duty imposed on it under Section 194-A of the Income Tax Act, 1961 to deduct the tax and it cannot be faulted on that. It also quoted a Supreme Court order in the case of Rama Bai vs Comissioner of Income Tax, A.P, Hyderabad in support of its action. The National Commission, after examining that order, the relevant sections of the Income Tax Act and also the decision of the Supreme Court in the case of Dr Shyamlal Narula vs Commissioner of Income Tax as well a decision of the Income Tax Appellate Tribunal in the case of Delhi Development Authority vs Income Tax Officer, concluded that the GDA was clearly wrong in deducting TDS..

The Commission explained further: In the order of the State Commission, interest means compensation or damages for delay in construction of the house or handing over possession of the same, causing consequential loss to the complainant by way of escalation in the price of the property and also on account of distress, disappointment faced by him. Interest is merely used in the Order as a convenient method to calculate the amount of compensation in order to standardise it. Therefore provisions of Section 194-A of the Income Tax Act were not applicable and the GDA was clearly wrong in deducting the TDS from the interest payable to the complainant, the Commission said. (GDA vs Dr N.K. Gupta, RP no 2244 of 1999, decided on September 18, 2002).


Market to stay range-bound
J.C. Anand

During the last fortnight, some important announcements were made. The Cabinet approved two Ordinances, one for restructuring the UTI and the other for arming SEBI with teeth to deal with errant companies. The RBI has announced its Credit Policy cutting bank rate, repo rate and CRR by 25 basic points. Kelkar, the Chairman of the Taskforce on Indirect Taxes, has suggested lower excise and customs duties in addition to some other recommendations regarding taxing agricultural products.

The Cabinet also cleared the 10th Five Year Plan, targeting GDP growth of 8 per cent. Reliance announced the discovery of a huge gas-reserves in the Krishna-Godawri off-shore area in Andhra Pradesh which would almost double the production of gas in India.

The corporate results were on the whole quite encouraging except for FMCG companies. According to a FICCI study, based on the results of 174 companies, the net profit during the first six months of the current financial year was higher by 11.6 per cent. The banks, pharmaceuticals companies, automobiles and IT sectors have done well. PSUs have performed much better than in the previous year. According to one analysis the PSUs’ net profit has jumped 132 per cent during the quarter ended September, 2002. The IDBI’s 2nd quarter net profit is higher by 360 per cent.

Reliance has reported a 25 per cent increase in the net profit during the Q2. The SBI’s net profit is up by 34.22 per cent. ABB’s net profit is higher by 15.5 per cent. Both Tisco and Telco have done well. Mahindra and Mahindra is now in the black. Even Gujarat Alkali has made profit during this quarter. Glaxo has also done better than in the Ist quarter.

In spite of good results and cut in the bank rate, the stock market has not responded well. While a month back, the Sensex moved in the range of 2900 to 3000 points during the last fortnight it has been generally moving within 2850 to 2950 points range, when Reliance announced its discovery of a huge gas field and declared 25 per cent higher net profit during the 2nd quarter, the Reliance share moved up from Rs 234 to Rs 266 in one trading session but on the next day profit-taking took away some part of the recent gains made in this scrip.

Tisco’s net profit was much higher than the market expectation but the market did not take note of it. The same it true of many other scrips in the market. This makes me believe that now that most of the bluechip companies have declared their 2nd quarter results and the market have ignored them, this fortnight will not have any bright points. The market is likely to remain range-bound. The RBI has also scaled down DGP estimates for 2002-2003 by 1 per cent from 6.5 per cent to 5.5 per cent. The NAV many mutual funds has also slipped by 10 to 15 per cent. FIIs have been stellers rather than buyers in recent months.

Long-term prospectus of the stock market appeared to be good but its short-term behaviour is likely to be range-bound. There are not many delivery-based transactions and the market is dominated by day-traders who are anxious to book profit on day to day basis.

Now that the bank deposit rates are also likely to be cut down, investment in the stock market looks gainful. But it must be made only in bluechip companies which have good management and good liquidity. This investment should be made on the long-term basis with a two to three years range.


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