CNG-driven bikes on Bajaj’s agenda
Birlas may buy Tatas’ stake in Idea
New Delhi, April 8
“What we are developing is a dual-fuel two-wheeler which will, apart from CNG/LPG, will also have the option of running on petrol,” Bajaj Auto Managing Director Rajiv Bajaj told reporters here.
He said the product was currently under development “and we hope that it will be out in the next 12 months.”
Mr Bajaj said the company would like to see significant sales numbers from the vehicle when launched. “Obviously, we are a mass-market player,” he said.
On the foray in the four-wheeler segment, he said the cargo vehicle was currently under development. “We expect it to be in the market in the next two-and-a-half years,” Mr Bajaj said.
“This is the first time we are developing a diesel engine,” he said, adding that the entire research and development was being done in-house.
The company is also planning to start assembly facility in Indonesia and Nigeria apart from eyeing some SE Asian countries.
Bajaj Auto today launched a new 100-cc bike, Platina, which it hopes will become its highest-selling bike in the coming months.
The bike is the company’s latest entry-level offering where it also sells the popular CT100, its biggest number grosser.
The company, which aims to sell about 25 lakh units this fiscal, is setting up a new plant in Uttaranchal from which it hopes to produce an additional 10 lakh units, primarily Platina.
He said compared to CT100, which would see 50 per cent diversion of sales to Platina, the new model enjoyed better margins. “Platina will have better margins than CT100,” he said. — PTI
New Delhi, April 8
While spokespersons of the two sides declined to comment on the issue that saw the business houses slugging it out in public, sources in the know of the development said the deal may be struck at a price band of Rs 42 to Rs 44 a share.
Almost signalling a solution to the imbroglio, Tata Group chief Ratan Tata had yesterday said, "We have already indicated that we will dilute stake (in Idea) at the right time and right price." The Birlas' price offer may have come in response to the poser by Tatas about the offer they are believed to have got from the Malaysian telecom company Mexis, which recently bought Aircel Telecom, from Sivasankaran.
There was speculation that Tatas may consider Maxis offer in case Birlas failed to match the Malaysian company's offer in 45 days.
A final decision and subsequent agreement between the two sides is yet to be formalised for deal under which Tatas would sell about 110 crore shares (equivalent to over 48 per cent equity).
In case Birlas fail to match the offer, Maxis telecom of Malaysia would automatically buy Tata's stake. Maxis, which has six circles after it bought Aircel, could increase its footprint in 11 more circles in which Idea has operations.
The fight between the two groups became public when Birlas wrote to the government seeking direction for ouster of Tatas from the joint venture on the grounds that the latter had violated the telecom licensing conditions. The other side retaliated by serving a termination notice and declaring that they would buy out their partner.
The Department of Telecom is yet to take a position on the issue raised by Birlas, even as the two sides later decided to keep off the media on the subject. — PTI
Judging from the past exercises, two national carriers, Air-India and Indian, are unlikely to rise as one airline, regardless of the claims made by the powers that-be. The merger in real sense is unlikely to come about because of over-indulgence of several unions, ‘mountain’ of staff in two carriers and emergence of road-blocks in effective policy to undertake foreign postings, transfers and promotions.
What is, however, possible is to bring about synergy in flight operations and judicious utilisation of fleet.
Maybe, there will be a common CMD (Chairman-cum-managing director) for two airlines.
Talking about merger, the authorities concerned had unwittingly said that two carriers would become two separate divisions of merged entity. In the same breath, it was said that it would help protect the seniority of the employees in two airlines. If the airlines have to stay in two separate divisions, where is the need of bringing about merger of the two carriers? Merger, if it is to be brought about, should be on the pattern of British Airways when British Overseas Airways Corporation (BOAC) was merged into the domestic wing, that is BA.
When BOAC-BA merger became reality, BOAC died. BA started handling both domestic and international passengers. During the time of merger and subsequent time, many employees were given ‘golden handshakes’. Now BA is stable to the extent that it has increased operations ex-India and from several other countries.
If Minister of State for Civil Aviation Praful Patel succeeds in bringing about merger of two airlines, what will be the new name of carrier? Will it be Air India? Will it be Indian only? In both carriers at least 40-45 per cent of staff is ‘deadwood’. Will the management offer ‘goldenhandshake’ to the redundant employees? Surprisingly, at the behest of politicians, quite a few high-ranking positions, lying vacant, have been filled by Air-India CMD. Where was the urgency to fill them at this juncture when there is a talk about merger and none of the new aircraft has arrived? The appointments at this point of time is surprising, if not fishy.
While there is uncertainty about ‘real merger’ of two national carriers becoming reality, the Monopolies and Restrictive Trade Practices Commission (MRTPC) has accepted the PIL (Public Interest Litigation) on the Jet-Sahara deal. The date for hearing has been fixed on May 2. The situation is messy.
Q: I was working in the USA on work visa (H1B) from January 1998 to December 2004. After the expiry of my visa, I came back to India in January 2005. I have a bank account in the US and an NRE account in India. I am unemployed in India till date and the only source of income is the interest earned on my bank account, which is around Rs 65,000 per annum. Since it has been more than six months of stay in India, I can no longer claim to be an NRI to claim tax benefits. I don’t have PAN in India. My questions are: Do I need to file income-tax return in India? How long I can continue to hold my bank account in the USA? Do I need to close my NRE account in India as Indian Bank sends the interest earned report to USA federal tax department and I have filed US Tax returns till last year?
— Dilip Bhatia
A: You should file the returns, if your global income is over the tax threshold of Rs 1 lakh. You can hold any financial assets abroad without requiring permission from any authority in India. Within a reasonable time after becoming a resident, you are required to inform the bank and they will redesignate your account as a resident account. Incidentally you cannot file a tax return without a PAN. Therefore, it would be advisable to get a PAN as soon as possible.
Saral and STT
Q: I have a query, which nobody I know has been able to give me a categorical answer.
This relates to short-term capital gains on stock exchange traded stocks and STT paid thereon at 10 per cent for fiscal 2005-06. In the computation of such capital gains, is the STT allowed to be deducted from profit on sale? This query arises as Saral tax form requires STT to be declared (along with certificate of payment from sharebroker).
— A. K. Gupta
A: STT is not allowed as a deduction against capital gains, or added to the cost of acquisition or deducted from the sale proceeds. Possibly the Saral form requires STT to be mentioned to ensure that the above-mentioned rule is complied with. Traders in stocks can set-off STT against their tax on trading profits.
Tax on capital gains
Q: I shall be grateful if you can kindly clarify as to whether 10 per cent income tax on short-term capital gains has to be paid separately even if my total income for financial year 2005-06 is within the taxable limit of Rs 1.35 lakh set for women. My income is as follows:
Short-term capital gains for the year expected Rs 1,75,000
Other income excluding non-taxable dividends Rs 25,000
Total income expected: Rs 2 lakh
Payment of PPF: Rs 70,000
Net income for the year expected: Rs 1,30,000
Do I have to pay income tax for FY 2005-06?
I hope whatever I pay for buying shares, including share transaction tax, is my cost and whatever I get on the sale of shares, excluding STT, is the sale proceeds, the difference being the margin on which tax is payable.
— Nirmala Sharma
A: You should have mentioned whether you are a resident Indian or an NRI.
In the case of capital gains arising out of securities and equity-based units of MFs sold on a recognised stock exchange in India or equity-based units repurchased from MFs —
a) LTCG is exempt under Section 10(38).
b) STCG is taxed @10 per cent flat, under a new Section 111A and amended Section 115AD.
In the case of all other assets, including equities and equity-based MFs, which have not been sold on a recognised stock exchange in India or repurchased from the MF and consequently have not suffered STT -
a) LTCG is charged to tax at the flat rate of 20 per cent. However, if the assets happen to be debt-based units or shares sold outside the stock exchange, additional option of paying the tax @10 per cent of the profit is also available, if more beneficial. An important aspect, which is mostly misunderstood, is that the long-term capital gains are always computed with indexation. It is only the tax that can be paid @10 per cent or @20 per cent, whichever is less.
b) STCG is treated as normal income of the assessee and charged to tax at the rate applicable to his slab of income.
Where LTCG is taxed and STCG is taxed @10 per cent, the assessee will not get any deduction u/s 80C, 80D etc., against these gains which will be treated as a separate block.
For a resident individual or an HUF, where the total income as reduced by -
a) STCG which is charged to tax @10 per cent and
b) LTCG which is charged to tax falls below the tax threshold applicable to the assessee, the gains would be reduced by the amount by which the total income so reduced falls short of the threshold and the balance of the gains would be taxed at the rates applicable. In short, where the tax liability arises only because of inclusion of the capital gains in the total income, tax is levied at the corresponding flat rates on the excess over the minimum taxable limit.
Consequently, in your case, the benefit of Section 80C can be claimed up to Rs 25,000 (your other income), bringing your total income from sources other than short-term capital gains down to zero.
If you are a resident, you can claim the benefit of threshold of Rs 1,35,000. Your tax liability then is Rs 4,500 (= 10 per cent of 1,75,000 - 1,35,000).
If you are an NRI, the benefit of the threshold is not available for capital gains. Therefore, your tax liability will be Rs 17,500 (10 per cent of Rs 1,75,000).
STT does not form any part of the cost of acquisition and does not reduce the sale value.
Q: Some say that the recently launched 100 per cent close-ended funds’ dividend payable will be taxed. Is it true?
— Narendra Singh
A: This is the situation for FY 2005-06. Of course, in the Budget 2006, this situation has been amended and even close-ended equity oriented funds are granted the dividend distribution tax break.
Till this year, under Section 115R, the exemption from dividend distribution tax is only available to open-ended equity funds. Therefore, close-ended funds, even if equity-oriented, would be subject to dividend distribution tax on similar lines as is applicable to non-equity oriented funds. However, the dividend continues to be tax-free in the hands of the recipients.
Like mentioned earlier, from next year onwards, both open and close ended funds will get similar benefit.
Investing for wife
Q: If I take an equity-linked savings scheme on my wife’s name, will I get benefit from tax? My wife is working as a government-school teacher.
— D. V. Shastri
A: No. Investment by you in the ELSS in the name of your wife does not entitle you to any deduction u/s 80C, irrespective of whether she is dependant on you or not. This is as per the provisions of Section 80C.
The author may be contacted at firstname.lastname@example.org
Chandigarh, April 8