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B U S I N E S S

FDI outflow set to cross $15 billion
New Delhi, March 18
The calendar year 2007 is expected to witness FDIs outflow of more than $15 billion, surpassing FDIs inflows for the first time ever with a bulk of outward FDI coming from manufacturing companies.


Chinese model of industrialisation not acceptable, says Trade Minister.
(56k)

Reliance pool shortlisted for Saudi mobile bid
Dubai, March 18
The consortium led by India's Reliance are among the seven firms to qualify for Saudi Arabia's third mobile phone licence, while MTNL-Al Shoula is out of the fray. Kingdom Turkcell, MTC & Partners, Samawat-Bharti, Oger Telecom, Tawasul-Digicel, MTN Saudi Arabia and Abdullah Abdul Aziz Al-Rajhi-Reliance have qualified to bid for the license.

A promoter shows off a latest pocket PC from Chinese computer giant Lenovo in Beijing
A promoter shows off a latest pocket PC from Chinese computer giant Lenovo in Beijing on Saturday. Lenovo reported an 18 per cent rise in net profit for the third quarter, boosted by robust sales in China and increased overall shipments of personal computers. — AFP

Date for filing form C extended
Ludhiana, March 18
In a major relief to the trade and industry, the Punjab government has extended the date for the filing of C forms related to the central sales tax to June 30 from March 31.

Rolls-Royce dealership
Munich, March 18
Encouraged by good demand for premium luxury cars, Rolls-Royce will be opening its second dealer's office in Delhi in the next few weeks. "Rolls-Royce will be opening the second dealer's office in Delhi within the next few weeks," Rolls-Royce Motor Cars' corporate communication director, Graham Biggs said here. — PTI





Shah Rukh to endorse Diageo
Liquor major Diageo Radico Distilleries has appointed Shah Rukh Khan as brand ambassador for its premium product 'Masterstroke deluxe whisky'
Liquor major Diageo Radico Distilleries has appointed Shah Rukh Khan as brand ambassador for its premium product 'Masterstroke deluxe whisky'. — PTI



EARLIER STORIES

 

Market Scan

Further correction possible
Sensex closed at its all-time high at 14,723.88 points on February 9, 2007 but it closed at 12430.40 points on March 16. The Sensex was down by 2293.48 points, registering a correction of 15.57 per cent. It is quite on the cards that there may be a further correction.

Tax Advice

Medical perquisite up to Rs 15,000 exempted
Q. I am an employee of Punjab State Electricity Board stationed at Patiala with a gross salary income Rs 3,15,922 for financial year 2006-07. I got some heart problem during July 2006 and treated (Angioplasty) my self from Patiala Heart Care Institute, Patiala and incurred expenditure of Rs 1,52,190 from my pocket.





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FDI outflow set to cross $15 billion
Tribune News Service

New Delhi, March 18
The calendar year 2007 is expected to witness FDIs outflow of more than $15 billion, surpassing FDIs inflows for the first time ever with a bulk of outward FDI coming from manufacturing companies.

The year 2007 promises to be a year of deals varying in size from few million to billion dollars, dominated by manufacturing as the balance of power in manufacturing has started to shift to India more recently, apart from China and Brazil and the number of deals also likely to be much higher than previous years, according to a study on FDI outflow and role of manufacturing in the mergers and acquisitions front done by Assocham eco pulse.

Owing to the restructuring taking place in Europe, Indian companies are targeting European entities offering cost competitiveness. The USA and Africa are other destinations of invasion of corporate India.

The analysis further establishes that boost will be provided by pharmaceuticals and automobiles, particularly in terms of value, though IT is still likely to dominate as far as the number of deals is concerned.

“Riding on strong balance sheets, good credit ratings and confidence shown by global business community, Indian manufacturing is leading India Inc.’s global quest”, said Assocham president Venugopal Dhoot.

With the growing appetite for cross-border acquisitions, India is poised to have numerous Indian multinationals, particularly in manufacturing. The driving forces are huge funds supply, globally competitive business practices, and favourable regulatory environment besides higher margins, revenue, volumes, and growth prospects.

The number of outbound M&A deals has increased sharply over the past six years from about 37 in 2001 to more than 170 in 2006. The transactions gathered tremendous momentum in 2005. Total number of deals actually doubled in 2005 from 2004 to reach a figure of close to 150 from 70 in previous year.

Though inbound deals are also increasing, but outbound deals are growing with much more vigour.

The number of inbound deals in 2006 grew to 532 in 2006 from 224 in 2001.

While globalisation is at its peak, Indian manufacturing nestled with huge cash reserves and easy availability of credit is leaving no stone unturned in staying competitive with its global peers.

Identifying the competitive advantage of Indian companies, the global private equity funds are extremely bullish on India Inc.’s shopping spree.

They have expressed faith in the ability of Indian companies to use the technology that the target company possesses. The domestic skills of scaling up in the foreign market at a cheaper cost are also playing a key role in cementing the confidence.

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Reliance pool shortlisted for Saudi mobile bid

Dubai, March 18
The consortium led by India's Reliance are among the seven firms to qualify for Saudi Arabia's third mobile phone licence, while MTNL-Al Shoula is out of the fray.

Kingdom Turkcell, MTC & Partners, Samawat-Bharti, Oger Telecom, Tawasul-Digicel, MTN Saudi Arabia and Abdullah Abdul Aziz Al-Rajhi-Reliance have qualified to bid for the license.

The Communications and Information Technology Commission (CITC) will open the single-sealed financial proposal of each of the seven eligible applicants in Riyadh on March 24 in the presence of the companies' representatives, Arab News said.

The board of directors of CITC, chaired by Mohammed Jamil Mulla, minister of communications and information technology, selected the seven consortia from nine applicants.

"These financial proposals will then be evaluated and the final results will be submitted to the board of directors and subsequently to the council of ministers for awarding the licence to the successful bidder," CITC spokesman Sultan Al-Malik said.

The CITC did not give values for the bids for the third GSM licence but market analysts predicted that the government would receive nearly SR20 billion (local currency) from the licence sale. — PTI

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Date for filing form C extended
Tribune News Service

Ludhiana, March 18
In a major relief to the trade and industry, the Punjab government has extended the date for the filing of C forms related to the central sales tax (CST) to June 30 from March 31. This was a long-pending demand of the industry in the state as the C forms were not available. Besides, the government announced the waiving off of the interest and penalty on the house tax, water tax and sewerage tax if the same was deposited by the people by March 31.

These announcements were made by the minister for local bodies, industries and commerce Manoranjan Kalia at a function jointly organised by the Ludhiana Spinners' Association and the Ludhiana Yarn Dealers association, here today.

He said the government would accord top priority to build international-level infrastructure in the state so that the trend for migration of industry from the state could be reversed.

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Market Scan

by J.C. Anand

Further correction possible

Sensex closed at its all-time high at 14,723.88 points on February 9, 2007 but it closed at 12430.40 points on March 16. The Sensex was down by 2293.48 points, registering a correction of 15.57 per cent. It is quite on the cards that there may be a further correction.

The market has been marked by two features consistently during the last fortnight: volatility and uncertainty. These are likely to be repeated during this fortnight and even longer. There are many factors leading to it. First, the Indian stock market is now a part of the global markets. When the global markets are volatile and uncertain, the Indian market responds to them. Other factors are: correction trends in the USA. European and Asian markets, including the Indian market, impact of inflation and high interests on the Indian market as well as the government’s measures to regulate prices of cement and steel products.

The financial year 2007-2008 is likely to be much dimmer than the previous financial year for the corporate sector and the stock market. Unseasonal rains and hail have damaged the wheat and other rabi crops in Punjab, Haryana and some parts of Uttar Pradesh. Inflation, high lending rates on loans, higher cost inputs for the corporate sector, wage inflation are bound to cut down profit margins and net profits of the companies. Rise in dividend distribution tax on the corporate sector and other factors relating to fringe benefit tax may be other dampers.

The long-term prospects of the Indian economy and of the corporate sector, are, however, bright. The index of industrial production for the month of January, 2007 is high at 10.9 per cent as against 8.5 per cent in the previous period. The manufacturing sector was the key driver. Exports are also doing well. But the short and mid-term prospects are not so good. There may be further correction in the market, as the US economy is slowing down. This will affect the European and the Asian markets as well. In Japan, the interest rates have been raised. The slow down of the US economy and raise in interest rates are likely to reduce FII funds in the emerging markets, including the Indian market. Liquidity may get tighter and affect the stock market and industry. It is not the time to make any fresh investments. It would be better for the investors to mark time and to watch the market and wait for the opportune time. First quarter results will indicate the market trend.

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Tax Advice

by S.C. Vasudeva

Medical perquisite up to Rs 15,000 exempted

Q. I am an employee of Punjab State Electricity Board stationed at Patiala with a gross salary income Rs 3,15,922 for financial year 2006-07. I got some heart problem during July 2006 and treated (Angioplasty) my self from Patiala Heart Care Institute, Patiala and incurred expenditure of Rs 1,52,190 from my pocket. My employer passed/cleared the medical bill of Rs 1,28,770 for reimbursement. My employer (PSEB) has asked me to pay the income tax on this amount after clubbing it with annual gross salary for the financial year 2006-07.

Kindly advise me that

i) Is this reimbursement of indoor medical treatment exemptable?

ii) Is difference of actual incurred amount and reimbursement received i.e. Rs 1,52,190 — Rs 1,28,770 = Rs 23,420 directly deductible from my gross salary?

— Gobinder Singh, Patiala

A. In accordance with the provisions of Section 17(ii) of the Act, the perquisite with regard to medical facilities in not chargeable to tax up to Rs 15,000 in aggregate per assessment year. This amount covers the expenditure incurred by the employee towards the expenditure on the purchase of medicines or general checkup or treatment in a private clinic. However, in case the expenditure has been incurred for having a treatment in a hospital, the perquisite is chargeable in the following manner:-

(i) If the hospital is maintained by the employer and the expenditure is incurred by him for medical facilities provided to the employee and his family members, no perquisite is chargeable to tax in the hands of the employee.

(ii) In case the hospital is maintained by the Central Government/State Government/ or a local authority or any other person approved by the Government for the treatment of its employees, medical facilities made available to and the expenditure is incurred or reimbursed by the employee no perquisite value is chargeable to tax

(iii) In case the hospital is approved by the Chief Commissioner of Income-tax having regard to the prescribed guidelines for treatment of prescribed diseases given in Rule 3(a)(ii) of Income-tax Rules 1962 and the expenditure is incurred or reimbursed by the employer, no perquisite value is chargeable to tax.

The facts given in your query do not indicate whether the Patiala Heart Care Institute is covered, in category (ii) or (iii) above. In case the same is so covered the amount of Rs 1,28,770 cannot be taken as perquisite value for the purposes of payment of tax as the prescribed diseases specified do cover heart ailment requiring surgical operation. If it is not so covered then the contention of the PSEB would be correct. The difference of Rs 23,420 is not deductible from your gross salary under any provisions of the Act.

Filing IT return

Q. I shall feel grateful if you advise on the following:

If the income (from all sources) does not exceed Rs. 1 lac (Rs 1.85 lac in case of Sr. citizens and Rs 1.35 lakh in case of women) in a particular financial year one need not file the I.T. return. The point is if one has PAN and after retirement or otherwise one can stop submitting I.T. return of one's own or needs the permission of I.T. Deptt.

2. Can one file one's I.T. return anywhere in India or the condition of residential jurisdiction is essential.

— Rajesh K. Anand, Jalandhar City

A. 1. It is not necessary to obtain any permission from the Income-tax Department for not filing an Income-tax return. The provisions of Section 139 of the Income-tax Act 1961 (the Act) are very clear on the subject. The requirement contained therein is to file the return in case the total income of a person exceeds the maximum amount up to which tax is not payable by an individual without giving effect to the provisions of Chapter VI-A or section 10A or section 10B of the Act. It may be added that Chapter VI-A deals amongst other, with the deduction allowable under Section 80C of the Act.

2 Normally the jurisdiction for assessment purposes is on the basis of principal place of business of an assessee. In other cases, it is based on the basis of permanent residence of an assessee. Any change from original jurisdiction requires approval of the tax authorities.

Pension benefit

Q. I have worked as a teacher in a private school for 18, years i.e. from April 88 to July 2006 in TGT grade. After a gap of one-and-half-month, I, joined another private school in the same grade. My P.F. was being deducted under the Employees Provident Fund Scheme 1952 and amount accumulated in my account is Rs 2.20 lakh (approx.) up to July 2006 (inclusive of Employer's contribution). My query is that:

1. Am I eligible for pension benefit? I shall attain age of 60 in Oct. 2017.

2. Should I continue to accumulate my PF in same account, being deducted by my new employer.

3. Does it affect to pension, if any, by opening a new PF account and withdrawal of all amount from my present account.

— Jaswinder Kaur, Amritsar

A. According to law, the employer's contribution to provident Fund has two components viz; provident fund and pension. In case a person is drawing salary which is less than or up to Rs 6,500/ pm, a contribution of 12 per cent being applicable, 3.67 per cent of 12 per cent is appropriated towards provident fund contribution and 8.33 per cent is appropriated towards pension contribution. The employees' contribution is appropriated towards provident fund in its entirety. However, in case a person is drawing a salary of more than Rs 6,500, the contribution towards pension is limited to 8.33 per cent of Rs.6,500 only. The excess amount is appropriated towards PF contribution.

The school must have been covered under a pension scheme administered by Central Board under the Employees Provident Fund and Miscellaneous Provisions Act 1952. The provisions relating to Pension Scheme were brought in by Amendment Act 1996 w.e.f. 16.11.1995. On the basis of legal position as explained here in above, you should be entitled to pension benefit. Further, you should continue to accumulate provided fund in the same account which can be transferred to the new establishment. It would be in your interest to continue with the old account so as to avail the benefit in its entirety at the time of your retirement.

Tax liability

Q. I shall be obliged if you verify and confirm my tax liability and amount of refund due, since substantial amount has been deducted towards TDS on Senior Citizen (P.O.) S.S. on the interest paid from 01.06.2005 to 30.09.2006 uptil now. TDS for the quarter up to 31.12.2006 is to be deducted in June 2007. Income figures may vary on account of D.A. increase which will be adjusted accordingly. I am not a senior citizen i.e. below 65 years of age.

May I invest in ELSS MF. Please favour me with your opinion. I am a retired bank employee (aged 61 years).

— Sudarshan Kumar Jain, Ludhiana

A. On going through the calculation, it is observed that you have claimed the deduction of Rs 50,000 under Section 80U of the Act. This deduction is allowable to an assessee who is certified by the medical authority to be a person with disability. The certificate is to be obtained in accordance with the provisions of the Act and filed along with the return. I hope you have obtained such certificate and would be enclosing the same along with your return of income. Further, the figure of interest income has been presumed to be correct as the facts in the query are not very clear. After taking into account the facts as explained by me, the computation of your tax liability of Rs 475 is correct and you would be entitled to a refund of TDS deducted over and above the tax liability. You can make investments in equity-linked saving schemes. However, you must go through the results of various schemes before you venture into such investments.

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BRIEFLY

Sun Pharma
New Delhi, March 18
Mumbai-based drug firm Sun Pharma is planning to hive off its research operations into a separate entity with an overall investment of $60-70 million in the next three years. It would initially pump in $45 million in the new company while the remaining sum would be met through internal accruals once it starts generating revenues, a company official said. — PTI

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