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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Chidambaram calls pvt players to invest in infrastructure
GDP growth again surpasses 8 pc in Q2

New Delhi, October 7
Pegging a massive resource requirement of $363 billion over the next five years for development of infrastructure in India, Finance Minister P Chidambaram today invited private sector to pitch in with the support of the government in this crucial area for ensuring over 8 per cent growth in economy.

Differences on SEZs exaggerated: FM
Playing down the differences with Commerce Minister Kamal Nath, Finance Minister P Chidambaram said today he had concerns about various aspects of SEZs, as do the Agriculture Ministry and farmers, but these were "exaggerated". Mr Kamal Nath, on his part, put the onus of identifying and acquiring lands for SEZs on state governments and said primarily wasteland and non-agriculture land should be utilised for such projects.


EARLIER STORIES

 
Bollywood actress and brand ambassador of Tag Heuer watches Sushmita Sen displays a watch designed by renowned golfer Tiger Woods in Bangalore
Bollywood actress and brand ambassador of Tag Heuer watches Sushmita Sen displays a watch designed by renowned golfer Tiger Woods in Bangalore on Saturday. — PTI

Penal interest on delayed payments to SSI sector
New Delhi, October 7
The Chartered Accountants will have to certify now onwards while auditing the annual accounts of companies in the annual statement how much amount remained unpaid towards suppliers at the end of year.

AVIATION NOTES
World-class airport complex near Palam on cards

In the vicinity of existing Palam infrastructure, plans for world-class airport complex have been prepared. The detailed document, with designs for ultra-modern terminal buildings and an additional runway to handle super-jumbo, has been sent to government for clearance. As soon as civil aviation and other concerned departments grant approval, the work on mammoth new project will commence with deadline of six months before the start of the 2010 Commonwealth Games in Delhi.

Investor guidance
Gains from MFs after lock-in period tax-free
by A.N. Shanbhag

Q. How to save tax completely by investing in mutual funds?
2. Is it possible to get tax exemption every fiscal by investing one time or by withdrawing and investing every year?
3. Give me the best possible solution to avoid tax from my salary by investing in mutual funds (again without being hit by the income tax when withdrawing from mutual funds)?
— Painuly

  • Future trading
  • STCG
  • PPF interest
  • NRI status

 

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Chidambaram calls pvt players to invest in infrastructure
GDP growth again surpasses 8 pc in Q2
Tribune News Service & PTI

New Delhi, October 7
Pegging a massive resource requirement of $363 billion over the next five years for development of infrastructure in India, Finance Minister P Chidambaram today invited private sector to pitch in with the support of the government in this crucial area for ensuring over 8 per cent growth in economy.

"Economy is expected to grow at 8 per cent or more in the 11th Plan. Unless investment grows at the same pace, it will not be possible to sustain the economic growth," he said addressing a day-long summit on infrastructure convened by the Planning Commission.

Mr Chidambaram said infrastructure has long remained in the domain of public sector which resulted in inadequate development. Hence, there was a need for participation for the private players who are flush with funds to invest in the sector.

He said in the 10th Five Year Plan, investments worth Rs 11,00,000 crore were required in infrastructure and by 2012, Rs 2,20,000 crore were needed to be invested in national highways, Rs 40,000 crore on airports and Rs 50,000 crore in ports.

After registering an unprecedented 8.9 per cent growth, the economy has again expanded by more than 8 per cent in July-September quarter from a year earlier.

Prime Minister Manmohan Singh, however, called upon the country to make efforts to achieve 9-10 per cent growth to make a real dent in poverty in India.

GDP in the April-June quarter grew by 8.9 percent from a year earlier, beating estimates, as demand for everything from phones to cars in rural and urban India surged amid falling prices and rising disposable incomes and attractive financing schemes.

The inflation during the first half of the year has also remained within a limit of 4-5 per cent, while oil after touching an all-time high of around $80 a barrel fell to below $ 60 a barrel.

The surging growth has forced the RBI to raise its interest rates three times this year to cool the economy and check inflation. The RBI is due to review rates again later this month.

He said if the country attracted foreign capital to the tune of 2 per cent of the GDP, which is within the limits of prudence, the balance of payment would continue to be in good shape. 

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Differences on SEZs exaggerated: FM

Playing down the differences with Commerce Minister Kamal Nath, Finance Minister P Chidambaram said today he had concerns about various aspects of SEZs, as do the Agriculture Ministry and farmers, but these were "exaggerated".

Mr Kamal Nath, on his part, put the onus of identifying and acquiring lands for SEZs on state governments and said primarily wasteland and non-agriculture land should be utilised for such projects.

"Contrary to popular perception, Commerce Minister and I have same points of view (on SEZ)... Problems are being exaggerated," Finance Minister P Chidambaram said in reply to a question from the floor at a seminar on infrastructure.

He, however, admitted that there were certain revenue concerns that his ministry had and other issues raised by Agriculture Ministry and farmers about various aspects of SEZs. — PTI

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Penal interest on delayed payments to SSI sector
Tribune News Service

New Delhi, October 7
The Chartered Accountants will have to certify now onwards while auditing the annual accounts of companies in the annual statement how much amount remained unpaid towards suppliers at the end of year.

This has been made mandatory under the Micro, Small and Medium Enterprises Development Act, 2006, which has been implemented from October 2 for all government departments, corporations and large companies, which have been often accused of delaying payment to the small-scale manufacturers supplying intermediate goods to them.

“Where a buyer contravenes the provisions of Section 22, (unpaid amount to buyers in annual statement), he shall be punishable with a fine which shall not be less than Rs 10,000,” the Act states.

Section 15 of the Act, which is likely to provide relief to lakhs of SSI units across the country, mentions that if the buyers fail to make payment of the amount to the supplier within 45 days of the agreed date between the two parties, he shall be liable to pay the amount along with compound interest rate at three times of the bank rate notified by the RBI.

Welcoming the move, Mr Surrender Singal, Secretary, Northern India Rubber Manufacturers Association, said, “ If the provisions of this Act are implemented in letter and spirit, it may provide a relief to thousands of small manufacturers.”

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Aviation Notes
World-class airport complex near Palam on cards
by K.R. Wadhwaney

In the vicinity of existing Palam infrastructure, plans for world-class airport complex have been prepared. The detailed document, with designs for ultra-modern terminal buildings and an additional runway to handle super-jumbo, has been sent to government for clearance. As soon as civil aviation and other concerned departments grant approval, the work on mammoth new project will commence with deadline of six months before the start of the 2010 Commonwealth Games in Delhi.

The plans, prepared by experienced architects and engineers, are unique in a way that national and international traffic will be integrated without causing any inconvenience to users. Keeping annual growth of traffic in mind, the new airport will cater to the needs of about 30 million passengers within five years of its operations.

The terminals will wear an impressive look of a township. All facilities will be available for passengers to ‘relax and rest’ while waiting for their flights.

There is every possibility that the existing infrastructure may be utilised for only no-frills operations. According to officials, the idea is that traffic should flow without any hindrance or problem.

In the revised plans, the Centaur hotel will remain unaffected at least until the Commonwealth Games. Maybe, Air-India will provide it a new look to its subsidiary. The aviation analysts feel that the first and foremost national carrier should do is to make it mandatory for cabin-crew, cockpit crew and other officials to stay in their subsidiary hotel instead of seeking accommodation in Ashoka or any other hotel. If Air-India does not promote its own product, who would?

While uncertainty about merger of Air-India and Indian stays, the government is actively planning to upgrade Indira Gandhi Rashtriya Uran Academy (IGRUA) at Rai Bareli. Registered as a ‘Society’, it wil become a Company of international standards.

Untill recently, it was a sought-after pilot training academy and its achievements in production-line were immense. It has fallen on bad days because of undue interference from both politicians and bureaucrats.

This transfer from ‘Society’ to ‘Company’ is again a ‘brain-child’ of the Minister of State for Civil Aviation Praful Patel. He has gone on record saying in that output will increase from production of 40 pilots a year to 200 a year. He also says that the training period will be reduced from two years to a year.

The truth of the matter is that there is acute shortage of pilot training academies in this country. The govenment should take a firm decision about Safdurjung Airport, which is lying in disuse for years. The location is ideal for providing training to pilots.

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Investor guidance
Gains from MFs after lock-in period tax-free
by A.N. Shanbhag

Q. How to save tax completely by investing in mutual funds?

2. Is it possible to get tax exemption every fiscal by investing one time or by withdrawing and investing every year?
3. Give me the best possible solution to avoid tax from my salary by investing in mutual funds (again without being hit by the income tax when withdrawing from mutual funds)?
— Painuly

A. It depends on your level of income. An investment up to Rs 1 lakh is eligible for tax deduction u/s 80C. The eligible avenues are ELSS of mutual funds, PPF, life insurance premiums, NSC etc.
2 & 3. It is possible to get deduction from income up to the existing ceiling by investing in ELSS of MF during the FY. The investment is locked in for three years. As the Income Tax Act stands today the long-term capital gains/loss earned from ELSS after 3 years is exempt from tax. At the end of this period, you can withdraw and redeposit unless the law changes.
3. Any professional financial planner cannot answer your query without knowing your background, age, risk profile, liquidity requirements, income levels of the family and several other parameters. These are to be carefully weighed and evaluated in great depth and detail before deciding upon the investment strategy or avenues. There is no ‘one size fits all’ solution. Each person’s situation is different and investment and tax saving strategies have to be tailored suitably.

Future trading

Q. I earned profit of Rs 47,000 in NCDEX future trading. The total turnover (sales & purchase) is more then Rs 90 lakh. Please confirm whether audit is required for this?
— J.K. Singh

A. Normally the audit is required if the turnover is over Rs 40 lakh. In case of trading in shares or futures, this limit on turnover will be surpassed in many cases. Therefore in practice, the department does not insist on audit but some ITOs who are interested in seeking rent from you may insist on the audit unless you satisfy their demand. A clarification from the CBDT is necessary since long.

STCG

Q. Unaware of the capital gain norms, we sold our plot after 32 months of its acquisition and there is a net gain of Rs 7 lakh after counting all costs, brokerage, non-construction fee paid etc. If this amount is counted as short-term capital gain (STCG), it will fall in 30 per cent tax bracket for us. Please guide if we can apply cost inflation index or not? And secondly, can this amount be invested in any scheme or bonds to save tax?
— Neena Singh

A. Had you waited for four more months to make the sale, the amount would have been long-term gains. As of now, it is indeed short-term. Short-term gains cannot use cost inflation index. This will be added to your income and taxed accordingly. You may contribute to avenues u/s 80C up to Rs 1 lakh to claim deduction from income. There is no other avenue available to save tax on short-term gains. If you have any short-term loss during the FY, the same can be setoff against the short-term gains.

PPF interest

Q. I am maintaining a PPF account with Head Post Office, Ludhiana. I want to have certain clarifications in this regard i.e. in case a cheque of certain amount limiting to Rs 70,000 payable locally at par is deposited between the dates from 1st to 5th of any particular month with the said post office under due dated acknowledgement whether the interest for that particular month shall be admissible to me irrespective of the fact that the actual amount is credited to my PPF account after 5th of the same month, if so under what rules?
— S.K. Gupta

A. As per PPF Rules, the date of presentation is the date to be taken for the computation of interest. Credit is given on the date of presentation of the cheque. Normally, the clearance takes two to four days. Thus, you may deposit your cheque on the last date of a month and not lose interest for the month on the savings bank account. It is unfortunate that most of the bank officers or post office personnel are unaware of this unique facility and compute interest on realisation basis. It is advisable to check the accuracy of interest credited every year.
However, where a deposit is made by means of an outstation cheque or instrument, collection charges at the prescribed rate shall be payable along with the deposit and the date of realisation of the amount shall be the date of deposit (G.SR 690(E) dated 27.8.03).

NRI status

Q. I am an executive travelling out of India frequently. In one of the newspapers I came across the result of the case regarding the income tax relief if the person is out of India for more than 182 days. This was given by the AAR against the case of a British Gas employee. It stated that if a person employed in India and earning salary in India has stayed abroad for more than 182 days even for the company work he will be considered as an NRI for the particular year and need not pay the tax. I will be completing the criterion of 182 days stay outside the country. Please advise, how I should approach for stopping TDS.
— Karl

A. The AAR ruling that you refer to is directly applicable in cases like yours. However, the problem is this that the AAR is a quasi-judicial body and its rulings are not the law. They are applicable to the particular assessee and to the particular transaction/ case only. It is clear that the issue hangs fire as the assessing officer has sought to tax the income. Under these circumstances, it will not be possible for your company to unilaterally not cut TDS on your salary. This action may invite litigation and unless and until there is a specific notification/circular in this regard, the employer’s hands will be tied. It is suggested that instead let the company deduct tax and you file your tax return and claim a refund on account of your NRI status. You may cite this ruling in your return.

The authors may be contacted at wonderlandconsultants@yahoo.com

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