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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

PM promises to deflate inflation
New Delhi, February 3
Prime Minister Manmohan Singh today said that the government will take policy measures to check inflation and underlined the need to ease domestic constraints on growth.

Ranbaxy in Valtrex vortex
Glaxo to sue Indian firm on patent right

New York, February 3
Drug developer GlaxoSmithKline PLC said today it is suing India-based generic drug maker Ranbaxy Laboratories Ltd over patents covering herpes treatment, Valtrex.

Investor Guidance
Gifts received on marriage are tax free
by A.N. Shanbhag

Gifts received on marriage are tax free
Q: (a) I am working in a PSU and posted at Sikkim. My company is paying Rs 4,200 towards the house owner per month, towards my leased accommodation. Besides that I am paying an extra amount of Rs. 1,000 month towards my house rent.


 

EARLIER STORIES

 
Yemeni Oil and Minerals Minister Khaled Mahfouz Bahaa (left) speaks to Minister for Petroleum and Natural Gas Murli Deora following a meeting in the Yemeni capital Sanaa on Saturday. India wants Yemen to expedite the bidding process of its two oil blocks, in which ONGC Videsh has evinced interest.
Yemeni Oil and Minerals Minister Khaled Mahfouz Bahaa (left) speaks to Minister for Petroleum and Natural Gas Murli Deora following a meeting in the Yemeni capital Sanaa on Saturday. India wants Yemen to expedite the bidding process of its two oil blocks, in which ONGC Videsh has evinced interest. — AFP

Aviation Notes
Check presence of touts, criminals
by K.R. Wadhwaney

Notwithstanding seasonal fog woes that affect flight operations, the general health of the Indira Gandhi International Airport (IGIA) has been far from satisfactory. The Delhi International Airport Limited, a private undertaking, is in command but discipline has been at a discount.

 

 


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PM promises to deflate inflation
Tribune News Service

New Delhi, February 3
Prime Minister Manmohan Singh today said that the government will take policy measures to check inflation and underlined the need to ease domestic constraints on growth.

At a meeting of the Economic Advisory Council (EAC) to the Prime Minister, he said, “the government was committed to reducing the rate of inflation through appropriate policy measures.”

He observed that while the global environment was currently conducive to sustaining India’s higher growth rate, it was necessary to ease domestic constraints on growth, a statement from the PMO said here.

Dr C Rangarajan, Chairman EAC to PM, made a presentation on the state of the economy, underlining the robust performance of the economy in ’06-07.

He said growth was being driven both by an increase in consumption and investment and expressed confidence that the government would be able to adhere to fiscal targets this year.

He identified inflation as a key macro-economic challenge in the short-term and that steps already taken by the government and the Reserve Bank of India (RBI) should be able to dampen inflationary expectations and bring respite on the price front.

While global factors and rising demand had contributed to inflation in some sectors, supply constraints had contributed to a larger extent. Easing of the supply constraint through appropriate interventions in the real economy, lower tariffs, higher agricultural and industrial productivity would ease the price pressure, he said.

Presenting an upbeat assessment of the state of the economy, the EAC reported that per capita income growth would be more than 7 per cent in 2006 and in 2007.

This is for the first time in 15 years, overall economic growth is expected to be close to 9 per cent. The EAC also reported a sharp increase in the savings rate to 35 per cent of national income (GDP). This was on account of an improvement in both private sector and government sector savings rate.

Senior economic editors and analysts participated in today’s meeting, which was also attended by the Union Finance Minister P Chidambaram.

Participants agreed with the assessment of the EAC that inflation management was the key short-term priority. They advocated further trade liberalisation and other measures to increase the “competitive environment” in the economy.

To sustain the growth momentum they called for acceleration of economic reforms, especially in agriculture and trade sectors.

They called for increased investment in infrastructure, economic pricing of power, water and other scarce resources, reform of government and public sector, improving the efficiency and quality of public service delivery, especially in education, healthcare and rural extension services.

Participants also emphasised the need to encourage growth of small and medium enterprises.

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Ranbaxy in Valtrex vortex
Glaxo to sue Indian firm on patent right

New York, February 3
Drug developer GlaxoSmithKline PLC said today it is suing India-based generic drug maker Ranbaxy Laboratories Ltd over patents covering herpes treatment, Valtrex.

The British drug developer filed the patent infringement lawsuit in the US District Court of New Jersey.

The company said patents on the drug do not expire until June 2009. Ranbaxy received Food and Drug Administration approval for a generic version of the drug yesterday and said it plans to market the drug in the US.

Glaxo is initially asking for an injunction to block Ranbaxy from selling the product, pending the outcome of the lawsuit.

Ranbaxy is not the first company to receive approval to make a generic version of Valtrex. On Wednesday Mylan Laboratories Inc. received FDA approval for 500-milligram and 1,000-milligram doses, but called the approval tentative pending the expiration of patents in 2009.

In a statement, Glaxo said Ranbaxy is the only generic drug developer to make a direct challenge on the Valtrex patent and that it feels confident in the strength of its patent protection. No trial date has been set.

Ranbaxy officials could not be immediately reached for comment. — AP

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Investor Guidance
Gifts received on marriage are tax free
by A.N. Shanbhag

Q: (a) I am working in a PSU and posted at Sikkim. My company is paying Rs 4,200 towards the house owner per month, towards my leased accommodation. Besides that I am paying an extra amount of Rs. 1,000 month towards my house rent.

Will I be able to get tax benefit on account of my extra payment?

(b) I got married in 2003. My spouse is a homemaker and fully dependant on me. At the time of marriage, the father of my spouse has deposited some amount in fixed deposit.

Will I be able to get any tax relief on that? If yes, then what amount.

— Nalin Shah

A: a) Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental less any amount paid by the employee or 20 per cent of the salary (15 per cent in cities with population less than four lakh), whichever is lower. Therefore, the tax benefit on account of extra payment is indirect in terms of a lower perk value.

From your query, it seems you are asking about the tax benefits associated with an amount that you or your wife received three years back. Gifts at the time of marriage are tax free. In any case, in 2003 there was no gift tax applicable and the amount would not have been taxable.

Savings of NRI

Q: I have read your advice to tax payers in The Tribune. I have some questions to ask.

I have a PAN card in India and I was a Central Government Officer who retired in March 2006. I filed my IT return for ’05-06 before moving out to foreign country. Now I have been abroad for more than six months .I am not working now. I deposited my retirement package in post office and senior citizen schemes in India. I receive monthly pension of Rs. 9,000 per month, besides interest on deposits of approximate value of Rs 1,25,000 This income is more than Rs 1 lakh the exemption limit. Please advice on how to file return for this year without coming to India.

Am I supposed to file the Income Tax return in the first place? How do I purchase or invest amount u/s 80C.

— Brinder Parhar

A: A resident is one who during a financial year (FY), which is from April to March, satisfies any one of the following two basic conditions:

He is in India for at least

a) 182 days in the FY or

b) 365 days out of the preceding 4 FYs and 60 days in the FY.

The stay in India need not be continuous.

Most persons going abroad for an employment for the first time will have the status of a resident since they will be covered by clause ‘b’ above. Therefore, if an Indian citizen leaves India in any year for the purpose of employment, or as a member of the crew of an Indian ship, the 60 days in the clause ‘b’ above is to be replaced by 182 days.

In other words, they will be treated as residents only if they are in India for 182 days or more in the current FY.

You were in India for 365 days or more out of the preceding 4 FYs and also for 60 days or more during FY 06-07. Yes, you will have to file tax returns. You will do well by appointing a consultant in your place of residence in India who is a specialist in the field.

Tax on perquisites

Q: When TDS is already deducted on LTC amount (without submitting any supporting document towards journey), this amount again can be considered in total income for calculation of IT as perquisite.

If the above is done, can it not be considered double tax on one item?

(2) Our company is paying certain amount in the form of soft furnishing allowances to certain level of officers once in four years. TDS is already being deducted while making the payment & this amount is also being considered in total income for calculation of perquisites.

If the above system is in vogue, can it not be considered as double tax on one item?

— Vishal

A: Tax deducted at source is not the same as tax payable.

Consequently, if the income is over Rs 1 lakh, you have to file the returns even if TDS is applied on the full amount. Tax should be computed at the rates applicable and credit shall be claimed for the TDS. If the result is negative, you will get a refund. If it is positive, you will have to pay additional tax.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Aviation Notes
Check presence of touts, criminals
by K.R. Wadhwaney

Notwithstanding seasonal fog woes that affect flight operations, the general health of the Indira Gandhi International Airport (IGIA) has been far from satisfactory. The Delhi International Airport Limited, a private undertaking, is in command but discipline has been at a discount. Petty crimes, particularly thefts, have increased. Analysts say that worsening situation has arisen as too many passes for different areas, including sensitive ones, have been issued. Touts and unauthorised persons roaming about are a common sight while police and security personnel are mute observers.

Recently, an immigrant family from Delhi lost all their savings within 25 seconds. In a bid to capture IGIA and his family members in his camera, one passenger chose to click before immigrating abroad permanently. When he returned to pick his baggage, he found his briefcase containing his whole life’s savings, travel documents and passports all missing. The family members were inconsolable.

The isolated instances of thefts like this one may not be a concern for authorities but what is sufficient cause of worry is that there is virtual ‘jungle raj’ prevailing outside the entrance gates. There are more ‘undesirable persons’ hanging around than genuine passengers waiting patiently to get inside the terminal building. It is this kind of ‘man-made bottleneck’ that causes irritation to the passengers. Why are unauthorised persons allowed to hang around?

When DIAL took over from the Airports Authority of India (AAI) officials made lofty promises that bottlenecks at entrances and congestions at airline counters or X-ray machines would be a thing of past. The fact of the matter is that the overall situation has deteriorated. Officials when contacted, merely evade questions.

Several commanders of national and international airlines have pointed out filthy locations affecting flight paths but the authorities, including DIAL, have stayed unmoved. The commanders have often reiterated that, apart from enormous losses to airlines, birdhit instance is a positive security risk.

In a bid to revamp airport, DIAL, in a haste, has decided to bring in private parties to handle duty free shops at the IGIA. According to government rules, customs bonds have to be obtained because articles sold at duty free shops are exempted from several taxes. The tug-of-war between DIAL and customs has begun and private parties feel diffident of starting operations before the end of February, as planned.

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BRIEFLY

Imes acquired
Chandigarh, February 3
Varroc group, a global provider of automotive parts, has acquired, Imes s.p.a, a hot forging manufacturer of Italy. According to a press note, the acquisition of Imes will provide synergy to Varroc’s existing business in India. The deal is a part of the company’s strategy to expand in the areas of engine valves and forged components, primarily intended for the European automotive market. — TNS

Shreyans’ plan
Ludhiana, February 3
Shreyans Industries, manufacturers of writing and printing papers, has recorded a 62 per cent increase in its net profit for the nine-month period ending December 31, 2006, a press note said today. The company recorded a net profit of Rs 7.28 crore. Mr Rajneesh Oswal, Vice-Chairman and Joint Managing Director, said the company would set up a 3.5-megawatt power co-generation plant at Ahmedgarh. — TNS

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