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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Hutch bid: Vodafone allays fears of overpayment
London, January 6
British telecom giant Vodafone has sought to allay investors' concerns about any overpayment in its bid to acquire Hutchison Essar, saying any deal would be in line with its stated mergers and acquisitions criteria.

Murthy favours FDI in retail
Says capitalism can combat poverty
New Delhi, January 6
While lamenting good quality leadership in the country, Chief Mentor and Founding Chairman of Infosys N.R. Narayana Murthy held firm that capitalism can solve the problem of poverty. 

SBI hikes interest rates on term deposits
Mumbai, January 6
The State Bank of India, the country's largest bank, today increased interest rates on term deposits between Rs 15 lakh and Rs 1 crore to 8.25 per cent per year.



EARLIER STORIES

 
Visitors walk past a modified Royal Enfield motor cycle displayed at the Bikex India, 2007, an expo of two-wheelers, in New Delhi
Visitors walk past a modified Royal Enfield motor cycle displayed at the Bikex India, 2007, an expo of two-wheelers, in New Delhi on Saturday. The expo is being held in the Capital from January 5 till January 8. — AFP
Aviation Notes

A-I chief gets extension
Mr V. Thulasidas will continue as Chairman and Managing Director of Air-India ‘till further orders’. As powers that-be are unsure about the date of the merger of two national carriers, they have extended his tenure in the A-I without specifying the date of continuation.

Investor Guidance

Residents can remit up to $1,50,000 per annum abroad
Q: I am an NRI (US residence) holding an NRE account in Mumbai. I am planning to transfer money from this NRE account into my mother’s (who is an Indian resident) regular savings account also in the same branch.





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Hutch bid: Vodafone allays fears of overpayment

London, January 6
British telecom giant Vodafone has sought to allay investors' concerns about any overpayment in its bid to acquire Hutchison Essar, saying any deal would be in line with its stated mergers and acquisitions (M&A) criteria.

Following reports about some shareholders expressing concern Vodafone might overpay in the highly-contested battle, a company spokesman said: "Any acquisition would fit with our published financial mergers and acquisition criteria." Vodafone has vowed not to breach the strict financial criteria introduced by its CEO Arun Sarin last year despite the over-exuberance in a heated race, sources close to the company said.

The company's defence about adhering to the M&A criteria comes amid the battle for India's fourth-largest mobile operator intensifying with another suitor — the Hinduja Group — joining the fray along with India's Reliance Communications.

Malaysia's Maxis is also believed to be interested in acquiring the 67 per cent stake of Hong Kong-based Hutchison Telecom International (HTIL) in Hutch-Essar, which is being valued in a range of $15-20 billion.

British daily 'The Times' yesterday reported that State Street, which holds about 1.7 per cent stake in Vodafone, said the firm risked overpaying in an overheated situation.

Hindujas optimistic about stake in JV

The Hinduja Group, the new suitor for Hutch-Essar, has claimed to have received favourable response from the joint venture's foreign partner Hutchison Telecom (HTIL) and expects a decision by this month-end.

"We have received a favourable response from Hutch. They have welcomed our interest and waiting for our proposal. A decision will be taken by the end of this month," Mr Gopichand Hinduja, President, Hinduja Group, said.

On Thursday, Hinduja TMT Executive Chairman Ashok Hinduja had said that the group was interested in acquiring controlling stake in the mobile joint venture. — PTI

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Murthy favours FDI in retail
Says capitalism can combat poverty
Tribune News Service

New Delhi, January 6
While lamenting good quality leadership in the country, Chief Mentor and Founding Chairman of Infosys N.R. Narayana Murthy held firm that capitalism can solve the problem of poverty. He favoured privatisation, hire and fire labour laws, FDI in retail and leaving urban education and health to the private sector.

Stressing that there was a serious crisis in Indian leadership at many levels, Mr Murthy made an exception in the case of Prime Minister Manmohan Singh. "Unfortunately, Dr Manmohan Singh leads a very fragile coalition and if he were to lead a majority Congress party government I have no doubt at all he would move much, much faster that he has been able to do to bring changes. Dr Singh has the vision, political capacity and courage to force change. I am absolutely sure about that."

Mr Murthy firmly believed that foreign direct investment (FDI) should be permitted in the Indian retail sector. The MNCs will bring the best technology and practices at the end of the day which benefits the consumer.

He had no doubt that the navratnas among the PSUs will perform much better if they are in the hands of the private sector. "I do not believe that the government should be in business."

Mr Murthy said infrastructure should be built by the private sector. The government should evolve policies that encourage them to create infrastructure such as roads, power, airports among others.

Capitalism is about providing equal opportunities for everybody and it is the responsibility of the government to create an environment where there is incentive for more entrepreneurs to create a large number of jobs, he added.

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SBI hikes interest rates on term deposits

Mumbai, January 6
The State Bank of India (SBI), the country's largest bank, today increased interest rates on term deposits between Rs 15 lakh and Rs 1 crore to 8.25 per cent per year.

The new rates would be effective from January 8 and applicable for term deposits with maturity of over one year and above, the bank said in a release today.

This offer will be available for a limited period till March 31, 2007, it added. — PTI

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Aviation Notes

by K.R. Wadhwaney

A-I chief gets extension

Mr V. Thulasidas will continue as Chairman and Managing Director of Air-India ‘till further orders’. As powers that-be are unsure about the date of the merger of two national carriers, they have extended his tenure in the A-I without specifying the date of continuation.

During last month or about, the scenario of merger has turned more intricate and complex. Many are firm that the merger in a ‘real sense’ will not come about and, if it is forced upon two national carriers, it will merely be to satisfy the ego of certain powerful politicians.

With fleet expansion of two carriers in the pipeline, there is actually no need whatsoever for the merger. Both airlines have competent officials to emerge out of turbulent weather, which is more murky because of the complex functioning of the politicians.

(IPCSI)

A few patriotic NRIs (non-resident Indians) have expressed their commitment to help develop infrastructure on twin sectors of aviation and tourism to provide further shining look to the northern Indian region. Buoyed by NRIs’ enthusiasm, the International Punjabi Chamber for Service Industry (IPCSI) will stage a one-day conference at Chandigarh on January 11, 2007, to formulate ways and means to develop aviation in particular on sustainable development mode.

According to IPCSI, “the conference will stress on the need to upgrade existing airports, develop new airports, make greater utilisation of helipads, specially in the far-flung areas of hill states of Himachal Pradesh, Jammu and Kashmir and Uttaranchal. Many helipads, despite existing amidst scenic beauty, are left in a “state of neglect”.

The event, fourth Parvasi Punjabi Divas, is the continuation of the “Think-India Think-Punjab philosophy 2006, which the Punjab Government launched with the IPCSI. The thrust continues to be on the Public-Private Partnership (PPP) basis which, according to aviation experts, is best suited for the infrastructure sector. What is most remarkable about the ‘triple P’ is that one-third of 25 million NRIs belong to the region. A majority of whom continue to have roots in Punjab.

Prime Minister Manmohan Singh has said: “Infrastructure development require huge resources. The Planning Commission has estimated that the investment in infrastructure, including in aviation sector, will need to be in the order of about Rs 14,50,000 during the 11th Plan period. This is a requirement of an immense magnitude”.

As northern Indian states constitute a unique socio-geographical unit of the country, rich in history and culture, all-out efforts through triple ‘Ps’, is the only way to help this region rub shoulders with more advanced units within India and abroad. The key areas to be developed on a war footing are aviation and tourism and, once connectivity is duly developed, sky is the limit where Punjab in particular is concerned.

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Investor Guidance

by A.N. Shanbhag

Residents can remit up to $1,50,000 per annum abroad

Q: I am an NRI (US residence) holding an NRE account in Mumbai. I am planning to transfer money from this NRE account into my mother’s (who is an Indian resident) regular savings account also in the same branch. I have the following questions-

1. I believe that this amount is tax-free without any limits. But can you please confirm this for me?

2. Since, I will lose repatriability on this amount, is there any other legitimate way of sending money out of India to relatives abroad. For example, I have heard that one is legally allowed to send up to $ 25,000 per year abroad. Is this true? If so, then how would that be reflected on my mother’s IT return? Also, what are the tax implications for me?

— Mohnish

A: 1. Yes, the amount that you transfer to your parents is tax-free without any limit.

2. As per Master Circular dated July 1, 2006, Indian Residents are allowed to remit abroad up to $ 1,00,000 per annum for maintenance of close relatives. You will be a close relative of your parents as per the law and hence this should take care of your requirements. Also, as per latest AP DIR Circular 24 dated 20.12.2006, the $25,000 limit that you refer to has been increased to $50,000 per calendar year and this includes gifts. Therefore, an Indian resident may send as much as $1,50,000 per annum abroad out of which $1,00,000 is necessarily to close relatives.

You gifting a sum of money to your mother or vice versa is tax neutral as per the current Indian tax laws.

Rebate on MFs

Q: I want a clarification on ELSS mutual fund savings. I had invested Rs 40,000 in ELSS tax-saving scheme with a lock in period of 3 years under dividend-reinvestment option in mid of September. Now I have received a tax-free dividend of Rs 5,800 which has been converted into units through the fund house itself, since I opted for dividend reinvestment option. Sir, here can I claim IT rebate for the reinvested amount of Rs 5,800. Kindly clarify me.

— Murli

A: Yes, you will get deduction for the reinvested amount. However, the same would be subject to a fresh lock-in of three years.

Penalty for not filing IT return

Q: What is the penalty for not having filed tax returns on time. Till when can one file tax returns of earlier years?

— Dadu

A: U/s 271(F), a penalty of Rs 5,000 is leviable if the returns are not filed before the end of the relevant Assessment Year. Which means for the current year, though the due date of filing tax return is 31st of July, 2007, you may file the return till 31st of March 2008 without having to pay any penalty. However, under subsection 8(a), the assessee shall be liable to pay simple interest @1% per month or part of a month on the amount of the tax payable. Interest is leviable on the tax on the total income declared in the return and not on the income as assessed and determined by the assessing authority [Tej Kumari v CIT 22TCR250 (Pat), 2001].

The assessing officer may reduce or waive the interest payable. This is theory. In practice, the penalty is not evoked, unless the assessing officer feels that the failure to file was deliberate and designed towards concealment of income.

In the case of willful failure to furnish return of income in the prescribed time, Sec. 276CC comes into effect. Where, as a result of failure to file the return, the tax evasion exceeds Rs. 1 lakh, the penalty is a fine and imprisonment that could vary in term between 6 months to 7 years. In other cases, it could be a fine and imprisonment of 3 months to 3 years.

In the case of late filing of return of loss, the assessee is not allowed to carry forward :

1. Speculative loss

2. Long or short-term capital loss

3. Loss from owning and maintaining race horses.

Rebate on insurance premium

The right to setoff and carry forward the loss of past year is not affected. The right to setoff the losses of the current previous years against the income of the current year is also not lost.

Rebate on insurance premium

Q: I pay the premiums for a life insurance policy in the name of my father. Will I get any deduction u/s 80C for the same? What about the premiums paid in the name of my wife?

— Linesh

A: Insurance premiums paid by a person to effect or to keep in force an insurance on the life of his parents, dependent or otherwise, do not earn any tax deduction for the person. This privilege is enjoyed by those in respect of premiums paid for covering the life of spouse and children, major or minor, dependent or otherwise. Interestingly, amount paid as premium towards Mediclaim for parents is deductible from income. As a matter of fact if the parent is a senior citizen, higher deduction is available.

PAN card

Q: I am a US resident and am PIO card holder. How do I apply for a PAN card? Is it wise to have one? Is it advantageous to have one or not.

— Brij M Mehra

A: You should possess a PAN especially if you are planning to purchase a real estate. PAN is useful for several other purposes, including filing returns to claim the refund of TDS.

The application for PAN should be made in Form-49A which can be downloaded from website of the Department or UTIISL or NSDL (www.incometaxindia.gov.in, www.utiisl.co.in or www.tin.nsdl.com). However, the filled up form has to be couriered to the agency responsible for issuing PAN.

As per the new guidelines, an applicant should fill the PAN application as indicated below -

1) AO Code pertaining to International Taxation Directorate should be used.

2) Individuals may indicate any address (residential or office — whether Indian or foreign) as the address for communication. A foreign address can be provided if they do not have any Indian address of their own. An e-mail id and a recent colour photograph of prescribed size must be provided.

3) Additional courier charges for PAN card dispatch shall be payable if the address for communication is a foreign address.

4) Providing details of Representative Assessee is not mandatory for such applicants. However, if details of Representative Assessee are provided, his proof of identity and address shall be required in addition to those of the applicant.

5) Even if the representative assessee details are provided, the application should always be signed by an individual.

6) The main document necessary is a copy of passport. If the applicant has a bank account in India, a copy or the bank pass book may be provided as proof of local address. Where the foreign address is not available in the passport, a copy of bank account statement in country of residence will suffice the purpose. A foreign citizen who at the time of application for PAN is located outside India should get the copies attested by Indian embassy in the country where the applicant is located.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

Forex reserves
Mumbai, January 6
India's forex reserves went up by $1.018 billion to stand at $177.251 billion during the week ended December 29. The reserves were up by $714 million, touching $176.233 billion during the preceding week ended December 22, compared to a week-ago period. Foreign currency assets too increased by $996 million to $170.187 billion during the seven-day period ended December 29, 2006. — PTI

Gold, silver fall
Chennai, January 6
Gold and silver prices fell sharply on the bullion market here today with standard gold (24ct) shedding Rs 210 per 10 gm to end the day at Rs 8,810 and ornament gold (22 ct) dropping Rs 20 per gm to settle the day at Rs 816 following weak global advices. Bar silver (per kg) also drifted lower to Rs 17,955 from yesterday's close of 18,665, registering a fall of Rs 710. — PTI

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