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B U S I N E S S

Global Trust Bank under moratorium
for 90 days

Mumbai, July 24

The Union Government, on an application by the RBI, today issued an order of moratorium on the Global Trust Bank Limited, debarring it from undertaking fresh business activity for the next 90 days, beginning from closing hour today.

New-look Mercedes out
Chennai, July 24
Daimler Chrysler India Pvt Ltd hopes to achieve a 15 per cent growth in sales of its Mercedes-Benz cars this year compared to last year, a top executive of the company said here today. Last year, the company, which has an assembling plant in Pune in Maharashtra, sold 581 cars as against 1208 in the year 2002

Senior DaimlerChrysler officials display the company's latest car, Mercedes-Benz C 200K Senior DaimlerChrysler officials display the company's latest car, Mercedes-Benz C 200K "Facelift" during its launch in Mumbai on Saturday. 
— Reuters photo

FM promises big tax reforms
New Delhi, July 24
Finance Minister P. Chidambaram today promised to launch major tax reforms next year in conformity with the recommendations made by the Kelkar Task Force even as he sought to downplay the projected differences with the Left parties on FDI, saying that the BJP was creating more difficulties on this front.




In video: Gold-lovers find cheaper alternative in plated ornaments.
(28k, 56k)


EARLIER STORIES

 
The historic Bentley sports car which was sold for a world record £ 2.8 million at an auction on Friday is seen in this undated picture made available by Christie's auction house in London
The historic Bentley sports car which was sold for a world record £ 2.8 million ($5.13 million) at an auction on Friday is seen in this undated picture made available by Christie's auction house in London. The 1930 Bentley Speed Six, described as an 'exceptional racing Titan', won the Double Twelve race and came second in the Le Mans 24-hour contest that same year. — AP/PTI

Pressure on EPF board for 8 pc interest
New Delhi, July 24
The CPI-affiliated Aituc today accused the UPA government of pressurising the board of trustees of Employees Provident Fund to agree to 8 per cent interest rate for 2004-05 and demanded an inquiry into the irregularities in the working of the country's largest public fund.

NTPC IPO by mid-Sept
New Delhi, July 24

The much-awaited initial public offering of NTPC will open by mid-September, company CMD C P Jain said today.

Best insurance man to get award
Mumbai, July 24
Mr Hira Lal Chopra, a Mumbai-based businessman hailing from Amritsar, has introduced an award for the best insurance person of the Year. The winners will be chosen from among the people working in the general and life insurance sectors.

AVIATION NOTES 

A-I hostesses lose sheen
by K.R. Wadhwaney
T
here was time when Air-India enjoyed a tremendous reputation with foreign flyers. The hostesses then were friendly and pleasant and food — snacks or meals — was excellent. To even economy class passengers, meals were served in style.

  • Munich airport

Investor guidance

Bonus taxable, like interest
by A.N. Shanbhag

Q: I have invested in the Post Office monthly income scheme which gives 8 per cent interest p.a. However, in the last year, apart from the interest, there is also a 10 per cent bonus payable. I know that the 8 per cent interest is taxable and also gets deduction u/s 80L. Please advise me the tax status on the 10 per cent bonus payable on maturity of Post Office MIP

GRAPHIC: Weekly Stock Movement
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Global Trust Bank under moratorium for 90 days

Mumbai, July 24
The Union Government, on an application by the RBI, today issued an order of moratorium on the Global Trust Bank Limited (GTB), debarring it from undertaking fresh business activity for the next 90 days, beginning from closing hour today.

The RBI also inducted three persons, including its regional director in Andhra Pradesh, on the GTB's Board of Directors to supervise the function of the bank during the moratorium period. The bank once promoted by banker Ramesh Galli, has about seven directors and is headed by Managing Director Sudhakar Gande.

During the moratorium period, which will end on October 23, 2004, the RBI, would consider various options, including amalgamation of the bank with any other bank, and finalise the plans in public interest and with a view to ensuring that the public deposits are protected. While all transactions undertaken by the public with the bank till the end of the banking hours today would be honoured, no fresh business or contracts would be entertained during the moratorium period.

The bank, however, will be permitted to make only those payments as per the moratorium order and the depositors would be allowed to withdraw up to Rs 10,000 only from their saving bank account or current account or any other deposit account through any branches.

Addressing a press conference, Reserve Bank of India (RBI) Executive Director Usha Thorat said here this evening that any requirement of cash at the branches of the bank for making permitted payments would be ensured in full since the cash balances maintained with it by the bank.

Ms Thorat also assured that a viable and alternative arrangement would emerge, including a merger during the moratorium period.

The GTB was among the five banks in recent past in whose functioning the RBI was forced to intervene for irregularities in their functioning.

It was in September 2003 that the bank had declared it had turned a corner and announced an operating profit of Rs 36.44 crore for the FY2002-03. — UNI
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New-look Mercedes out

Chennai, July 24
Daimler Chrysler India Pvt Ltd hopes to achieve a 15 per cent growth in sales of its Mercedes-Benz cars this year compared to last year, a top executive of the company said here today.

Last year, the company, which has an assembling plant in Pune in Maharashtra, sold 581 cars as against 1208 in the year 2002, Sanjiv Sahajwala, Director, Sales and Marketing, told newsmen while launching the new-look Mercedes-Benz C-class range here.

This year the company hopes to sell nearly 1800 cars, including the new-look vehicle.

The new C-class car, which will cost between Rs 2.6 million and Rs 2.9 million in India is being simultaneously launched in the UK, Japan and India.

The new vehicle would be available in two engine variants, the petrol C-200 Kompressor and the diesel C-220 CDI. The C-class version was launched in India in 2001, Sahajwala said.

A newly developed technology, powerful engines, the latest technical innovations and sporty agility were among the new features combined in the new car.

He said the company registered a turnover of Rs 430 crore in the year 2003. — PTI
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FM promises big tax reforms
Tribune News Service

New Delhi, July 24
Finance Minister P. Chidambaram today promised to launch major tax reforms next year in conformity with the recommendations made by the Kelkar Task Force even as he sought to downplay the projected differences with the Left parties on FDI, saying that the BJP was creating more difficulties on this front.

"I did not launch big ticket tax reforms in this year's Budget as the Kelkar Task Force Report was not available for public debate. There are still seven months to go for the next Budget. Let us deliberate on the proposals of the task force and arrive at a consensus," the Finance Minister said at a meeting organised by the Associated Chambers of Commerce and Industry of India (Assocham) here.

Lauding the Kelkar Task Force for suggesting "radical" reforms on the tax front, Mr Chidambaram said, "If we can build up a sensible tax regime, it will be a major success story of 2005."
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Pressure on EPF board for 8 pc interest
Tribune News Service

New Delhi, July 24
The CPI-affiliated Aituc today accused the UPA government of pressurising the board of trustees of Employees Provident Fund to agree to 8 per cent interest rate for 2004-05 and demanded an inquiry into the irregularities in the working of the country's largest public fund.

"The board of trustees is being pressurised by the Labour Ministry to agree to 8 per cent," trade union General Secretary Gurusdas Dasgupta told newspersons here. The EPF board has held three meetings since June 30 to decide on the rate of interest to be offered to 340 million subscribers, but no agreement was reached as the Government stuck to 8 per cent, while most trade unions demanded 12 per cent.

The fourth meeting of the EPF is scheduled for August 9 and the Labour Minister Sis Ram Ola has expressed the hope that the board will take a unanimous decision on the EPF rate.

However, RSS-affiliated BMS and left trade unions did not share the minister's optimism even though they had authorised him to take a final decision. The NDA government had reduced the rate of interest on special deposit scheme to 8 per cent.
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NTPC IPO by mid-Sept

New Delhi, July 24
The much-awaited initial public offering of NTPC will open by mid-September, company CMD C P Jain said today, but refused to divulge the price band of the issue through the book-building route.

"The price-band will be decided after assessing the markets at that time," Mr Jain told mediapersons after a CII-sponsored seminar on the Electricity Act here.

However, sources indicated that the book value of an NTPC share of Rs 10 face value was hovering around Rs 45 with an earning per share of Rs 6. According to analysts, with strong fundamentals, NTPC could raise up to Rs 2,000 crore. The issue is the most sought-after after the mega IPO of TCS.

NTPC has already submitted a draft red herring prospectus with the Securities and Exchange Board of India envisaging an IPO to raise about 5.25 per cent of its equity (Rs 432 crore) of Rs 7,812 crore.— UNI
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Best insurance man to get award
Tribune News Service

Mumbai, July 24
Mr Hira Lal Chopra, a Mumbai-based businessman hailing from Amritsar, has introduced an award for the best insurance person of the Year. The winners will be chosen from among the people working in the general and life insurance sectors.

"The award trophy will be the replica of the General Insurance Corporation building - Suraksha - and will also carry a cash price of Rs 25,000," Chopra said. The trophy will be named after Late Madan Gopal Chopra, he added

The selection committee comprising of Mr S.K. Kanwar, former chairman New India and United India Assurance, A.P. Pradhan former GM New India, Mr S.C. Bhargava Executive Director LIC, and L.P Mehta former G M New India has selected Mr H.S Wadhwa, chairman National Insurance Co. Ltd for the award.

Mr Hira Lal Chopra, who bagged the World Business Leader award for 2004 constituted by the International Association of Business Leaders is chairman Pratibhuti Viniyog Ltd, an online stock-broking firm based in Mumbai and the Middle East.
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AVIATION NOTES 

A-I hostesses lose sheen
by K.R. Wadhwaney

There was time when Air-India enjoyed a tremendous reputation with foreign flyers. The hostesses then were friendly and pleasant and food — snacks or meals — was excellent. To even economy class passengers, meals were served in style.

It cannot be said so of Air-India today. Most of the hostesses seem to be casual in their service which, according to regular flyers, means that they are no longer enjoying their work. There is a marked deterioration in the quality of food.

This decline has become more noticeable now because several other foreign airlines — in competition with Air-India — have taken vigorous measures to improve their inflight services. Some passengers say that ‘freshners’ in toilets are also in short supply, causing a lot of inconvenience to passengers.

The overall civil aviation scenario in the country is lacklustre, but Indian Oil Corporation (IOC) has embarked upon new and refreshing ideas to widen its operations in supplying jet fuel to the airlines. As of today, there are 94 aviation fuel stations from Thiruvananthapuram to Leh and it serves to more than 90 international carriers, in addition to domestic airlines.

Just as airports are sleepless hubs, so is IOC, which provides fuel to operators round the clock, regardless of strikes and bandhs and disruptions in other areas. “We have a major pie in the supply of aviation fuel in the country and we are contemplating to step it up,” said a senior official of the IOC.

Munich airport

While the upgradation of Indian international airports remains a distant dream, the Munich airport (Terminal II) has completed a highly rewarding one year. It has acquired clearance for operations of Airbus A-380 whenever they are launched. What is important is that the Munich airport is fully geared and equipped to handle flights. The standards for handling super jumbo jets are exacting, but the Airport is ready for operations.

Apart from technical achievements regarding the length and width of runway and larger-scaled pier parking positions for A-380 craft, Terminal II is fully equipped for quick and easy boarding and disembarking. The aircraft can carry 800 passengers. The jumbo 747 looks a ‘small bird’ in comparison to the A-380.

It was be the day when any of the Indian airports will be able to handle an A-380. Maybe, it will take at least two decades more, judging from slovenly progress made by the Airports Authority of India, which is embroiled in internal bickerings and problems. 
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Investor guidance

Bonus taxable, like interest
by A.N. Shanbhag

Q: I have invested in the Post Office monthly income scheme which gives 8 per cent interest p.a. However, in the last year, apart from the interest, there is also a 10 per cent bonus payable. I know that the 8 per cent interest is taxable and also gets deduction u/s 80L. Please advise me the tax status on the 10 per cent bonus payable on maturity of Post Office MIP

— Naresh Yadav

A: Circular F. No. 2/2/90 N.S.II dated 16.2.93 states that the 10 per cent bonus at maturity is not long-term capital gain but interest, covered by Sec. 80L. Therefore, the taxability of the bonus is on similar lines as the interest.

LIC agency

Q: I am an engineering student and have taken up LIC agency for the past three years. LIC recovers 10 per cent of income tax from my commission. Can I claim the refund of the tax deducted so far, as I have no other income? I have applied for PAN also.

— Rohit M. Kakirde

A: As per the CBDT circular 648 dated 30.3.93, LIC agents having total commission (including 1st year commission, renewal commission and bonus commission) of less than Rs. 60,000 for the year and not maintaining a detailed account for expenses incurred by them, may be allowed an ad hoc deduction as follows :

l Where separate figures of 1st year and renewal commission are available, 50 per cent of first year commission and 15 per cent of renewal commission;

l Where separate figures are not available, 33.33 per cent of the gross commission.

In both the above cases, the ad-hoc deduction will be subject to a ceiling of Rs 20,000. The 'gross commission' includes the 1st year as well as the renewal commission, but excludes bonus commission. Benefit of ad-hoc deduction will not be available to agents with a total commission of over Rs 60,000 during the year.

U/s 194D tax is required to be deducted at source when the amount of commission is Rs 5,000 or more during the year. In other words, even if you do not have income from any other source and the total insurance commission received by you is far below the minimum taxable limit, TDS is applicable. The only way to bypass the TDS is to get a certificate from your ITO, allowing the authorities to waive TDS - understandably a difficult proposition.

Of course, you can claim refund due, if any, by filing returns.

Capital gains

Q: I am a regular reader of your and have always benefited from your articles. Thanks. I have a confusion regarding the short-term capital gains tax as per the recent Budget. For long term, it clearly states that there are no taxes if the securities are transacted on Indian stock exchanges. How about short-term capital gains? Do they also need to be on Indian exchanges? I have a few Employee Stock Options (ESOP) from my employer based in the USA. I work for the Indian subsidiary and sell the stock options in the USA and till now was paying 33 per cent as advance tax. I have a feeling that this will not change as per the new Budget. Is this correct?

— Gaurav Aggarwal

A: Yes, you are right. The eligibility for the new exemption depends upon the sale of the security on 'a recognised stock exchange in India'. ADRs and GDRs are not included.

No double tax

Q: I am not able to appreciate that when a person is paying income tax and he is buying something out of the remaining income he is again paying sales tax on it which is actually a purchase tax. Does it not amounting to double taxation?

As the FM is implementing Modvat should he not allow a Modvat on IT paid by individual once the sales tax (even the excise) has been paid by a person on his purchases? As the new income tax provision calls for accounting to tax authorities of all the expenditure above Rs 50000 in a year is it not worthy to allow Modvat of sales tax on the income tax paid?

— N. Daga

A: Sales tax, Modvat, excise, etc., are not income tax. You could have said, without traveling outside income tax, something like this --- An employee buys medicines from his after-tax income. Should the chemist pay income tax? The chemist buys medicines from the pharmaceutical company out of his after-tax income. Should the company pay income tax? 
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BRIEFLY

Punjab Tractors
Chandigarh, July 24
Punjab Tractors has announced the first quarter (April-June, 2004) profit before tax of Rs 15.2 crore against Rs 7.5 crore posted for the same period last year, a jump of 103 per cent. Driven by a 40 per cent rise in volumes which reached 7400 tractors for the quarter, the net revenue grew 52 per cent to reach Rs 182 crore. Volume growth was mainly in the 31-40 HP and 41-50 HP segments where the company had introduced two models in the last quarter of fiscal 2003-04. The geographical spread of this growth was also broad-based, covering the central, western and southern territories of the country. —TNS

Spiderman smile
Chandigarh, July 24
Sony is running an exciting "Be a Cyber-shot Hero" promotion in its Sony World outlets at Chandigarh, Ludhiana, Jalandhar and Amritsar. Coinciding with the launch of `Spiderman 2, Sony has created a month-long opportunity for the public to walk into the outlets and have fun around the popular comic book hero Spiderman. Parents can click their child in Spiderman style on a digital camera and carry the moment back home, as a photo print or through email to friends and relatives free of cost.—TNS

Best Hotels
New Delhi, July 24
Two Indian hotels have made it to this year’s World’s Best 100 Hotels list compiled by the Travel and Leisure magazine. This is the first time that Indian hotels feature in the list and interestingly both belong to the Oberoi Group. The Oberoi Rajvilas, Jaipur, made its entry in the list at the 29th position, while the Oberoi Amarvilas, Agra, barely made it to the list at the 91st rank. – UNI

Unclaimed
New Delhi, July 24
A whopping Rs 742.20 crore is lying with the nationalised banks and other schedule commercial banks as unclaimed account as on December, 2003. Minister of State for Finance S.S. Palanimanickam informed the Lok Sabha that the unclaimed amount in SBI group of Banks is Rs 145.67 crore while in other nationalised bank, it was Rs 504.21 crore. The unclaimed amount in private sector bank is Rs 50.31 crore and Rs 42.01 crore in foreign banks. — UNI
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