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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Planning Commission members sworn in
FDI issue to be resolved through dialogue, says PM
New Delhi, July 17
Prime Minister Manmohan Singh today administered the oath of office and secrecy to the non-civil servant and non-minister members of the Planning Commission, including its Deputy Chairman Montek Singh Ahluwalia. Among the members who took the oath include, Mr Kirit Parekh, Mr B L Mungekar, Ms Syeda Hamid, Mr Abhijit Sen, Mr Anwar-ul Hoda and Mr B N Yugandhar.

Prime Minister Manmohan Singh congratulates Deputy Chairman of Planning Commission Montek Singh Ahluwalia after the oath-taking ceremony In video
(28k, 56k)

Prime Minister Manmohan Singh congratulates Deputy Chairman of Planning Commission Montek Singh Ahluwalia after the oath-taking ceremony of the members of the Planning Commission in New Delhi on Saturday.
— PTI photo

FM replays the reforms raga
Predicts 6.2-7.4 per cent GDP growth
P Chidambaram
New Delhi, July 17
Finance Minister P Chidambaram today allayed fears over reversal of the reforms process and said the government was committed to further broadening and deepening it.
In video (28k, 56k)

VAT panel formed
T
HE Union Finance Ministry has set up a Technical Experts Committee which will work closely with the state governments to ensure smooth implementation of Value Added Tax (VAT) with effect from April 1, 2005.

Punjab against phasing out CST
New Delhi, July 17
Punjab Finance Minister Surinder Singla has said the state does not favour phasing out Central Sales tax (CST) as it will have adverse impact on the local trade.



Actress-turned-Member of Parliament Hema Malini launches Vallaya
Actress-turned-Member of Parliament Hema Malini launches 'Vallaya', a collection of bangles in gold and silver, at the India International Jewellery Show in Mumbai on Saturday. — PTI

EARLIER STORIES

 

SEBI nod for TCS IPO
New Delhi, July 17
Market regulator SEBI has given clearance to Tatas for the proposed initial public offering (IPO) of Tata Consultancy Services, which is likely to realise over Rs 5,000 crore. “We got all the clearances from SEBI last evening,” TCS vice-president (Corporate Communication) Atul Takle told PTI from Mumbai.

Investor guidance

Gifts from NRI children not taxable
Q:
I have been working in the US since last year and am currently on NRI status. Now I want to send some money home to my parents. I want to know whether these funds that I transfer to my father are taxable either in my father’s hands or mine.

Aviation Notes

Airlines cut the ground from under agents’ feet
F
OR decades airlines worldwide have been dependent upon agents — AIATA—approved and general sales agents — to promote their business. There was a time when agents in India not only got a chunk as commission but several other perks and facilities, including complementary tickets on international and national routes.

Graphic: Weekly Stock Movement

Indian Ambassador to China Nalin Surie launches the first commercial export of Indian mangoes in Beijing on Saturday Indian Ambassador to China Nalin Surie launches the first commercial export of Indian mangoes in Beijing on Saturday. The Indian Embassy and Agricultural and Processed Food Products Export Development Authority (APEDA) in cooperation with Hualian Group is holding a Mango Promotion Festival in Beijing from July 17 to 19. — PTI

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Planning Commission members sworn in
FDI issue to be resolved through dialogue, says PM
Tribune News Service

New Delhi, July 17
Prime Minister Manmohan Singh today administered the oath of office and secrecy to the non-civil servant and non-minister members of the Planning Commission, including its Deputy Chairman Montek Singh Ahluwalia.

Among the members who took the oath include, Mr Kirit Parekh, Mr B L Mungekar, Ms Syeda Hamid, Mr Abhijit Sen, Mr Anwar-ul Hoda and Mr B N Yugandhar.

All members took oath in English.

After the swearing-in, Prime Minister Manmohan Singh asked the Planning Commission to find out ways and means to make the delivery system more efficient and effective.

Addressing the first meeting of the Commission, Dr Manmohan Singh, who is its Chairman, said it should focus on how to implement the assurances made in the Common Minimum Programme (CMP) and the Budget.

Prime Minister Manmohan Singh said the politically sensitive issue of enhancing the cap of FDI in telecom, insurance and civil aviation would be resolved through a process of dialogue among all allies of the UPA government.

“Our colleagues in other parties are great patriots. Everything will be resolved through discussions. The government will have smooth sailing in the end,” Dr Singh told newspersons after the swearing-in of the new members of the Planning Commission.

He said: “All issues can be resolved.. We are united and have to work together. I think there will always be problems but I have great faith in the patriotism of my colleagues in different political parties”.

Dr Singh said that the country today was in the “realm of political economy”.

“A judicious mix of politics and technocracy is what the country needs,” he said.

After the meeting Mr Ahluwalia told newspersons that that the Prime Minister has expressed concern about the delivery system.

On the issue of additional allocation of Rs 10,000 crore, the Deputy Chairperson said the Commission was working “very hard.”

“Hopefully, in a couple of weeks time, we will have the answer,” he said. He however, refused to comment on whether the GDP growth rate of eight per cent was achievable.

The Commission is working on the mid-term review of the 10th Five Year plan.
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FM replays the reforms raga
Predicts 6.2-7.4 per cent GDP growth
Tribune News Service

New Delhi, July 17
Finance Minister P Chidambaram today allayed fears over reversal of the reforms process and said the government was committed to further broadening and deepening it.

"We need to press on with reforms...and we need to deepen and broaden the capital markets," Mr Chidambaram said while speaking at an investor meeting organised under the aegis of SEBI and CNBC-TV 18.

The Finance Minister added that it was premature to revise the GDP growth projections in the band of 6.2 to 7.4 per cent in wake of delayed monsoons. The band of growth has been projected by many think tanks. "I cannot comment on monsoons. They are not in my control", he said, even as he added the band of growth of 6.2 to 7.4 per cent was strong, especially as it comes on the basis of 8.2 per cent growth of in the previous fiscal year. "I pray for rain. I request you to pray also," he added.

On the issue of 0.15 per cent Transaction Tax proposed in this year's Budget, the Finance Minister said that concerns of investors are being addressed. "Your point is well taken. You will find that your concerns (over transaction tax) are addressed", he said.

The Finance Minister, however, did not agree that the there were more than 100,000 day-traders-a category which is likely to be affected the most due to the tax. "There are a few thousand day-traders", Mr Chidambaram said but added that the proposed transaction tax will contribute only one per cent of the total taxes proposed in the budget.

He also indicated that measures could be taken to address the issue of vanishing companies. 
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VAT panel formed

THE Union Finance Ministry has set up a Technical Experts Committee which will work closely with the state governments to ensure smooth implementation of Value Added Tax (VAT) with effect from April 1, 2005. The members of the committee are: Dr Govind Rao, Director, National Institute of Public Finance and Policy, Mr P V Rajaram, former Finance Secretary, Government of Tamil Nadu, Mr Ramesh Chandra, Member Secretary, the Empowered Committee of State Finance Ministers, Dr Renuka Vishwanathan, Adviser, Planning Commission, Mr C M Bachhawat, Commissioner Commercial Taxes, Government of West Bengal, Mr M N Joshi, Additional Secretary, Finance, Government of Gujarat, and Ms R Kavita Rao, Fellow, National Institute of Public Finance and Policy.

Director, State Taxes, Ministry of Finance, shall be the convenor of the committee.
— TNS
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Punjab against phasing out CST
Tribune News Service

New Delhi, July 17
Punjab Finance Minister Surinder Singla has said the state does not favour phasing out Central Sales tax (CST) as it will have adverse impact on the local trade.

Mr Singla, who was in the capital to participate in the meeting of the Empowered Committee of State Finance Ministers, said it was anticipated that in the event of CST becoming zero, most buyers would purchase goods from other states and the local trade and industry will suffer.

“Punjab is not in favour of phasing out the CST as it is likely to have an adverse impact on local trade. It is anticipated that in the event of CST becoming zero, most of the bulk buyers would purchase goods from other states and local trade and industry would suffer heavily,” Mr Surinder Singla said.

The state had suggested an alternative to phase out CST by providing Input Tax Credit (ITC) on inter-state purchases. This has not been accepted by the Empowered Committee in view of the fact that the Centre has not agreed to compensate the states for loss of revenue on account of grant of such ITC.

Mr Singla pointed out the Kelkar Committee report has, however, observed that a decision to allow ITC of the CST paid in other states would not only secure revenue of the states but would also help to ensure effective regulation of inter-state movement of goods.
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SEBI nod for TCS IPO

New Delhi, July 17
Market regulator SEBI has given clearance to Tatas for the proposed initial public offering (IPO) of Tata Consultancy Services, which is likely to realise over Rs 5,000 crore.

“We got all the clearances from SEBI last evening,” TCS vice-president (Corporate Communication) Atul Takle told PTI from Mumbai.

Tatas had submitted on Thursday their response to a clarification sought by SEBI on the draft red herring prospectus, Takle said.

On whether the company would file on Monday papers before the Registrar of Companies (RoC) for the IPO, which is perhaps the last requirement for TCS before announcing the launch date and price band, he said “it has not yet been decided.” The necessary clearances from SEBI coincide with the recommendations of the merchant bankers mandated by TCS for the IPO to launch the offer on July 29, sources said.

The company was presented with two plans for opening the issue—first beginning on July 23 and the second by the end of the month—by the merchant bankers for the IPO, the biggest in the private corporate sector, sources said. — PTI
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Investor guidance

by A.N. Shanbhag

Gifts from NRI children not taxable

Q: I have been working in the US since last year and am currently on NRI status. Now I want to send some money home to my parents. I want to know whether these funds that I transfer to my father are taxable either in my father’s hands or mine. I have already paid tax on the money here and since, I am an NRI, I don’t think I am taxable in India. Would it be better if I transfer the funds to my own account and my father withdraws from the same as per the Power of Attorney given to him? Should I transfer the funds to my NRE or NRO account? Please guide.

— Rishi Talwar

A: Transfer by itself does not create any tax liability. If the money transferred is capital in nature, the question of paying tax thereon does not arise.

If your status for the financial year (FY) ‘April-March’ is NRI and if the money transferred is not an income that has arisen out of some nexus with India, either by way of Indian employment or business, the amount is tax free without any limits.

You may freely gift the funds to your father and there would be no tax consequences. Gifts made for bonafide purposes is tax neutral, in that, there is no tax payable either by the donor or the donee. However, since you are gifting, it is important to follow a proper procedure.

It is necessary for the donor to make an offer and the donee to accept the same in black and white. To safeguard against any hassles, the donee should request the donor for a gift and then the donor remit the amount to the donee. Alternatively, the donor can offer the gift. In either case, it is necessary for the donee to accept the gift in writing (maybe through a thank you note). Only then, would it be considered as a gift in India.

It is better to prepare a gift deed and get it registered (with related stamp duty) but such a precaution is normally needed in the case of high-value gifts, particularly those of real estate.

However, note the fact that the Department has a right to inquire into the genuineness of the gift to ensure that it is not a payment made for any illegal transaction or for services rendered.

There is no income tax on the amount gifted. However, any income earned thereon subsequent to the gift is chargeable to tax. Note that by giving a gift, you lose title to the funds gifted.

IT return

Q: As per my understanding, I need not file a tax return if I have income below the taxable limit. Now though my income is above Rs 50,000 (the minimum taxable limit), by taking advantage of tax benefits, particularly Sec. 80L, Sec. 88 and Sec. 88C, I manage to get it below the taxable limit. Under these circumstances, do I need to file the tax returns? Also, one of the banks that I have a deposit in did not accept Form 15G as my total income is above Rs. 50,000 and therefore liable to TDS. How can I claim a refund if I don’t have to file tax returns? Any way out of this Catch-22 situation?

— K T Shenoy

A: U/s 139(1), every person whose total income during the previous year exceeds Rs 50,000 shall, on or before the due date, furnish a return of his income in the prescribed form.

Similarly, every person who falls under the 1-by-6 criterion also is required to file the returns even if his total income is below Rs. 50,000. Total income includes total income of any other person in respect of which he is assessable under the Act (clubbing provision). This means after taking the advantage of all exempt incomes and before claiming deductions under Chapter-VIA (Sec. 80L, 80D, etc.) and rebates u/s 88, if the income chargeable to tax is over Rs. 50,000, returns are required to be filed.

This is so even if the total tax deducted at source covers the tax payable liability more than sufficiently.

HRA claim

Q: Currently I live in a rented house and claim HRA exemption on the rent paid. Now I intend to purchase a house. However, I shall not be staying there since it is too far from my place of work. At most, I might give it on lease and earn some rent thereon. However, someone told me if I have my own house, HRA cannot be claimed. Also, if I am receiving rental income, HRA cannot be claimed.

— V F Dastoor

A: The HRA exemption is related with the rent paid and can be claimed as long as you pay rent for the house you live in. Merely owning another house does not make you ineligible for the HRA deduction. This confusion arises because there is another section in the ITA, Sec. 80GG, which allows a deduction on the rent paid as per specified limits. It is Sec. 80GG that precludes the assessee from owning a house at a place where he ordinarily resides and performs his duties of employment. Even here there are some conditions under which benefit under the section can be taken in spite of owning a house. (Incidentally, Sec. 80GG is not available if you get HRA). In any case, you may certainly claim HRA exemption and own the house.
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Aviation Notes

by K.R. Wadhwaney

Airlines cut the ground from under agents’ feet

FOR decades airlines worldwide have been dependent upon agents — AIATA—approved and general sales agents — to promote their business. There was a time when agents in India not only got a chunk as commission but several other perks and facilities, including complementary tickets on international and national routes.

The situation has now change. The airlines have begun to depend upon their own ‘sales’ department instead of marketing through agents. In several foreign countries, the commission to agents has been either drastically slashed or done away with.

The strategy has benefitted many carriers. Emulating the success, the airlines have planned to slash commission to agents in India. This move has put agents in a ‘big fix’. Some of the agents, led by senior officials, have had detailed discussion with the foreign carriers’ bigwigs. But the threat of slash in commission stays.

The agents say the Indian market is different from the West. This argument does not seem to convince airline bosses. They believe that the nature of job the agents here and abroad is the same.

The problem is that there is a mushroom like growth of travel agents. Many of them are unscrupulous and some of them are even indulging in human trafficking. Several prospective passengers have been stranded abroad.

Come September, more than half-a-dozen foreign carriers will switch over to just 5 per cent commission to the agents. There attitude is ‘take it or leave it’. “We are cutting our costs to stay afloat and we are not in a position to offer commission exceeding 5 per cent”, airline bosses are reported to have told the agents.

Air India, which heads the Board of Airlines Representatives (BAR), is yet to reveal its intentions. A majority of the foreign carriers and A-I have often been on different wavelengths. Foreign airlines blame A-I for promoting unethical practices in fare structures while the A-I accuses the foreign carriers. There is a love and hate relationship between the two. The fact is that A-I is more sinned against than sinning.

Airport upgradation

Minister of State for Civil Aviation Praful Patel has gone on record saying that 15 airports will get a facelift before the end of December, 2006. It is easier said than done. Several ministers have said so earlier but even Delhi and Mumbai airports have not been upgraded or revamped.

The civil aviation policy is yet to be finalised. The policy must strengthen the national carriers. — Air India and Indian Airlines. As of now, private operators are having “better playfield’ than the national carriers. Singapore has already accorded landing rights to two private operators — Jet Airways and Air Sahara.
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Weekly Stock Movement
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BRIEFLY


A model displays the new Samsung Digital Camera during its launch in New Delhi on Friday
A model displays the new Samsung Digital Camera during its launch in New Delhi on Friday. — PTI

Forex reserves
Mumbai, July 17
India’s foreign exchange reserves grew by $ 700 million to touch $ 1,20,778 million for the week ended July 9. The foreign currency assets registered a growth of $ 687 million at $ 1,15,405 million, according to the Reserve Bank of India’s weekly statistical supplement released here today. — TNS

Union Bank
Mumbai, July 17
Union Bank of India has posted a 32.42 per cent rise in net profit at Rs 210.40 crore in its first quarter ended June 20, 2004, compared with Rs 158.88 crore posted during the same period of the previous fiscal. The company’s total income rose to Rs 1,400.65 crore during the quarter under review, as against Rs 1,277.71 crore posted during the same period a year ago. UBI informed BSE here today.
— PTI

Allahabad Bank
Mumbai, July 17
Allahabad Bank has posted a net profit of Rs 137.65 crore for the quarter-ended June 30, 2004 as compared to Rs 67.97 crore for the quarter-ended June 30, 2003. The bank said its total income has increased from Rs 767.91 crore in the 01-03 to Rs 987.02 crore in the quarter-ended June 30, 2004. — UNI

Birla contract
New Delhi, July 17
Indicating a long battle with R.S. Lodha over the controversial will of Priyamvada Birla, the entire Birla family has contracted a PR firm Genesis to advise them on all aspects of communication and to handle media. “We were approached yesterday and we have agreed in principle to handle the issue,” CEO of Genesis PR, Ashwini Singla, said here today. — PTI

Gail pact
Mumbai, July 17
Gail (India) Ltd has signed a technology agreement with Mitsui Chemicals Inc, Japan for setting up a new, dedicated high density polyethylene (HDPE) plant with a capacity of 1,00,000-TPA at its petrochemical complex at Pata in District Auriaya, Uttar Pradesh. — UNI

RBI notes
Mumbai, July 17
The Reserve Bank of India would shortly issue Rs 20 denomination bank notes with inset letter ‘A’ in both numbering panels in the Mahatma Gandhi series. These notes would bear the signature of RBI Governor YV Reddy, RBI release said today. — PTI

Tricom India
Mumbai, July 17
Tricom India Ltd, an IT-enabled services company, is to acquire the US-based Tricom Document Management Inc to strengthen its business presence in North America. TIL would acquire the US-based company in the current quarter, for which all the legal formalities are in place, its Managing Director Chetan Kothari said in a release here today. — PTI

Spice outlet
Chandigarh, July 17
Spice further strengthened its market dominance in Amritsar with the inauguration of its exclusive Franchisee Showroom at Novelty Telecom, Amritsar inaugurated by Mr Navin Kaul, COO, Spice Telecom, the showroom will be a high-quality retail point exclusively for Spice subscribers and will provide them with complete world-class customer care services. — TNS

Intel seminar
Chandigarh, July 17
Intel India Pvt Ltd is staging a nationwide 100-city business advantage seminar series to educate enterprises across the country on the bottom line business benefits of the latest IT solutions and the planning and management of effective technology upgrades of PCs, notebooks, and servers. — TNS
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