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B U S I N E S S

No tax relief required for IT firms: Murthy
Mumbai, July 11
N.R. Narayana Murthy Infosys Technologies chairman and chief executive officer N.R. Narayana Murthy opined that there should not be any tax exemption to corporates, including BPOs and software companies, and instead they should pay taxes as they are making huge profits.

IT gets rural tilt in Karnataka
Bangalore, July 11
It is still going to be called Bangalore IT.Com, but the now mandatory pro-rural area tilt has been attached to the prestigious annual event, with a focus on “secondary cities,” with the stated purpose of spreading the benefits beyond Bangalore.

Govt miffed over bank frauds
New Delhi, July 11
The Central Government has expressed serious concern over the sharp rise in cases of fraud and corruption in the nationalised banks.

FIIs net buyers in equities
Mumbai, July 11
Foreign institutional investors have registered net purchases of Rs 280 crore ($61.7 million) in equities while remaining net sellers in debt at Rs 28.1 crore ($6.3 million) for the week ended July 9, marked by the presentation of Budget.







EARLIER STORIES

 
A promoter shows off the front and the back of a new mobile phone of Samsung Electronics in Seoul
A promoter shows off the front (L) and the back of a new mobile phone of Samsung Electronics in Seoul in this handout picture released on Sunday. The new mobile phone is equipped with a 3 million pixel digital camera and is priced at about US $700.
— Reuters

Singapore Airlines flights from Amritsar in September
Amritsar, July 11
Singapore, Airlines is planning to start operations from the Holy city of Amritsar in September this year. The Director, Rajasansi Airport Mr V.S. Mulekar said today the Singapore Airlines has conducted a survey to study the potential of its planned venture and will be tapping the huge Punjabi NRI base of the region.

Escorts mulls pact in China
New Delhi, July 11
Escorts plans to float a joint venture in China to sell and service tractors in collaboration with a local company. “We are planning to create a joint venture in China for selling and servicing tractors there.

Market scan
Turnover tax row simmers
The Budget proposes to levy a tax of 0.15 per cent on all kind of transactions in stock exchanges. Long-term capital gains tax is proposed to be abolished and short-term capital gains will be taxed at 10 per cent.

Tax advice
Pensioners can file returns till July 31
Q. Please advise me regarding the following questions of Income tax for the financial year 2003-04 i) whether the interest on recurring bank deposits is also taxable under the head income from other sources?

  • HRA deduction

  • Senior citizen

  • Index number

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No tax relief required for IT firms: Murthy

Mumbai, July 11
Infosys Technologies chairman and chief executive officer N.R. Narayana Murthy opined that there should not be any tax exemption to corporates, including BPOs and software companies, and instead they should pay taxes as they are making huge profits.

Reacting to Budget here on the sidelines of the visit of Cornell University President Jeffrey Lehman, Mr Murthy said tax exemptions should not be encouraged and the focus of the Budget should be proper implementation.

“Instead of giving more tax exemptions, the government should empower them to compete independently with the international companies. The government need to provide opportunities to grow”, Mr Murthy said.

“We are good at planning, but when it comes to execution we fail miserably. There are indeed good initiatives in this Budget but we need to execute in time. It is not that we don’t have proper plans, but we failed in the last 57 years to execute all good plans”, the mentor of Infosys said.

Mr Murthy appreciated the efforts to give thrust to rural India and cess on education. He said the focus to infrastructure is also a step in right direction and the 8 per cent GDP growth is attainable.

Speaking to reporters on the sidelines, Tata Sons chairman Ratan Tata said that the Union Budget is a positive Budget with a clear vision. — UNI
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IT gets rural tilt in Karnataka
Sridhar K. Chari
Tribune News Service

Bangalore, July 11
It is still going to be called Bangalore IT.Com, but the now mandatory pro-rural area tilt has been attached to the prestigious annual event, with a focus on “secondary cities,” with the stated purpose of spreading the benefits beyond Bangalore.

The seventh edition of the international event, hosted by the Department of IT and Biotechnology and the Software Technology Parks of India (STPI), will be held between November 1 and 5 in Bangalore. Industry concerns have been catered to at least at a nominal level, with a focus that includes hardware, and a hardware policy has also been promised. Other concerns like infrastructure and e-security also form part of a planned ‘focus pavilion.’

Department Secretary M.K. Shankarlinge Gowda is, however, clear about priorities, with his view that IT, as an established industry, should start benefiting people. “Once an industry is past the growth phase, the government’s role should be to see that people at large begin to reap the benefits.”

He, however, claimed that “this focus is not new,” pointing to various initiatives including the Rural IT quiz which is being conducted in fact for the fifth consecutive year.”

The focus would be to attract investments in secondary cities like Mysore, Mangalore, the twin cities of Hubli-Dharwad, Gulbarga, and Belgaum, he said. These cities, all possessing their own universities, are considered to be crucial in generating employment in their areas.

This focus was already apparent in the Governor’s address, which made its sole reference to IT in terms of enabling access to call centre jobs to youth in districts away from Bangalore.
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Govt miffed over bank frauds
Manoj Kumar
Tribune News Service

New Delhi, July 11
The Central Government has expressed serious concern over the sharp rise in cases of fraud and corruption in the nationalised banks.

The RBI, in its latest report, has reported a rise in number of such cases. It reports that number of frauds in the public sector banks increased from 1643 during calendar year 2002 to 2193 during 2003. In 2004, 540 fraud cases have been reported by March 31, 2004.

To check the malpractices and cheating of customers, the government has set up the Serious Fraud Investigation Office and a Board of Financial Supervision has been set up by the Reserve Bank of India.

On Friday, Finance Minister P. Chidambaram in a statement in the Lok Sabha submitted that Central Bureau of Investigation (CBI) has registered 43 cases of fraud against 59 officials of 17 public sector officials. The CBI cases included five cases against seven officials of State Bank of India, six cases against 12 officials of the Central Bank of India and five cases against six officials of the Punjab National Bank.

Finance Minister further added, “CBI has also registered two cases against five officials of Allahabad Bank, three cases against two officials of Canara Bank and three cases against six officials of Oriental Bank of Commerce.”

RBI has also reported that fraud cases have been particularly high in the area of credit cards and to some extent in the housing loans/ personal segment. Its report maintains that during 2002, 493 employees of the public sector banks were penalised for their involvement in cases of corrupt practices as against 509 employees during 2003.

The officials with the SBI claimed “ internal vigilance department of the banks has also failed to take timely action on the complaints of customers or to take adequate preventive steps to check frauds in the banks.”

They said strong pressure of bank employees’ unions, long process of conviction and considerable time taken by the investigating agencies also encouraged corrupt officials to continue with their activities.

In fact, the Mitra Committee report submitted to the RBI had recommended a two-pronged strategy to check corruption and fraud cases in the nationalised banks, which included in-house preventive measures and legislative changes.

The Committee had also suggested development of best practice code, internal check and control, application of criminal laws to financial frauds, separate investigating authority for investigating serious financial frauds and special court for trying such offences and separate act to deal with financial frauds.

The insiders in the Banking sector allege that though Mitra Committee had submitted report in 2001, yet the government has so far implemented only a few of its recommendations. “Had the previous government implemented the recommendations of the Mitra Committee, thousands of bank customers would have been saved from corrupt bank officials and long legal battles in the courts,” said a union leader of the SBI Officers Employees Union.
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FIIs net buyers in equities

Mumbai, July 11
Foreign institutional investors have registered net purchases of Rs 280 crore ($61.7 million) in equities while remaining net sellers in debt at Rs 28.1 crore ($6.3 million) for the week ended July 9, marked by the presentation of Budget.

Mutual Funds (MFs) were net investors in equities and debt at Rs 27.23 crore and Rs 35.31 crore during the period under review, according to data available with SEBI here. The FIIs were net buyers in equities for four trading days and recorded the highest net inflow of the week at Rs 147.60 crore ($32.40 m) for July 8, the day when UPA government presented its first Budget.

They also netted sales of Rs 11.70 crore ($2.60 m) on July 7.

The foreign funds made net purchases in debt instruments on first day of trading at Rs 49 crore ($10.80 million).

MFs were net sellers in equities for three days and netted outflows at Rs 36.29 crore, Rs 5.51 crore and Rs 8.59 crore on June 5, 6 and 7. — PTI
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Singapore Airlines flights from Amritsar in September

Amritsar, July 11
Singapore, Airlines is planning to start operations from the Holy city of Amritsar in September this year. The Director, Rajasansi Airport Mr V.S. Mulekar said today the Singapore Airlines has conducted a survey to study the potential of its planned venture and will be tapping the huge Punjabi NRI base of the region.

Mr Mulekar said the Singapore Airlines would operate three weekly flights directly from here. The airlines would also offer easy connectivity to Australia and Vancouver in Canada.

The Singapore Airlines, has sought permission to operate new 320-seater Boeing 720 Aircraft.

At present, Uzbekistan and Turkmenistan Airlines along with Indian Airlines are operating weekly 28 flights connecting various destinations in CIS countries, Europe, the USA and Canada, carrying over 2.50 lakh passengers annually.
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Escorts mulls pact in China

New Delhi, July 11
Escorts plans to float a joint venture in China to sell and service tractors in collaboration with a local company.

“We are planning to create a joint venture in China for selling and servicing tractors there. Our Chinese venture will be in collaboration with a Chinese company,” Business Head Escorts (Agri Machinery Group) Rakesh Chopra told PTI.

Escorts, which has joint ventures in the US and Poland, will replicate the same model for the Chinese market.

The company’s proposed move was aimed at tapping the burgeoning Chinese tractor market.

Asked how long it would take to fructify the Chinese venture and the amount to be invested there, he said “it will be too early to specify the time frame or the amount to be invested there”. — PTI
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Market scan
Turnover tax row simmers
by J.C. Anand

The Budget proposes to levy a tax of 0.15 per cent on all kind of transactions in stock exchanges. Long-term capital gains tax is proposed to be abolished and short-term capital gains will be taxed at 10 per cent. These proposals have been welcomed by long-term investors, for it will lighten the burden on both assessee and income tax officials.

The proposed transaction levy has been strongly opposed by traders as well as brokers. The stock market participants demonstrated before the Mumbai and Delhi stock exchange.

On Thursday, the sensex slumped by 112 points. It is largely presumed that the proposed levy will come into force on July 9. The agitators also met the Chairman of SEBI. Meanwhile, a notification from the Ministry of Finance clarified that the transaction levy would get operative only after the Budget is passed by Parliament. This may be in the first week of October or later.

The market has almost regained at the end of the last week’s trading what it had lost on the Budget day. It is also reported that the Finance Minister will meet the brokers this week.

The proposal to levy tax on market transactions has been made largely to prevent tax evasion as well as to bring the stock markets into a uniform pattern with the stock markets in Asia and abroad. FIIs were also anxious for this kind of change in the operation of the stock markets in India. It appears that the transaction levy will stay, though the tax rate may be reduced from .15 to .1 per cent, or some kind of “differential levy” may be imposed for transactions in debt, futures and equity shares, putting them in different categories for purpose of taxation.

The scrapping of long-term capital gains tax and taxing short-term capital gains at 10 per cent is likely to benefit investors as well as help promoting delivery-based investments. The transaction levy will be paid by the buyer. Finance Minister proposed that the transaction levy would be imposed on all kind of transactions in the stock exchanges. It is, however, clear that the imposition of tax on transactions will affect business volumes.

The welcome feature of the Budget proposals is that the interest rates on PPF and other small-saving schemes have been maintained. Likewise, tax relief under Section 80 L and Sections 88 has largely been retained. Senior citizens will continue to have tax relief of Rs 20,000 under Section 88B. It is also proposed to provide a new scheme for senior citizens which will carry 9 per cent interest.

Last week the inflation rate moved up to 6.09 per cent from 5.87 per cent. It is also on the cards that some new taxation proposals like service tax (raised from 8 to 10 per cent) and education surcharge of 2 per cent on all direct taxes will raise the inflation rate further. It appears that the best form of investment will still be long-term investment in fundamentally sound scrips.
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Tax advice
Pensioners can file returns till July 31
by S.C. Vasudeva

Q. Please advise me regarding the following questions of Income tax for the financial year 2003-04

i) whether the interest on recurring bank deposits is also taxable under the head income from other sources?

ii) whether Section 80-L is also applicable regarding deduction in respect of interest on recurring bank deposits?

iii) whether person having gross total income above Rs 1,50,000 (rate 30 per cent would be required to pay 5 per cent surcharge on the total income tax payable after rebates u/s 88, 88-B & 88-C?

iv) what is the last date of filing income tax return for the pensioners?

— R.C. Sehgal

A. The answers to you questions are given hereunder.

i) Interest on recurring bank deposits is taxable under the head “Income from other sources”.

ii) Yes, the deduction u/s 80-L of the Act is applicable in respect of interest received on recurring bank deposits.

iii) Surcharge of 10 per cent for assessment year 2004-05 i.e. for financial year ended March 3, 2004, is payable by an individual only if the taxable income exceeds Rs 8.5 lakh.

iv) The last date for filing the return of income for pensioners is July 31, 2004.

HRA deduction

Q. I am working at Government College, Shimla, and my wife works at Solan. I have a rented house at Solan. My wife is not claiming any deduction on account of HRA. I gave receipt of house rent of Solan to my employer. But he refused to entertain the same and disallowed HRA deduction to me. My question is whether I am entitled for HRA deduction on the production of house rent receipt from a station other than the station of serving?

— R. K. Thakur

A. Deduction in respect of HRA is available u/s 10(13A) of the Act if an assessee has incurred expenditure on payment of rent in respect of residential accommodation occupied by the assessee. Since you are not actually occupying the residential accommodation in respect of which rent is being paid, you will not be entitled to the deduction u/s 10(13A) in respect of the HRA received by you.

Senior citizen

Q. I am a retired government servant and my age is 76 years. Although my taxable income for the assessment year 2003-04 was Rs 1,19,000 only but I have been submitting my income tax return for the past five years as my taxable income was about Rs 50,000. My taxable income during the 2004-05 is almost the same. I understand that the senior citizens from this year are not required to submit the Income tax return if the net taxable income is less than Rs 1,50,000. I have already been allotted PAN number. Kindly advise if I am required to submit the return this year also, so that I could not accordingly. I have not been paying any tax as my income been always below taxable limit. I have no other source of income except pension and interest.

— Ram Sarup Jain

A. As per the provisions of Section 139 (1) of the Act you are liable to file your income tax return even if the tax payable by you is Nil on account of the rebate u/s 88B (senior citizen) of the act.

Index number

Q. What is index Number for following financial years:

2001-20022002-20032003-20042004-2005

— O.P. Mangla

A. The Cost Inflation for the respective years is as under:

Financial Year      Index

2001-02              426

2002-03              447

2003-04              463

2004-05        Not notified as yet
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