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B U S I N E S S

Mamata asks Tatas to shift car project
Serves 12-day ultimatum on govt
Singur, November 5
Trinamool Congress supremo Mamata Banerjee today asked the Tatas to shift their proposed small car project from farmland in West Bengal's Singur and gave a 12-day ultimatum to the state government to announce that industries would not be set up on agricultural land. However, the Buddhadeb Bhattacharjee government expressed determination to go ahead with the project.

RBI keen to rein in NBFCs
Mumbai, November 5
The RBI seeks to discipline the non-banking finance companies (NBFCs) as also convergence in regulatory requirements for both banks and NBFCs through its draft circular on a revised framework.

IT Dept wants standard deduction restored
Kolkata, November 5
The salaried class will stand to gain if the suggestion by the Income Tax (IT) Department is accepted by Union Finance minister P. Chidambaram in the forthcoming Finance Budget 2007. The IT Department is in favour of re-introduction of standard deduction for the salaried class withdrawn by Mr Chidambaram in the 2005 Budget.

Reliance Capital to buy Travelmate
New Delhi, November 5
Reliance Capital Ltd has said it will acquire 100 per cent equity share capital of Travelmate Services (India) Pvt Ltd.

Tax Advice
Deduction on income from house property permissible
Q. I am a senior citizen of 71 years. My income during the financial year 2005-06 (Assessment Year 2006-07) will be as under:

Market Update
Market may gain further
The market continued its winning streak to settle at a lifetime high on the back of robust results from India Inc and a rather benign monetary policy from the RBI. Sensex gained 1.7 per cent for the week to close at 13130, whereas Nifty gained 1.8 per cent to close the week at 3805.


Bollywood actress Katrina Kaif displays a creation by designer Sabyasachi Mukherjee at the finale of the Lakme Fashion Week at the National Centre for Performing Arts (NCPA) in Mumbai on Saturday.
Bollywood actress Katrina Kaif displays a creation by designer Sabyasachi Mukherjee at the finale of the Lakme Fashion Week at the National Centre for Performing Arts (NCPA) in Mumbai on Saturday. Forty-two designers from across the country displayed their spring/summer and ready-to-wear collection. For the first time four international designers also showcased their collections. — AFP

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Mamata asks Tatas to shift car project
Serves 12-day ultimatum on govt

Singur, November 5
Trinamool Congress supremo Mamata Banerjee today asked the Tatas to shift their proposed small car project from farmland in West Bengal's Singur and gave a 12-day ultimatum to the state government to announce that industries would not be set up on agricultural land.

However, the Buddhadeb Bhattacharjee government expressed determination to go ahead with the project.

Ms Banerjee said if the state government failed to meet the ultimatum, her party would gherao Parliament, State Assembly and the Chief Minister's residence.

''Barren land was lying idle in the state and the Tatas should go there to set up their project'', Ms Banerjee, who launched her party's 'non-cooperation' movement against the state government, said.

Addressing a rally here about one-and-half months after she was forcibly removed from the BDO office during a sit-in against the conversion of farmland for the Tata project, she said ''you (Tatas) have got huge funds and have many industries. But please do not to come to Singur to set up the car project''.

Describing the land at Singur as highly fertile, the TC chief called upon the peasants not to be afraid and continue with their cultivation

Both Chief Minister Buddhadeb Bhattacharjee and Industry Minister Nirupam Sen have made it clear that the Tata Motors' project would come up at Singur and the state government would make the required 997 acre land available to the Tata Motors' within this month.

Tata Motors would invest Rs 1,000 crore to set up their much-publicised people's car project.

Basu tells CM to take allies into confidence

Kolkata: Veteran Marxist leader Jyoti Basu has told West Bengal Chief Minister Buddhadeb Bhattacharjee to take all Left Front partners into confidence on policy matters relating to the land deal with Tata Motors for its small car project at Singur, front representatives said.

"It was because of Jyotibabu's intervention that the Left Front meeting on Friday night did not lead to a stand-off," said representatives of the CPI, RSP and the Forward Bloc, the three major Left Front constituents, who wanted the Chief Minister to disclose the state government's 'total deal' with the Tatas.

Mr Basu told the Chief Minister and his ministerial colleagues to 'show respect' to alliance partners and their right to any information they sought. — PTI

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RBI keen to rein in NBFCs

Mumbai, November 5
The RBI seeks to discipline the non-banking finance companies (NBFCs) as also convergence in regulatory requirements for both banks and NBFCs through its draft circular on a revised framework.

One of the most important points that the draft circular makes relates to banks' holdings in deposit-taking NBFCs. In this case, the circular puts a cap on banks' holdings in such NBFCs at 10 per cent of the paid-up equity capital of the NBFC.

"Banks in India, including foreign banks operating in India, shall not hold more than 10 per cent of the paid-up equity capital of an NBFC-D," the circular states. However, this cap will not apply to investment in housing finance companies.

Tightening the screws further, the apex bank stated that banks whose holding in deposit-taking NBFCs presently exceeded this 10 per cent limit, must present to it a definite plan to meet the proposed regulatory requirement within two months from the date of this circular.

In a scenario where there is growing interest to set up NBFCs, especially by foreign banks, the RBI's proposed move could hit their plans. A few foreign players who have acquired local NBFCs in the recent past could also be adversely affected by this proposed move.

Further, the circular stipulates that a bank's exposure to a single NBFC should not exceed 5 per cent of the bank's net worth as per its last published balance-sheet.

Partially modifying its prescriptions of current single/ group borrower exposure ceilings for banks, the circular states that aggregate exposure of a bank to all NBFCs should not exceed 40 per cent of the bank's net worth as computed above.

On systemically important non-deposit-taking NBFCs, which the RBI has defined as NBFC with an asset size of Rs 100 crore and more, the RBI has put a cap on their borrowings which should not exceed 10 per cent of their net-owned funds.

Restrictions have also been imposed on non-deposit- taking NBFCs in terms of lending to any single borrower where the limit has been prescribed at 15 per cent of its owned funds and at 25 per cent of its owned funds for lending to any single group of borrowers.

Feedback and comments have been invited about the circular from banks and NBFCs till November 17. The final circular governing this subject will be issued before the end of this month, the RBI said. — PTI

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IT Dept wants standard deduction restored

Kolkata, November 5
The salaried class will stand to gain if the suggestion by the Income Tax (IT) Department is accepted by Union Finance minister P. Chidambaram in the forthcoming Finance Budget 2007.

The IT Department is in favour of re-introduction of standard deduction for the salaried class withdrawn by Mr Chidambaram in the 2005 Budget.

"We have suggested that the standard deduction withdrawn from financial 2004-05 should be re-introduced," a senior official with the IT West Bengal zonal office said.

The department felt that the salaried class was at a disadvantage compared to corporate entities.

"Standard deduction was given as a lump sum benefit toward cost to earn income. But, after the tax exemption ceiling on investment was raised to Rs 1 lakh, this was abolished," the source said.

The Rs 1 lakh investment ceiling has certain advantages for business firms and corporate entities like depreciation of vehicles and cost of hiring a driver, the official said.

The standard deduction slab was Rs 30,000 for the total income for the salaried class under Rs 5 lakh per annum and Rs 20,000 for income over Rs 5 lakh. — PTI

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Reliance Capital to buy Travelmate

New Delhi, November 5
Reliance Capital Ltd has said it will acquire 100 per cent equity share capital of Travelmate Services (India) Pvt Ltd.

The proposed acquisition will mark the immediate entry of the company into the growth areas of money changing and money transfer in one of the world’s fastest growing, and most under-served markets.

Travelmate Services (India) Pvt Ltd, wholly owned by the Kuoni Group, has 36 offices, 2900 agents and 91 employees across the country, and is headquartered in Mumbai. — UNI

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Tax Advice
Deduction on income from house property permissible
by S.C. Vasudeva

Q. I am a senior citizen of 71 years. My income during the financial year 2005-06 (Assessment Year 2006-07) will be as under:

Kindly let me know:

a) Pension 

 1,30,000

b) Income from property (rent) 

 34,000

c) Other income (interest = Bank/ NSC/ bonds/ withdrawal from NSC 87)

 1,16,000

Total 

 2,80,000

Less - Amount deposited in PPF or NSC (VII Issue) (under Section 80C)

 1,00,000

Total income 

 1,80,000

(i) As the exemption limit in case of senior citizens is Rs.1,85,000/-, I may not be required to file income-tax return for the Assessment Year 2006-07, above total income for the financial year 2005-06 being less than Rs 1,85,000 according to latest budget provisions, relating to senior citizens. Kindly confirm:

(ii) A deduction of 30 per cent on income from house property was previously available for the maintenance/repairs etc. Is this deduction still available for such income for the financial year 2005-06 or not.

— J.L. Bragta, Shimla

A. The answers to your queries are as under:

(i) In accordance with the provisions of Section 139 of the Income-Tax Act, 1961 (the Act), as amended by the Finance Act 2005, if the total income of any person in respect of which he is assessable under the Act, before giving effect to the provisions of chapter VI A exceeds the maximum amount which is not chargeable to tax is now required to file the return of income of the relevant assessment year. The above amendment is applicable for the assessment year 2006-07 and onwards.

Accordingly, you will have to file the return of your income for the assessment year 2006-07, even though your taxable income would be Nil on account of deductions allowable under Section 80C of the Act which section forms part of chapter VIA of the Act.

(ii) The deduction of 30 per cent is available under the provisions of section 24 of the Act from income from house property and is applicable for assessment year 2006-07 (financial year 2005-06).

Tax liability

Q. I am a senior citizen. My income is as under:

 

 (Rs)

Pension 

 90,000

Interest on fixed deposit 

 50,000

L.T.C. Loss through sale oaf shares 

 30,000

L.T.C.G. 

 50,000

S.T.C.G. 

 3,000

All these shares have been sold through recognised stock exchange and S.T. Tax due on them paid thereon. Please advise whether any tax is payable.

— O.P. Chopra, Chandigarh

A. The net longterm capital gain of Rs 20,000 (Rs 50,000 Rs 30,000) would be exempt from Income-tax, in view of the provisions of Section 10 (38) of the Act as the conditions specified in the said section are complied with. The remaining income of Rs 1,43,000 being less than the maximum chargeable limit applicable to a senior citizen, no tax will be payable by you.

II

Q. I (Pb. Govt. pensioner) was born on 24.08.1942. The particulars of my income from all sources is as below:

 

 (Rs)

- Pension (receivable) 

 1,16,762

- House Property : Partly SOP & Partly LOO (Rent receivable after availing deduction under section 24)

 8,400

Other sources:

- Dividend from Companies 

 3,059

- Interest earning from bank & P.O. 

 27,696

- Tata MF of Rs.30,000/- purchased on 31.12.2004 and sold after one year on 02.01.2006 with a gain.

 12,384

- Principal MF. (PNB) of Rs.25,000/- purchased on 15.10.2004 and sold after 7 months on 03.05.2005 with a gain.

 1,560

- Accrued Interest earned on old NSC's Savings/Investments (Ded. u/s 80CCE) 

 4,415

- Reinvestment of Accrued Interest on Old NSC's

 4,415

- LIC premium paid 

 8,727

- Aviva Life Insurance (Pension Plan) Premium paid

 10,000

- Contribution to NSC VIII issue 

 10,000

- Invested in Tata MF (Tax-Advantage Fund-I)

 5,000

Please help me in the "Computation of total income and tax payable thereon in the light of above said figures, as I have to deposit the Income-tax payable thro' Self -Assessment challan Form "Secondly in which Financial Year, I will be eligible to avail the facility of senior citizenship"

— Jagmohan Singh, Patiala

A. The total income on the basis of figures given in the query would work out at Rs 1,33,075 (including longterm gain and short-term gain). The tax thereon, including education cess and interest @ 1 per cent for three months (i.e. from August to October) would be Rs 4,775. For the purpose of these computations, it has been presumed that the Mutual Funds in which investments have been made are not equity-oriented funds and that long-term gain on the redemption of units of Tata MF as computed by you is after taking indexed cost into account.

You will be covered under the category of senior citizen as and when you complete 65 years of age. Since your date of birth is 24.08.1942, you would be entitled to claim this status of senior citizen in the assessment year 2008-09 (financial year 2007-08).

Rebate on tuition fee

Q. My son (unmarried/ B.Tech Computer) is working as Software Engineer in a software Co. at Delhi. He is also studying/preparing for MS (Computers) through distant learning programme from Birla Institute of Technology & Science (BITS) Pilani.

The institute charges fee @ Rs 12,000 per semester (i.e. half yearly) which I pay out of my own account by means of demand draft in favour of BITS, Pilani.

My question is whether or not I am eligible to seek income tax rebate for the fees i.e. Rs 24,000 p.a. while filling my IT return. I may add here that my son is on income tax payee.

— Om Parkash, Rajpur Town

A. Section 80C of the Act provides for the deduction of tuition fee (excluding any payment towards any development fee or donation or of payment of similar nature) whether at the time of admission or thereafter to any university, college, school or other educational institutions situated within India for the purpose of full-time education of any of the two children of the individual paying such fee. Since your son is studying for a full time course of MS (Computers) and the payment is being made to an educational institution, in my view, it should be possible for you to claim the deduction of Rs 24,000 while filing the Income-tax return. I may add that this payment of Rs 24,000 would be within the limit of Rs 1,00,000 provided for by Section 80C of the Act.

Section 80 D

Q. I am a retired bank employee, and paid one month’s gross pension i.e. Rs 8,374.93 inddg. commutation for joining SBOP Retired Employees Medical Benefit Scheme which involves (carries) Insurance for Rs 2 lakh against onetime contribution. May I avail tax rebate by deduction the amount paid from gross total income or the year or I should avail rebate under Section 80D as the scheme appears to be similar to Mediclaim i.e. in case the employers pension paying authority does not allow the deduction/ indicate payment in Form 16 issued by it.

How should I reduce the tax liability, will it be safe, in order and paying to invest in ELSS of SBI Tax Gain Magnum Scheme in which dividend is tax-free in the hand of investor though it attracts security transaction tax on redemption at present @ 0.15 per cent which may be raised by FM in the Budget.

— Sudarhan Kumar Jain, Ludhiana

A. Section 80D of the Act provides for the deduction of amount of Medical insurance premium paid to the extent of Rs 10,000 in case of an individual (Rs15,000 in case of a senior citizen) provided the insurance is in accordance with the scheme of the General Insurance Corporation of India or any other insurer approved by the Insurance Regulatory and Development Authority. In my view therefore, the amount contributed by you towards SBoP Retired Employees Medical Benefit Scheme may not be allowed as a deduction under Section 80D of the Act. You can invest your savings in mutual funds specified under Section 10 (23D) of the Act, as the income received from such mutual funds is tax free. Further in case the mutual fund is an equity oriented fund, long term capital gain arising thereon would also be exempt in view of the provisions of section 10(38) of the Act.

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Market Update
Market may gain further
by Lalit Batra

The market continued its winning streak to settle at a lifetime high on the back of robust results from India Inc and a rather benign monetary policy from the RBI. Sensex gained 1.7 per cent for the week to close at 13130, whereas Nifty gained 1.8 per cent to close the week at 3805.

The ONGC was the major gainer during the week on news that Norway’s Norsk Hydro had offered it a stake in two exploration blocks. There were also reports that it plans joint ventures with Russian oil companies to acquire oil and gas assets.

The market is likely to extend its rally in the coming week on the back of high liquidity in the market. Strong buying support from FIIs and impressive second-quarter results has boosted the market sentiment. Stable crude oil prices will provide momentum.

Suzlon Energy

Suzlon Energy is Asia’s leading manufacturer of wind turbine generators (WTGs) having around 58 per cent share of India’s domestic installations in the first half of the current financial year. The company acquired Belgian Hansen Transmissions, which is one of the three major multi-MW gear box suppliers in the world.

The prospects for the wind power sector are very encouraging, given the fact that wind energy is cost effective. India has to generate an incremental 13,000 MW capacity per year for the next six years to plug the demand-supply gap and meet the target of ‘power for all’ by 2012. Alternative sources of energy such as wind energy are likely to play an increasingly important role in bridging the demand-supply gap in the long term.

The past six months have seen Suzlon make deeper inroads into the global wind energy markets. The company’s export market has grown to include Brazil, Italy and Portugal in addition to its established market presence in Australia, China, South Korea and the US. The company won new orders from China, Europe and Latin America, with breakthrough orders from the European and South American regions.

In January 1 had recommended booking of partial profit in Suzlon as the valuation at that time looked ripe, but from a business perspective, there has been an improvement in fundamentals of Suzlon.

I recommend a buy at the current price of Rs 1316 with a two-year perspective.

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