SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Railways may transit via Bangladesh
New Delhi, April 21
In order to boost trade in north-eastern states, India is exploring possibilities of a transit route via Bangladesh to bring down freight cost and distance between Kolkata and Agartala.

Air Deccan plans 3 separate entities
Kolkata, April 21
Air Deccan, which is buying 80 more aircraft to its present fleet strength of 43, including 19 airbus A-320 and 24 ATR turboprop, will continue to offer the lowest possible fares to enable the common people to fly as often as possible to the country's different destinations from their respective places, company managing director G.R Gopinath declared at a press conference in Kolkata last evening.

Bank of M’rashtra to go overseas
Chandigarh, April 21
Having established itself as a leading retail bank in central India, Bank of Maharashtra is finally looking towards expansion in North India and the overseas markets of West and South East Asia.
                                      Rajiv Madhok

Rajiv Madhok

India, Syria shortlist projects
New Delhi, April 21
India and Syria has identified a number of projects and key areas for further enhancing cooperation in the hydrocarbon sector spanning across exploration and production, refinery modernisation and new projects, development of gas infrastructure including city gas projects, marketing, training of Syrian technicians and engineers.

Aviation Notes
MPs discuss state of air routes

The need to strengthen, streamline and evolve a new road-map for air connectivity in the southern parts of the country was discussed by Minister of State Praful Patel and 14 members of Parliament in Kochi recently. The main agenda was the development of air connectivity in the South, but the members took the opportunity to highlight the need for upgrading airports in the east, including Kolkata, which, after the 50s and 60s, was subjected to needless neglect and step-motherly treatment.



A jewellery vendor poses with a rare and unique mukhi rudraksha surrounded by nearly 108 diamonds and gold at a fair organised by The Indo-Nepal Rudraksha Organisation in Hyderabad
A jewellery vendor poses with a rare and unique mukhi rudraksha surrounded by nearly 108 diamonds and gold at a fair organised by The Indo-Nepal Rudraksha Organisation in Hyderabad on Saturday. The piece is priced at Rs 30 lakh ($71,400). — AFP

EARLIER STORIES

  Investor Guidance
Equity-based units of MFs subject to securities transaction tax

Q: Could you please provide the details about STT applicability for mutual funds? If I invest in STT applicable schemes, what are the benefits I can avail and the amount of STT to be deducted, if I invest Rs 10,000 in a mutual fund?

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Railways may transit via Bangladesh

New Delhi, April 21
In order to boost trade in north-eastern states, India is exploring possibilities of a transit route via Bangladesh to bring down freight cost and distance between Kolkata and Agartala.

"The distance between Kolkata and Agartala is about 1,500 km. A transit route will reduce the rail distance to just 350 km between the two points and sharply bring down the freight cost," Railway ministry sources said today.

There are already five rail route linkages between India and Bangladesh — Gede (India)— Darsana (Bangladesh) (broad gauge), Singhabad (India)-Rohanpur (Bangladesh) (broad gauge, Petrapole (India) — Benapole (Bangladesh) (broad gauge), Radhikapur (India) — Shahbazar (Bangladesh) (metre gauge).

Though there is no direct rail link between Kolkata and Agartala at this moment, they said a rail link was being set up between Kumarghat and Agartala by December 2007.

The Indian government is understood to have sounded Bangladesh about allowing cargo transit in a rail route linking Kolkata and Agartala through Bangladesh. India has also offered a $150 million line of credit to Bangladesh for its railways development.

A railway project between Kolkata and Dhaka has already been announced. On the cargo transit issue through Bangladesh, India has already done a feasibility study. This will reduce the cost of cargo transit from Kolkata to north-eastern states to a great extent.

Ircon Malaysia-bound

State-owned Indian construction company, Ircon will help Malaysia revive a multibillion-dollar rail project that had been shelved in 2003 due to its high cost, Malaysia's transport minister said today, according to a report.

Ircon, which was previously involved in the project, will participate in the construction of a double-track line between the towns of Seremban and Gemas in southern Malaysia, transport minister Chan Kong Choy was quoted as saying by the national news agency Bernama.

Chan did not elaborate on details of the financial cost or length of the rail track. Officials at Chan's office were not available to comment on the report.

The entire project — previously estimated to cost 14.45 billion ringgit ($3.8 billion) — was put aside in late 2003 after Prime Minister Abdullah Ahmad Badawi took over from former leader Mahathir Mohamad, who had approved it.

The Malaysian government announced last month it was reviving the project, and that the northern link would be implemented by local private construction companies MMC and Gamuda. — Agencies

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Air Deccan plans 3 separate entities
Tribune News Service

Kolkata, April 21
Air Deccan, which is buying 80 more aircraft to its present fleet strength of 43, including 19 airbus A-320 and 24 ATR turboprop, will continue to offer the lowest possible fares to enable the common people to fly as often as possible to the country's different destinations from their respective places, company managing director G.R Gopinath declared at a press conference in Kolkata last evening.

Capt Gopinath claimed Air Deccan, during its short presence in the country's aviation world, had successfully created a tectonic shift towards low fare air travel, otherwise called "janata air travel", providing an affordable travel option to millions, spurring economic activities, movement of tourism and overall development.

Besides running passenger services, Air Deccan has been also planning to diversify into cargo and chartered flights. "We want to have separate companies to run three separate businesses, namely, the passenger, cargo and chartered and we are looking to raise between $50 million and $100 million through private placement of fresh equity shares", he said, adding that the bids were being shortlisted by the Deccan's merchant banker, Edelweiss Capital, the process of which will be completed in a month's time.

The country's fastest growing low-cost airline with a market share of 21.7 per cent, which has been now operating at 65 airports and plying over 350 flights a day, had recently introduced low cost services to Shimla, Port Blair, Imphal and Dimapur. 

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Bank of M’rashtra to go overseas
Ruchika M. Khanna

Tribune News Service

Chandigarh, April 21
Having established itself as a leading retail bank in central India, Bank of Maharashtra is finally looking towards expansion in North India and the overseas markets of West and South East Asia.

This was disclosed here today by the executive director Rajiv Madhok during an interaction with The Tribune . He said that that bank already has over 1,346 branches, with majority of these being in central India (950 in Maharashtra and 110 in Madhya Pradesh).

“We are now looking for expansion in North India, especially Rajasthan, where we will set up a regional office this year and open five new branches, taking the total number of branches to 16. This year, we will open 50 new branches this year, of which 15 will be in north India,” he said.

The bank proposes to open three branches in Himachal Pradesh at Baddi, Mandi and Bilaspur, besides opening new branches in Ludhiana (one branch) and Chandigarh (two branches). “We are also undertaking surveys for overseas expansion and will soon be setting up two representative offices - in West Asia and South East Asia,” he added.

The ED said that the bank will start a community farming project for small and marginal farmers in Maharashtra within the next two months. Under this project, the bank will act as an intermediary to reorganise small and marginal farmers by pooling in their land and other resources so that they operate as a single entity. “Considering the success of the project in Maharashtra, we will launch the project in Madhya Pradesh,” he said.

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India, Syria shortlist projects
Tribune News Service

New Delhi, April 21
India and Syria has identified a number of projects and key areas for further enhancing cooperation in the hydrocarbon sector spanning across exploration and production, refinery modernisation and new projects, development of gas infrastructure including city gas projects, marketing, training of Syrian technicians and engineers.

This was agreed at a meeting between Murli Deora, Minister of Petroleum & Natural Gas and his counterpart. Sufian Al-Alao, Minister of Petroleum & Mineral Resources of Syria at Damascus, an official press note issued here has said.

Syria has agreed to work closely together with Indian companies, and consider the request of Indian side for allocating blocks on preferential basis in the spirit of mutually beneficial relationship.

Further, Syria would provide information to Indian companies about seven offshore blocks proposed for bidding later this year.

ONGC extended offer of assistance to Syrian Petroleum Company (SPC) for increased oil recovery/enhanced oil recovery (IOR/EOR) from their heavy oil fields through techniques such as in situ combustion, gas and water injection, slim hole drilling, side tracking, production system optimisation.

ONGC will also assist SPC in data interpretation pertaining sub-surface activities. ONGC’s offer for EOR/IOR projects could help in arresting Syrian oil production decline which fell from about 6,00,000 barrels per day (bd) in 2002 to about 4,00,000 bd at present.

ONGC emphasised that they have world-class training facilities in India and can train Syrian engineers and personnel in areas like reservoir management, data interpretation, 3D seismic survey for greater coverage of exploration acreages in Syria.

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Aviation Notes
MPs discuss state of air routes
by K.R. Wadhwaney 

The need to strengthen, streamline and evolve a new road-map for air connectivity in the southern parts of the country was discussed by Minister of State Praful Patel and 14 members of Parliament in Kochi recently.

The main agenda was the development of air connectivity in the South, but the members took the opportunity to highlight the need for upgrading airports in the east, including Kolkata, which, after the 50s and 60s, was subjected to needless neglect and step-motherly treatment.

It augurs well that the government has placed faith in its own Airports Authority of India (AAI) and granted a Rs 1,542-crore project to upgrade the Kolkata airport within three years. As often said, the AAI has an ‘army’ of staff, including competent, dedicated and sincere officers, but sadly they are not being made use of by the authorities for their own ‘hidden agenda’.

In the consultative meeting at Kochi, the consensus was on all-round development throughout the country, but the members pointed out several shortcomings, shortfalls and outdated methods being adopted even at international airports.

Dr Najma A. Heptulla, an enlightened and lively member, pointed out that the system of having barricades at the entrance of the Indira Gandhi International Airport (IGIA) was obsolete in this jet age. She also considered checking cars through mirrors for potential bombs was totally irrelevant.

Another member, Tarlochan Singh, suggested that there was an urgent need to increase flights to the Lakshadweep and Port Blair. He also suggested that there should be a daily flight from Amritsar to Dubai by Air India Express as there was a heavy demand for it. In the words of the member, the development of Chandigarh Airport should be undertaken on a war footing as neighbouring states like Himachal Pradesh will be the beneficiaries.

The ministry and Air-India continue to be on the drawing board for the start of the Delhi-Amritsar-London-Vancouver flight when the operations ex-Punjab are offering a very satisfactory load of passengers.

Dinesh Trivedi, another member, voiced security concerns for flights operating from Bangalore. He said that the belly of the aircraft can be seen from nearby buildings. This is risky, according to him. On the subject of hydraulic failures, the member raised doubts whether the system was reliable.

Santosh Bagrodia (RS) pointed out that a passenger travelled from Jaipur to Dubai without a ticket. He also said that a helicopter landed at Umaid Bhavan (Jodhpur) without the knowledge of the air traffic control. He pointed out several other instances which amounted to stowaway cases.

Dr Farooq Abdullah (RS) made a fervent plea for the use of air force fields at Jammu and Srinagar for landing after 5 p.m. He suggested that the Defence Ministry should be approached for relaxing the rules since all facilities for night landing are available there. He pointed out deterioration in Centaur Hotel at Delhi. The hotel is likely to be demolished in the second phase of the new airport coming up.

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Investor Guidance
Equity-based units of MFs subject to securities transaction tax
by A.N. Shanbhag

Q: Could you please provide the details about STT applicability for mutual funds? If I invest in STT applicable schemes, what are the benefits I can avail and the amount of STT to be deducted, if I invest Rs 10,000 in a mutual fund?

— Chinmay

A: With effect from October 1, 2004, STT is levied on all sales of equity-based units of MFs. The rate is 0.25 per cent. There is no STT on debt-based schemes. Equity-based MF schemes (65 per cent or more exposure to equities) are governed differently from the debt-based schemes. In both the cases, dividend is tax-free in the hands of the investor. However, there is a dividend distribution tax @14.1625 per cent payable by the MF directly to the exchequer in the case of debt-based whereas the equity-based are exempt from this tax.

Equity-based schemes are also exempt from long-term capital gains tax. The short-term capital gains are taxed @10.3 per cent only.

Home loans

Q: I want to know about the rebates on income tax on repayment of home loans (both interest and principal).

— Ramanath

A: The following tax benefits are available on housing loans:

Under section 24 deduction up to Rs 30,000 is available on interest on capital borrowed for acquiring, constructing, repairing, renewing or reconstructing, whereas the enhanced limit of Rs. 1,50,000 is applicable on loans taken on or after April 1, 1999, only for acquiring or constructing.

The acquisition or construction should be completed within three years from the end of the year in which the capital was borrowed. It is possible to claim this deduction on two or more loans.

In any case, the ceiling on total amount of deduction is Rs. 1,50,000 in a year. If the house is rented out, the entire interest payable without any ceiling can be deducted from the rent received.

It is necessary for the assessee to obtain a certificate from the lender that such interest was payable in respect of the amount advanced for acquisition or construction of the house, or as refinance of the principle amount outstanding under an earlier loan taken for such purpose.

Additional deduction u/s 80C, within the overall limit of Rs 1 lakh for the repayment made of the principal amount is available. This deduction is available only on loans for acquiring or constructing a housing property but not for any addition, alteration, renovation or repair.

This deduction on repayment of capital is available on loan taken from specific sources whereas for deduction of interest the loan can be taken from any source.

The deduction u/s 80C and the interest u/s 24 are allowed only when the income from house property becomes chargeable to tax. In other words, the construction should be complete, the flat should be ready for occupation and the municipal annual value is known.

The interest for the years prior to the year in which the property was completed, shall be deducted in equal instalments for the year during which it was completed and each of the 4 immediately succeeding years. Unfortunately, there is no corresponding provision for the capital repayment.

Rebate on MFs

Q: I am an asst manager in one of the reputed PSU. I purchased mutual funds (ELSS) in favour of my wife and child to claim the tax benefit u/s 80C.My employer objected that since the MFs are not in my favour, I cannot claim tax rebate. Is this correct?

— Parsvanath

A: Your employer is right. Only for investments in i) life insurance premium for life cover ii) LIC deferred annuity iii) PPF iv) ULIP and Dhanaraksha are eligible for the deduction in respect of contributions made in the name of spouse and children. For ELSS, the investment has to be in the name of the person claiming the deduction.

HRA exemption

Q: Please guide me on the following query:

Can one enjoy HRA exemption and deduction on interest on housing loan and repayment of housing loan principal, all at a time or is it only HRA or interest and principal deduction?

— Shirwarkar

A: The only two situations under which the exemption cannot be claimed are:

a) the residential accommodation occupied by the assessee is owned by him ; or

b) the assessee has not actually incurred expenditure on payment of rent in respect of the residential accommodation occupied by him.

If you satisfy these, and also the conditions under which you can claim the deductions u/s 24 of interest and repayment of housing loan u/s 80C, you certainly can claim all three concessions together.

Lock-in period

Q: Before I immigrated to the US as an Indian resident, I owned a house that was bought in the later part of 2000. Now I intend to sell it. However, one of the accountants I spoke to mentioned that there is a 10-year lock-in and would not be allowed to sell it till 2010. Is this true and if so, is there any way out?

— R. C. Pillai

A: Lock-in rule used to exist, however, a recently issued circular has subsequently done away with this rather inconvenient provision. So you can sell the house, if you so desire.

In all probability, the way property prices have risen in India, you will earn long-term capital gains. You can either pay the tax and remit the net proceeds to your bank in the US or save the tax by investing the capital gain amount in specifically designated bonds and then remit the net proceeds abroad.

The authors may be contacted at wonderlandconsultants@yahoo.com

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