Left open to discuss divestment in non-navratna companies
Revised ombudsman plan for banks soon: FM
Branding of loom products on cards
Rolls-Royce bags $600 m deal from
HPCL plans stake in Shell’s LNG
India, Mauritius to sign pact
Cadila posts 19 pc rise in
Mumbai, October 22
Cadila Healthcare Ltd today posted 19.07 per cent rise in net profit at Rs 51.8 crore for the quarter ended September 30, 2005, as compared to Rs 43.2 crore in the year-ago period.
Level playing field for
national, private airlines
Invest capital gains in realty to save tax ELSS withdrawals Double taxation
Left open to discuss divestment in non-navratna companies
New Delhi, October 22
“We are opposed to disinvestment of navaratna companies but shares can be sold in other companies to raise resources for the social sector,” Mr Karat told the Forum of Financial Writers here today.
He explained that the Left was asking the government to emulate what is happening in West Bengal. In the Left Front-ruled state there were some unviable companies which can be closed. The Left was ready to discuss privatisation on a case-by-case basis in keeping with the National Common Minimum Programme. Some resources can be raised from that as well.
Of the 240 odd central PSUs, only nine were in the navaratna categority. Among them 88 are loss making and the rest are making profits.
Mr Karat was also against foisting politicians as independent directors on the boards of public sector companies which he insisted was a bad idea. “We do not want PSUs to be run as government departments.” While underlining the need for Parliamentary control over the PSUs, the Left favoured professionalisation of these companies.
Stressing that he was not a hardliner as being made out by the media and others, Mr Karat expressed confidence that the Left parties Coordination mechanism with the government would work well.
The UPA-Left Coordination Committee is meeting here on October 27 after a gap of four months on the condition that the union government will not divest stake in the navaratna companies.
“We are not pessimistic at all...we are confident that constructive discussion will take place at the meeting on several issues including Foreign Direct Investment in the retail sector, raising resources for the social sector and bettering the rural economy.” He said during the UPA-Left Coordination Committee meeting they would discuss the Chinese experience. “We are not asking the government for certain dos and don’ts but suggesting some alternatives in the framework of the NCMP.”
The Left would also focus on the decline of agriculture, raising public investment flows to the rural and remote areas. “We would also tell the government to keep in mind that the people rejected the NDA government during the 2004 Lok Sabha elections because it created a hype about the economic growth but ignored the ground realities,” Mr Karat added.
Bangalore: Ruling out disinvestment in profit-making public sector enterprises, Defence Minister Pranab Mukherjee today said a debate on this topic was “unnecessary.”
“There is no question of disinvestment in profit-making public sector enterprises on a sustainable basis in a competitive environment.” Mr Mukherjee said in his address to the 28th plenary session of the Indian National Trade Union Congress (Intuc) being held here.
Be it in banking or manufacturing, the government’s stake should not be less than 51 per cent, he said. “To my mind, this debate (on disinvestment) is unnecessary.” — PTI
Revised ombudsman plan for banks soon: FM
Manipal, October 22 Addressing staff of Syndicate Bank, customers and people after reviewing it's functioning at its head office here, he said he had received the revised plan only yesterday after it was submitted by the Reserve Bank of India (RBI). This system would act as the watchdog of customers of banks, including lenders and depositors, he said.
Manipal, October 22
Addressing staff of Syndicate Bank, customers and people after reviewing it's functioning at its head office here, he said he had received the revised plan only yesterday after it was submitted by the Reserve Bank of India (RBI).
This system would act as the watchdog of customers of banks, including lenders and depositors, he said. — PTI
Branding of loom products on cards
Chennai, October 22
The ministry had entrusted the council for textiles promotion with the task of developing a handloom mark for handwoven products so that they were not duplicated, Chairman of Tamil Nadu Handloom Export Promotion Council M Sivakkanan said today. Stating that the council had already started the process of developing a brand, he said the ministry was also providing funds for design centres establishing full-fledged designing centres at Kannur (Kerala), Karur (TN), Panipat (Haryana) and Kekera (UP).
The Union Commerce Ministry had declared these places as towns of export excellence, he said. The entire textiles industry in general and the handloom industry in particular was agog and vibrant at the prospect of entering a new era of the WTO regime and globalisation and hence the industry had to move towards the highest form of preparedness, Sivakannan said at a workshop here on 'Strategies and preparedness for trade and globalisation in India for textile and clothing sector'."
At the national level this sector has the potential to grow up to $ 85 billion by 2010 from the current level of $ 36 billion. India is emerging as a country with tremendous potential after China due to its cheap labour and abundant natural resources," state Director for Handlooms and Textiles S Ramachandran said.
He said the strength of the handloom sector was its ability to produce intricate designs, meticulously woven on fabrics in a striking range of colours. — PTI
Rolls-Royce bags $600 m deal from IndiGo
London, October 22
The order is the biggest-ever received by International Aero Engines (IAE), the consortium which produces the V2500 engines, and in which Rolls-Royce is a senior shareholder.
IndiGo has ordered 100 Airbus A320 jets worth $6 billion at list prices, according to a statement from Rolls-Royce. Deliveries will start in 2006. The V2500-A5 engine, available at seven different thrust ratings, is suitable for the Airbus A319, A320, A321 and the A319 corporate jet.
Mike Terrett, President of Civil Aerospace at Rolls-Royce, said, "This is a significant, strategic success for IAE and Rolls-Royce in the burgeoning Indian market." V2500 is the only engine type selected by private sector airlines in India which have ordered the A320 series of airliners, Rolls-Royce said. IndiGo President and CEO Bruce Ashby said: "The inherent fuel burn advantages of the V2500 engine and the V2500Select(TM) programme proved to be the key differentiators in this decision, especially in terms of the operating cost benefits to our operation, the product improvements V2500Select(TM) delivers and the unique approach to services IAE has adopted. — UNI
HPCL plans stake in Shell’s LNG terminal
Surat, October 22
Shell's LNG (Liquefied Natural Gas) plant in Hazira is India's second re-gasification terminal and has been designed to import 5 million tonnes of super-cooled gas a year.
While French oil company Total SA holds a 26 per cent stake in the project, the Hazira project is India's first merchant terminal to offer flexible short-term contracts to customers unlike the traditional model of rigid long-term supply contracts wherein a customer is committed to buy gas for 20 years.
HPCL's sole interest in picking up the stake was to foray into LNG imports and then market the gas in various parts of the country. — UNI
India, Mauritius to sign pact
Port Louis, October 22
A framework for the pact is expected to be signed by Prime Minister Manmohan Singh and his Mauritian counterpart Navin Ramgoolan during a visit to India next week." Mauritius has identified a number of products with export potential, which we hope to export to India under the Preferential Trade Access Agreement between the two countries," said Rajesh Jeetah, Mauritius' Industry Minister.
The pact will list a number of products which the two countries can trade at low or zero tariffs and officials say India is interested in exporting pharmaceuticals, agricultural machinery, automobiles and spare parts. India's exports to Mauritius reached $228 million in 2004, making it Mauritius' third biggest supplier, while Mauritian exports to India doubled last year to $16.50 million. — Reuters
Cadila posts 19 pc rise in profit
Mumbai, October 22
Total income has increased 9.79 per cent to Rs 349.7 crore for the quarter ended September 30, 2005, from Rs 318.5 crore in the same period last fiscal, the company informed the Bombay Stock Exchange.
The group has posted a consolidated net profit of Rs 48 crore for the quarter ended September 30, 2005, as compared to Rs 34.9 crore in the corresponding period in 2004-05. — PTI
by K.R. Wadhwaney
Level playing field for national, private airlines
The general health of private carriers is far from satisfactory. Most of them are incurring losses as overhead expenses, particularly fuel prices, are increasing. Some of them have taken to international skies. But the picture is gloomy whatever bosses of some airlines may claim. Some new no-frills airlines will soon hit the Indian skies. The competition will indeed increase but overall scenario will worsen because market share will get diluted further.
Amidst this unstable situation, Air-India’s Chairman and Managing Director (CMD) V. Thulasidas has gone on record saying that the merger of two national carriers is inevitable. He also says that merger will help attain greater synergy, reduce costs and avoid duplication. Saying all this on paper is easy but translating it into reality is virtually impossible in this country, where committees or sub-committees spring up.It is believed that the words of the CMD are not his own. He has spelt out what government has been seriously thinking. This is not the first time the government contemplates the merger of two national carriers.
Nearly 15 years ago, a serious attempt was made for merger when Jagdish Tytler was aviation minister. Bureaucratic committees came up. Some senior heads rolled in Air-India. Lofty talks and promises were made. Rosy picture was painted. What happened eventually? The merger bid was grounded for bulky files to collect dust in Rajiv Bhavan.
During these 15 years, several ministers have been changed. Bureaucrats have retired. Many CMDs have come and gone. The merger has not come about because minds of those who matter in government, are locked. The merger may become possible if politicians open their minds and undertake this complex project in the interest and welfare of the country’s aviation.
The dispassionate study shows that almost all politicians have been supportive of private carriers since skies were thrown open in 1992. No aviation follower objects to the government assisting private airlines. But supporting private airlines does not mean paying foul with national carriers.
The development of national carriers is vital. Whatever their problems — mostly man-made — are the only ones which are serving religiously for ‘social causes’. They are the ones which function in emergencies. They are the ones which fly on non-profitable routes. The government does not apply similar coercive methods where private operators are concerned. The double rule — one for national carriers and another for private operators — does not augur well for the government.
However, the merger of two national carriers is one thing. But achieving synergy is totally different. The synergy can be achieved even without merger. Unfortunately, Air-India has been planning to take Indian Airlines head-on on domestic routes instead of diverting its attention to compete with private airlines. Healthy competition with equal ground level is welcome but not manoeuvrability.
Air India CMD says: “Instead of owning two companies, the government will own one in the same vertical where it can bring synergies to bear, and this will help them in raising fresh funds from the capital market.”
There was a time when there was just one ministry to cater to the needs of aviation and tourism. Now there are two. Both function independently. Why not bring aviation and tourism under one ministry? It will bring in more synergy then.
by A.N. Shanbhag
Invest capital gains in realty to save tax
Q: I have got my ancestral agriculture land of about 18 kanals in the month of March-2004 from my father as a gift. Out of the said 18 kanals, I sold 6 kanal 5 marlas at the rate of Rs 6,25,000 on 10-8-2005. The said land is agricultural and it falls within the municipality limit and accordingly stamp duty for sale deed was paid by the buyer as per collector rate for agriculture land within MC. My father got the land from his father in March 1968 as result of family partition and his father (my grandfather) got the land at time of country (India & Pakistan) Partition in 1950 in lieu of his land in (West Punjab) now in Pakistan as per policy of Government of India.
Please advise what is my capital gain tax liability and how can I minimise or neutralise this capital tax, if any, arising from the above sale. I am salaried person and getting annual salary of about Rs 2,85,000 in the current financial year.
— Ajit Singh Virk
A: For computing long-term capital gains arising out of the subsequent sale by the donee or the legatee, the cost of the property is the cost incurred by the donor when he originally acquired it, or the FMV as on 1.4.81 as assessed by an official chartered valuer, whichever is higher. Explanation ‘iii’ to Section 48, defines ‘indexed cost of acquisition to mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later’.
This means that in the case of an inherited or gifted property, the cost of acquisition is the cost to the original holder (or FMV as on 1.4.81) but the date of acquisition should be taken as the date of the inheritance or the gift. However, the character of long or short-term depends upon the date of acquisition of the original holder. In case this original holder has also acquired the property by way of gift or inheritance then it will be the date of very first holder who purchased or constructed the property.
In your case, you will have to get the FMV as on 1.4.81 from an official valuer and use the index for 03-04 (= 463) and 05-06 (= 497) to arrive at indexed cost. Subtract the same from the sale value (Rs 6,25,000) to get the long-term capital gains. The tax payable will be 20 pc of the indexed capital gains.
There are three different methods available to you for saving this tax.
1. Invest within 6 months the amount of capital gains in infrastructure-related bonds of Nabard, NHAI, NHB, REC or Sidbi u/s 54 EC. The lock-in period is 3 years. The current interest rate is around 5.5 pc and this is fully taxable. Obviously, the interest is quite low and what is given by savings in tax is taken away by earning low interest and the tax on this interest.
2. Purchase a residential house within 1 year before or 2 years after the date of sale or construct a residential house within 3 years after the date u/s 54F by investing the net sale proceeds (after the related expenses) to be reinvested. The assessee should not own more than one house on the date of earning the capital gains. The new house has a lock-in of 3 years.
3. Capital gains from transfer or sale of agricultural land used by the assessee or his parents for agricultural purposes for at least 2 years immediately preceding the date of transfer, are not to be included in the gross total income provided a) The assessee has purchased any other agricultural land within 2 years after the date of transfer or sale and b) The cost of the new land equals or exceeds the capital gains. If the cost of the purchased land is less, the exemption is pro-rata.
Q: I wish to know that after 3-year lock-in period in ELSS, when units are sold, the receivables are taxfree or added to that year income?
If one invest in ELSS by SIP (Systematic investment Plan) say for 3 years (i.e. 36 months) what is lock-in period?
— Hemant Patel
A: As per current tax rules, the sale after the lock-in of 3 years will attract the provisions of long-term capital gains. The scheme being equity-oriented one, the LTCG would be exempt. The original capital invested is not taxed as per the existing law.
Investors may note that though as of now the Finance Act, 2005 does not tax any withdrawals from ELSS, it may be possible that as and when the EET system becomes fully operational, any redemptions from ELSS may be subjected to tax.
In order to work out the roadmap for smoothly moving towards the EET system, the Bill has proposed to set-up a committee of experts. Such committee will examine the mix of savings instruments that would qualify under the new system and propose suitable tax incidence.
2. Each instalment will have its own lock-in of 3 years each.
Q: I have been living in the US for the past 30 years and have got US citizenship. Next year I plan to return to India and settle there after my retirement. However, I am entitled to pension from my employer (private sector) for the next few years. Also, I am entitled to certain social security benefits. Both amounts will be credited in local rupees eventually to my bank account in India. My question is regarding the taxation thereof. As after 6 months of living in India, I would become an Indian resident, how will these payments be taxed?
issue is addressed by the Double Taxation Avoidance Agreement between
India and the USA. The domestic laws of each country may seek to tax
these payments individually, Article 20 of the Agreement clearly
specifies that the pension will be taxed in the country of residence
(in your case India) while the social security benefits will be taxed
in the source country (in this case, USA).