SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Another possible petro price hike threatens consumers
Cascade effect on inflation rate feared
New Delhi, August 8
At a time, when large parts of the country are reeling under floods and drought-like conditions, the oil companies are contemplating another hike in petrol and diesel prices during the next price review by mid-August, due to rise in international crude oil prices.

EPFO Board meets today
New Delhi, August 8
Amid inflation rate crossing seven per cent and trade unions seeking 12 per cent returns, the Employees Provident Fund Organisation (EPFO) Board will not find it easy to keep interest rate at 8 per cent.

World President of General Motors Allen Peritan with UP CM Mulayam Singh Yadav at the latter’s residence on Sunday

World President of General Motors Allen Peritan (left) with UP CM Mulayam Singh Yadav at the latter’s residence on Sunday. Also seen are State Development Council Chairman Amar Singh and Sahara Group Chairman Subrata Roy (right). General Motors India announced a limited Rs 16,000 discount on its mid-size car, Opel Corsa, as part of anniversary celebrations of its Chevrolet brand in India. The discount will be valid till end of September. — PTI


Market scan

The best is over, market may
plateau for now

T
he stock market has welcomed the revival of monsoon and has gone bullish. The Sensex has not only crossed the 5200-mark but also recorded a 3-month high. Business Standard’s analysis indicates that the Indian stock market has been doing better during the recent weeks as compared to many of the Asian stock markets.



Zayed Khan is seen in this file photograph
Main Hoon Na: Zayed Khan is seen in this file photograph. After signing sizzling Cindy Crawford and Pamela Anderson, the international pizza chain Pizza Hut is hiring Bollywood’s latest heartthrob, Zayed Khan, as its brand ambassador to reach out to the youth. With the fast food industry in India touching about Rs 98,000 crore, the company views India as a critical market.



EARLIER STORIES

 

TAX ADVICE

Get rebate on construction loan for another house
Q. Is a person eligible for Income tax rebate on the house construction loan taken for construction of second house?
A. The facts given by you are not very clear. It has, however, been presumed that the clarification sought by you is in respect of rebate from income tax allowable u/s 88 of the Act.

British Airways will boost surcharges on tickets by about 200 per cent as a result of record high oil prices British Airways will boost surcharges on tickets by about 200 per cent as a result of record high oil prices, according to a report. Europe’s second-largest airline will announce that a current £2.50 charge per leg will rise to between £6 and 8, The Observer said.
— Reuters

Top


 

 

 


 

Another possible petro price hike threatens consumers
Cascade effect on inflation rate feared
Manoj Kumar
Tribune News Service

New Delhi, August 8
At a time, when large parts of the country are reeling under floods and drought-like conditions, the oil companies are contemplating another hike in petrol and diesel prices during the next price review by mid-August, due to rise in international crude oil prices.

Since the government has already given a green signal to the oil companies to increase petrol and diesel prices by up to 10 per cent without its approval, they would not require any sanction. Oil companies are likely to announce hike in diesel and petrol price by Rs 1 to 1.5 per litre this month itself, said the official sources adding that “ the price hike was inevitable though it may be postponed for a fortnight or so keeping in view high inflation.”

The industry experts say amid inflation rate already crossing seven per cent, another hike in diesel and petrol price may lead to further rise in inflation. They said recent hike in petrol and diesel prices have already led to increase in the costs of transport, agriculture and manufacturing sector by 0.2 to 0.5 per cent.

Mr S.P. Singh, coordinator, Indian Foundation of Transport Research and Training (IFTR), claimed that truck freightage on most routes have already dropped by over 2 per cent after hike in diesel prices.

A senior official of an oil company disclosed that since Petroleum Minister Mani Shankar Aiyar has failed to convince the Finance Minister to “provide adequate budgetary allocation for the subsidised LPG and kerosene in the Budget, he is expected to remain silent on another price hike.” In fact, he is more busy with the Panchayati Raj ministry than this unpopular ministry, he added.

Oil companies have claimed that despite recent hike in petrol and diesel prices by around Rs 1 per litre, they would not be able to absorb the LPG and kerosene subsides unless the government decides to cut down duties on petro products. The international crude prices are likely to remain high, currently touching $ 44 per barrel, due to continuing Iraq crisis, crisis in Russian oil exploration, and increased demand from the USA.

Oil companies officials maintain that as much as 50 per cent of the petrol retail is pocketed by the Central and State governments. With every increase in petrol or diesel prices, the governments would additional revenue in the form of central excise and sales taxes.

At present, they said, the tax rates on petrol and diesel are much higher than most of the luxurious items like air-conditioners, cars or colour televisions. For instance, in most of the towns in North India, for every litre of petrol costing around Rs 36, the consumers are paying between Rs 17 to 18 to the Centre and state governments. In case of diesel, they are paying above Rs 6 per litre in the form of taxes.

The oil companies have proposed the government to review the excise and sales tax on petrol and diesel to bring down their costs, at least for the period till the international crude oil prices cool down.

Sources in the Ministry of Petroleum and Natural Gas disclosed though the government was concerned with the rising petrol and diesel prices in the domestic market that had fuelled the inflation to some extent yet the Finance Ministry had so far resisted the move to lower taxes. Perhaps government may have to review its decision if the Leftist parties and the Opposition build up pressure on the government to keep petrol and diesel prices under control, they added.
Top

 

EPFO Board meets today
Tribune News Service

New Delhi, August 8
Amid inflation rate crossing seven per cent and trade unions seeking 12 per cent returns, the Employees Provident Fund Organisation (EPFO) Board will not find it easy to keep interest rate at 8 per cent. The board is meeting tomorrow to take a decision on interest rate for its three crore subscribers.

During the past three meetings, the board has failed to decide on the interest rate. Now when the inflation rate has already crossed 7 per cent, claim trade unions, the board cannot offer a mere one per cent “real interest rate” on their hard-earned money in the name of social security net. The banking circles are already talking of increase in interest rate.

RBI Governor Y.V. Reddy has also admitted that economy is observing an increase in credit demand though the inflation rate that has touched 7.51 per cent, is due to imported price oil shock. Union leaders have pressed upon the board that it should look for higher returns on their money from the market.

Unable to find a common ground between the “high” interest demanded by central trade unions and 8.0 per cent proposed by Finance Ministry, the Central Board of Trustees (CBT) of EPF had to defer a decision repeatedly.

The tripartite CBT is likely to have a tough time persuading the unions to accept lower returns in view of spiralling living costs measured by Wholesale Price Index inflation.
Top

 
Market scan

— by J.C. Anand

The best is over, market may plateau for now

The stock market has welcomed the revival of monsoon and has gone bullish. The Sensex has not only crossed the 5200-mark but also recorded a 3-month high. Business Standard’s analysis indicates that the Indian stock market has been doing better during the recent weeks as compared to many of the Asian stock markets.

The first quarter results of the corporate sector have been good. Reliance, Tisco and Larsen & Toubro (which had been recommended in this column) have done well in terms of the market prices. Colour Chem (which closed at Rs 303.58 last week) has been moving up on the expectation that the Supreme Court judgement, which is likely to come during the next two weeks or so, may favour the shareholders on the buy-back offer of the Colour Chem’s foreign parent. The hearing on the issue has been completed last week. A favourable judgement may also reward the shareholders of Venavil Dyes.

The Reliance Industries scrip is quoting around Rs 500 buoyed by the news of the discovery of new gas wells in the D-6 block of the Krishna-Godavari basin and in the NEC-25 block off the east coast.

The Nahar group of companies has also announced their first quarter results. Nahar Spinning’s net profit stands at Rs 910.28 lakh against Rs 690.58 lakh for the corresponding period last year.

Tata Consultancy Services has been over-subscribed by 10 to 11 times. The scrip may command some moderate premium on the issue price. But in the long run it will be a highly profitable investment. Hopefully within the two years, the scrip may quote at Rs 1,200 nearly. It is interesting to note that the FIIs have put in substantial application money in the issue.

So far, the stock market, in spite of its volatility, has been doing well but it appears that the market may go flat or even suffer some sharp decline during this fortnight. This view is based on the analysis that the performance of the corporate sector is bound to be affected by the early drought and later floods, landslides and disruption of road and rail transport. The petro prices and the rising inflation rate (which now stands at 7.51 pc) are also likely to slow down the production and affect sales and profitability of the corporate sector.

Now as the first quarter results of the corporate sector have been announced, there is little to trigger an upward movement in the market.
Top

 
Tax advice

— by S.C. Vasudeva

Get rebate on construction loan for another house

Q. Is a person eligible for Income tax rebate on the house construction loan taken for construction of second house?

— Anil Gupta

A. The facts given by you are not very clear. It has, however, been presumed that the clarification sought by you is in respect of rebate from income tax allowable u/s 88 of the Act. The provisions of the Section 88(2) (xv) provide for the rebate for the purposes of purchase or construction of a residential house property, the income of which is chargeable under the head “income from house property” or which would have been so chargeable had it not been used for the assessee’s own residence. This section nowhere indicates that the rebate is allowable for the construction for one house only. It may therefore be possible to argue forcefully for the grant of rebate for another residential house.

Mutual fund units

Q. Please refer to The Tribune dated July 22, 2004, under column Transact Tax Para 7 for unit holders holding units in equity-oriented mutual fund. The Finance Minister has said the units would be treated as “securities” and benefit of the new capital gains tax regime extended to such unit holders. Kindly let me know whether such benefit would be extended to me as I am a unit holder of UTI – Scheme CGGF, which has been terminated by the UTI. I had bought units in the name of my stepson. Will the gain be clubbed with any income or with the income of his parents?

— Sarabjeet Kaur

A. The Finance Minister has made the following statements in the Parliament on July 22, 2004. “In respect of the unit-holders holding units in equity-oriented mutual funds, I propose to treat ‘units’ as ‘securities’ and extend the benefit of the new capital gain regime to such unit holders. However, like any other equities traded on the stock exchange, now they will have to pay securities transaction tax at 0.15 per cent (i.e. 15 basis points).” Accordingly, you will be covered in the scheme in case the units are held in the equity-oriented mutual fund. As far as the clubbing of the income of the stepson with your income is concerned, it will depend upon the status of the child. If he is a minor, the income will be clubbed under Section 64 (1A) of the Act. In case he is an adult, you can always claim that the money or the units have been gifted to him and therefore any gain arising on the sale of such units will be taxable in the hands of the stepson. However, such gift must be disclosed in your tax return. I may add that the securities transaction tax would come into operation w.e.f. such date as the Central Government may notify in the Official Gazette. The new scheme for capital gains would be applicable for the assessment year 2005-06 i.e. for the year ended March 31, 2005.

Education cess

Q. The Finance Bill 2004 has provided for an education cess @2 per cent on various direct and indirect taxes. Please let me know the date of applicability of such cess?

— Usha Kumari

A. The education cess on direct taxes would be leviable w.e.f. the date the Finance Act, 2004, becomes applicable. However, in case of indirect taxes i.e. Excise and Customs, it has become applicable from the date of the Budget.

IT return

Q. I am a retired railways employee with over 66 years of age (in a group of senior citizen) and have been getting pension, after retirement. My income particulars are as under:

Gross amount of yearly pension payment: Rs 49,534
Yearly interest earned (under MIS of post office): Rs 7,400
Interest calculated from the saving account of bank & post office: Rs 778
Interest accrued on STD of bank yearly –( approx in maximum): Rs 2,300
Total: Rs 60,012

Please let me know whether:

i) Income tax return i.e. to be filed or not at this stage in view of the above facts, whether it is taxable or not.

ii) Standard deduction to be deducted from the yearly Pension Payment as shown above or to be deducted from the Gross Total.

iii) Rate of standard deduction is 1/3 per cent or 40 per cent of yearly income.

iv) Maximum standard deduction as admissible.

v) Exempt income limit as admissible on the mode of earned interest under monthly income scheme of post office & banks.

vi) Whether the interest/ dividend against the amount of Rs. 7,000 for 700 shares on 09.01.1995 and received back the amount of Rs. 7,186.35 on 02.09.2003 after 8 years, under the scheme of UTI (Unit Trust of India), MEP (Master Equity Plan- 1995-UTI/ Mutual Fund are also to be counted in the Col. No. 3 above; (which comes to Rs. 186.35 i.e. 7,186.35 minus 7,000/-) or not at this stage.

— Om Prakash

A. On the basis of the figures given in the question, it appears your total income being less than 50,000, you are not required to file the return of income. You are entitled to a standard deduction of 40 per cent of your salary income or Rs 30,000, whichever is less. standard deduction is allowable with reference to salary income only.

The maximum standard deduction allowable to you would be Rs 19,814, which would be 40 per cent of Rs 49,534, being the amount of your yearly pension. The deduction allowable under Section 80-L of the Act in respect of the interest income is restricted to Rs. 12,000.

This includes the interest under the Post Office (Monthly Income Account). Rules, 1987. The amount of Rs 186.35 which you have received back after eight years under Master Equity Plan, 1995, would not be taxable on account of indexation benefit available under the provisions of the Act as there would be a capital loss in respect of the repurchase of such units by Unit Trust of India which have been purchased at a much lesser price than the indexed cost.
Top

  bb
BRIEFLY

Hike in rentals
New Delhi, August 8
Airtel and Hutch have increased the monthly rental for national roaming to Rs 49 a month with effect from August 10. While Hutch was charging a nominal Rs 20 per month, Bharti had scrapped it to zero in December last year. The spokespersons of the two companies said the rental has been increased. — PTI

GTB moratorium
New Delhi, August 8
The Union Government is likely to lift the moratorium on Global Trust Bank soon, as it has been decided to merge the troubled bank with the financially-strong Oriental Bank of Commerce. — PTI

SBI interest rates
Chandigarh, August 8
The State Bank of India has decided to revise the interest rates for domestic term deposits with effect from today. According to an official release, interest rates on short-term deposits of maturity ranging between 15 days to 45 days and 46 days to 179 dayshave been revised downwards by 25 basis points to 3.75 per cent and 4.25 per cent per annum respectively. However, there is no change in the interest rates of term deposits with maturity period of 180 days and above. — TNS

Cincom Systems
Mumbai, August 8
Cincom Systems India Pvt Ltd, the Indian arm of software major Cincom Systems Inc, is to add another 500 software developers and Business Process Outsourcing (BPO) personnel in the country even as it has set up a subsidiary in the US for outsourcing and Application Service Provider (ASP) services. — PTI

India’s exports
New Delhi, August 8
India’s exports to the US touched $13 billion in the year 2003, registering an average annual growth of 11 per cent. India’a exports to the US have been steadily increasing since 1993 and the country is at the 17th spot in the list of top exporters to the US, accounting for 1.6 per cent of the total US imports, a CII study said.
— PTI
Top


HOME PAGE | Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Opinions |
| Business | Sports | World | Mailbag | Chandigarh | Ludhiana | Delhi |
| Calendar | Weather | Archive | Subscribe | Suggestion | E-mail |