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THE TRIBUNE SPECIALS
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B U S I N E S S

French Cos ink MoUs to set up units in Haryana
Chandigarh, October 14
A number of French companies have signed MoUs with Indian companies to set up their ventures in Haryana. The MoUs were signed in the presence of the Haryana Chief Minister, Mr Bhupinder Singh Hooda, who reached Paris today along with an official and a CII delegation.

Indian CAs to ‘audit’ Singapore firms
New Delhi, October 14
Indian chartered accountants will soon be able to audit the balance sheets of companies operating in Singapore as the Institute of Chartered Accountants of India (ICAI) is entering into an agreement with Institute of Certified Public Accountants of Singapore (ICPAS) in this regard by first week of November.

ONGC: no investor grievances pending
New Delhi, October 14
Reacting to reports, state-owned Oil and Natural Gas Corporation (ONGC) today said that no investor complaint existed against the corporation in the National Stock Exchange or is pending for settlement barring those related to mishandling by the Registrar of the 2004 Public Issue.

MTNL, IOL to launch IPTV on Divali
Mumbai, October 14
IOL Broadband today announced the roll out of India’s first Internet Protocol Television (IPTV) service in Mumbai, in strategic partnership with state-owned telecom major, Mahanagar Telephone Nigam Ltd (MTNL) from October 21 this year.

Models pose with a newly launched I-Mate, specialist in Microsoft Windows mobile devices and software applications, and the world's first touch-screen messaging PDA phone at the ‘Mobile Asia 2006’ exhibition in New Delhi
Models pose with a newly launched I-Mate, specialist in Microsoft Windows mobile devices and software applications, and the world's first touch-screen messaging PDA phone at the ‘Mobile Asia 2006’ exhibition in New Delhi on Saturday. ‘Mobile Asia 2006’ is the largest mobility exhibition in South-East Asia with more than 2.5 lakh visitors expected to visit the four-day expo until it closes on October 16. — AFP

Aviation Notes
New rules to benefit airline industry

The Civil Aviation Ministry has stipulated new set of ‘cruise’ rules so that airline industry displays ‘vibrant health’ instead of ‘sickly posture’.

Investor Guidance
Long-term capital gains tax-free

Q: I was born and raised in India. I had bought stock (shares) in a pharmaceutical company in India about 20 years ago. I was in India at that time. The shares have appreciated in value over the years.


 

 

Models showcase shawls by Ahujasons at the Woolmark fashion show in New Delhi
Models showcase shawls by Ahujasons at the Woolmark fashion show in New Delhi on Friday night. —Tribune photo by Mukesh Aggarwal 

 

 
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French Cos ink MoUs to set up units in Haryana
Tribune News Service

Chandigarh, October 14
A number of French companies have signed MoUs with Indian companies to set up their ventures in Haryana. The MoUs were signed in the presence of the Haryana Chief Minister, Mr Bhupinder Singh Hooda, who reached Paris today along with an official and a CII delegation.

Two MoUs were signed by Mr N. Minda of Minda Industries with Valeo, a France-based world leader in auto lighting products, for setting up a unit in in Haryana.

A joint venture agreement was signed by Mr S.K. Arya of Neel Metal Products, a JBM group company, with Arcelor Tailored Blank of the Arcelor-Mittal Group, to manufacture tailor welded blanks in Haryana. The 50:50 joint venture will involve an investment of Rs 60 crore. The tailor welded blanks technology is used in critical sheet metal components of automobiles for improving safety and reducing weight.

A French engineering giant, Alstom, expressed its keenness to set up a project for manufacturing equipment used in coaches for metro and power generation in India.

Interacting with entrepreneurs at a session organised by Medef International, Mr Hooda invited French entrepreneurs to set up their units in Haryana. He said he was keen on learning and replicating the successful model adopted by the developed countries to make Haryana a numero uno state. He expressed the hope that the delegation from France, scheduled to visit India in December, would also visit Haryana.

The Chairman, CII Haryana State Council, Mr Adesh Gupta, highlighted the economic and investment scenario in India and Haryana.

Medef International is the international arm of the French business confederation and represents the large, medium and small enterprises in all sectors. 

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Indian CAs to ‘audit’ Singapore firms
Tribune News Service

New Delhi, October 14
Indian chartered accountants will soon be able to audit the balance sheets of companies operating in Singapore as the Institute of Chartered Accountants of India (ICAI) is entering into an agreement with Institute of Certified Public Accountants of Singapore (ICPAS) in this regard by first week of November.

“The talks are in final stage and we expect to sign an agreement with ICPAS by month-end or in the first week of November under which Indian auditors will be eligible to work in Singapore on reciprocal basis. We will presently studying the auditing standards in both countries to give finalise the conditions of eligibility,” said Mr T.N. Manoharan, President, ICAI here today.

A Singapore company has recruited fresh CAs during a campus interview last month at a salary of Rs 27 lakh, he said, as against an average salary of Rs 4 lakh to Rs 7 lakh offered by Indian companies.

The institute, has, meanwhile, set up an 11-member Task Force headed by Mr S.C. Vasudeva, former chairman of its Accountants Standard Board to look into the issue of convergence of Indian auditing standards with international standards evolved by International Financial Reporting Standard (IFRS). 

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ONGC: no investor grievances pending
Tribune News Service

New Delhi, October 14
Reacting to reports, state-owned Oil and Natural Gas Corporation (ONGC) today said that no investor complaint existed against the corporation in the National Stock Exchange or is pending for settlement barring those related to mishandling by the Registrar of the 2004 Public Issue.

Referring to media reports that a large number of investor complaints were filed against ONGC in the NSE, the corporation said: “The investor grievances relating to disinvestment, by the Government of India, through the public issue of 10 per cent equity shares of Oil and Natural Gas Corporation Ltd. (ONGC), will be settled within a month. The assurance has been given by the Registrar of the Public Issue of ONGC.”

In a review meeting convened by the Department of Disinvestment on October 6, the ONGC vehemently sought an assurance of immediate settlement of the investor grievances, before the issue of bonus shares in November 2006, said a corporation statement issued here today.

In this context, the ONGC management claimed it has an online grievance handling mechanism on its corporate website, for real-time settlement of investor complaints.

On verifying with NSE, it has been found that the reported complaints relate to the ‘Offer of Sale’ of 10 per cent equity shares of the ONGC by the Government of India in March 2004. 

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MTNL, IOL to launch IPTV on Divali

Mumbai, October 14
IOL Broadband today announced the roll out of India’s first Internet Protocol Television (IPTV) service in Mumbai, in strategic partnership with state-owned telecom major, Mahanagar Telephone Nigam Ltd (MTNL) from October 21 this year.

IPTV is a system where digital quality television service is delivered to customers, using a broadband connection.

MTNL Chairman & Managing Director R S P Sinha said the company has entered into a strategic partnership with IOL Broadband. — UNI

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Aviation Notes
New rules to benefit airline industry
by K.R. Wadhwaney

The Civil Aviation Ministry has stipulated new set of ‘cruise’ rules so that airline industry displays ‘vibrant health’ instead of ‘sickly posture’.

Since liberation of skies in 1990, there has been mere loud talking. During these 16 years, industry’s general health is far from satisfactory. The concept of air travel has captured the imagination of even middle class people, but it has not brought much cheer to airlines which are sustaining operational losses. Many carriers, particularly private operators, owe a lot of arrears to the Airports Authority of India (AAI) and other government agencies.

According to new set of rules, fresh applicants for licence will have to secure aircraft, new or leased, appoint cabin and cockpit crews in addition to displaying their financial muscle.

This all-important aspect was not heeded when skies were opened. The result was that many entered skies only to shut down their operations for lack of funds. Some declared bankruptcy and even faced litigations.

“We do not want repeat situation of 1991,” said a senior aviation official, adding, “The high-profile industry is meant for only those who have at least five-year sustainable financial muscle”. The airline is a complex industry and it is meant for only the fittest.

According to aviation officials, about a dozen carriers are waiting in queue for clearance. Majority of them have a very weak credentials to take to the skies. In view of their vulnerable bio-data, these rules are being introduced. The new entrants — at least some of them — feel that most of the barriers are arbitrary to prevent entry of a few out of 12 waiting in queue for Government nod.

About dozen airlines, led by Air-India’s chairman and managing director V. Thulasidas, will shortly meet in Mumbai to find out ways and means to reduce losses. Fuel prices cannot be controlled by India-based airlines. What is possible is to check overhead expenses. Is any airline in a position to reduce salaries and perks of pilots? It is a highly pampered community which gets its pound of flesh regardless of the health of the airline.

The status of Air-India is even more complex. It has three times more staff it should have. The aviation analysts are unanimous in saying that the national carrier will fly steadily only when it sheds a lot of reduntant muscle out of its heavy belly.

Eight out of these 11 for cost-cutting exercise are private operators. This will be yet another high profile association of renowned CEOs who will talk much without achieving any worthwhile result. 

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Investor Guidance
Long-term capital gains tax-free
by A.N. Shanbhag

Q: I was born and raised in India. I had bought stock (shares) in a pharmaceutical company in India about 20 years ago. I was in India at that time. The shares have appreciated in value over the years. A few years ago, I moved abroad and have become a citizen of another country.
My question is:
1. What do I need to do if I want to either sell the stock or gift it to my brothers who are in India?
2. Do I need to notify the company about change in my status/address?
3. What are the tax implications, including capital gains?
4. Any gift tax, if I transfer them to my brothers?
5. Can I sell them and transfer the money into an NRO account?
6. Would it benefit if I take dual citizenship?
7. Any RBI implications.

— Vittal Kumar

A: You are free to do so. You may have to open a demat account and transfer the physical shares to the demat account. Thereafter, you can either sell those shares or gift those to your brothers. However, proper gift procedure will have to be followed for abundant precaution.

All that is required is an offer by the donor and acceptance thereof by the donee in black and white. To safeguard against any hassles, the donee should request the donor for a gift and then the donor should remit the amount to the donee. Alternatively, the donor can offer the gift. In either case, it is necessary for the donee to accept the gift in writing (may be through a thank you note). Only then it would be considered as a gift in India. It is preferable to mention the relationship between the donor and the donee.

2. On becoming an NRI, legally you are required to inform all your banks and also all companies where you have investments about the change in your status within a reasonable time. The banks will re-designate your accounts as NRO. You can use this account the same way as you used it before becoming an NRI. It is also necessary to inform all companies of whose shares you hold, and UTI/MFs about change in your status. If you have a demat account, it is not necessary to inform the companies but informing the DP is a must.

3. The long-term capital gains are tax free if you sell the shares on a recognised stock exchange in India.

4. Gift tax stands abolished. Gifts by close relatives are not eligible to Indian income tax and there is no limit on the amount that can be gifted.

5. Yes, you can do so.

6. Tax depends upon your residential status and not upon citizenship. The dual citizenship will make no difference.

7. None, other than the ones mentioned in point-2 above.

You will do well by taking corrective action before selling the shares and hope for the best.

ELSS withdrawal

Q: This question is regarding equity linked saving scheme (ELSS) funds. Say, in a joint holding, the first holder dies within two years of making the investment, can the surviving (joint) holder withdraw/redeem the fund even though the mandatory lock-in period of three years has not yet elapsed. Do note that the joint holder has not availed any tax benefit as the same was enjoyed by the first holder.

— Ranadhir

A: In the above situation, the surviving joint holder cannot redeem the investment. He will have to hold the investment for the remaining one year and only then choose to redeem the investment. The reason is that while investing in an ELSS fund, all investors ipso facto, contract to abide by the terms/law under which the fund is launched. The ELSS notification imposes a lock-in of three years on the investment. The fact that the surviving holder has not availed of any tax benefit is not relevant in this case. The lock-in is mandatory even if the first holder had not availed of the tax benefit u/s 88 or u/s 80C.

Exemptions to NRI

Q: This is with reference to your column in The Tribune dated 8-10-06. I have been in employment with Tata Consultancy Services since 1.7.02. I was sent to London on 11-7-03 on assignment, on work permit valid from 30-6-03 to 30-6-05 and further extended upto 30-6-07.
I received my salary in Indian currency through my bank account in India. The company deducted Income tax from my salary in usual course in routine for the financial years 2003-04, 2004-05 & 2005-06. Income tax return for financial year 2005-06 is yet to be filed. I worked in UK during the said period and stayed there for more than 182 days in each financial year, except for a few holidays to meet my parents in India, thus qualified as an NRI for the above period.
As per news in Economic Times dated 21-8-06 & your guidance column, I intend to file income tax return for financial year 2005-06 claiming full exemption from income tax and also file revised returns for previous two years for refund of tax deducted by the company. Please guide any better course if any for claiming exemption being an NRI.

— Dilbagh Singh

A: You have possibly misunderstood the message. Your Indian salary was taxable and continues to be taxable in India.

CBDT Circular 8/2005 dated 29.8.05 states that the per-diem allowance is exempt from tax under Section 10(14). It would be subject to FBT because the per-diem allowance is paid for use of hotel, boarding and lodging facilities, it would fall within the scope of Section 115WB(2G). The employee will not be liable to pay income tax on any surplus accruing to him from such allowance.

Consequently, your per-diem will be tax-free in your hands for FY 05-06. Prior to that, u/s 10(14) any allowance granted to the assessee either to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, or to compensate him for the increased cost of living enjoyed freedom from tax to the extent it was actually spent on the purpose it was meant for. Any savings there from were taxable in India whether remitted to India or not.

The authors may be contacted at wonderlandconsultants@yahoo.com

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