SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

SEZs: No exemption for non-processing zones
New Delhi, May 5
In a major move that will have revenue implications for special economic zones (SEZs), states today said they were not going to exempt non-processing areas in these zones from state taxes.

Tamil Nadu registers impressive growth in IT: Survey
Chennai, May 5
IT, automobile and auto component industry have registered an impressive growth in Tamil Nadu during October 2006 to March 2007, according to a survey carried out by the Confederation of Indian Industry (CII).

MLR Motors to roll out cars in 2009
Hyderabad, May 5
The long-cherished dream of Andhra Pradesh, to turn into a automobile hub, has finally turned into reality with the laying of foundation stone for a passenger car plant.

Ramesh apprehensive over micro finance Bill
New Delhi, May 5
Minister of state for commerce Jairam Ramesh has expressed reservation over some of the clauses contained in the micro finance Bill, pending before a Parliamentary standing committee, that seeks to put restrictions on small lending institutions.




EARLIER STORIES

 
A labourer and bullocks pose with a "multi-drill cultivator" in Ahmedabad on Saturday.

Poor man’s cultivator

 


A labourer and bullocks pose with a "multi-drill cultivator" in Ahmedabad on Saturday. This 100 per cent eco-friendly, mainly animal driven cultivator has been invented by Chaitanya Ajitbhai Patel, an obstetrician and gynaecologist by profession. The cultivator is a machine mounted within a pentagonal metal chassis balanced on three wheels and that the wheel motion of this machine achieved by human, animal or any prime mover is converted through a gear box and simultaneously axially rotates one to four drills to cultivate or to plough the land for agricultural purposes. The price of the machine is approximately Rs 70,000. — AFP

Exide eyes US, European market
Yamunanagar, May 5
Exide Industries is making efforts to sell batteries to the USA, Germany, France and Mexico for submarines after selling it to the Indian Navy.

Courier firms oppose restriction in FDI cap
New Delhi, May 5
The government’s move to restrict foreign shareholdings to 49 per cent in courier companies and amendment in the Indian Post Offices Act, 1898, making their annual registration renewal mandatory.

Aviation Notes
All-freighter services need boost

For the last two to three decades, the civil aviation ministry and the Airports Authority of India have been slow in thinking, slower in take-off and slowest in completing projects.

Investor Guidance
NRIs can have PAN card

Q. I am a US citizen and have NRE as well as NRO account. I am being taxed on interest earned on my NRO account. It is not very significant but can I still file a return and see if I am eligible to receive refund?

 

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SEZs: No exemption for non-processing zones

New Delhi, May 5
In a major move that will have revenue implications for special economic zones (SEZs), states today said they were not going to exempt non-processing areas in these zones from state taxes.

"Empowered committee of state finance ministers on VAT unanimously feel that in non-processing zones of SEZs, no one should impose on states anything relating to states tax exemptions," VAT panel chairman Asim Dasgupta told reporters.

"In other words, we are against any state tax exemption in any non-processing part of SEZs," he said after the VAT panel meeting.

When asked that many states have come out with SEZ policy giving exemptions on overall SEZs, he said, "What happened has happened. We are now of view that on non-processing zones of SEZs, no one should impose on states that they have to give tax exemptions," he said.

The union commerce ministry has written to states to provide tax exemptions to SEZs, officials in the VAT meeting said.

When asked whether the view of states are in conformity with the centre's SEZ Act, Dasgupta said," Yes, it is, but if it is not, we are communicating our views to the centre because it is unanimous view of all states." A union finance ministry official also said the views of states are in line with the SEZ Act.

Group for GST implementation

Meanwhile, the official panel on value added tax (VAT) today decided to set up a joint working group (JWG) to map the road for introducing the goods and services tax (GST), which will harmonise indirect taxation structure between states and the center.

The group will be co-chaired by Parthasarthi Shome, adviser to the finance minister and Satish Chandra, secretary of the empowered committee of state finance ministers on VAT.

The JWG, also comprising other union finance ministry officials and state chief secretaries, will submit its report in four months, the committee’s chairman Asim Dasgupta told reporters here.

The terms of reference for the group would include making the proposed GST a superior and better tax system than state-level VAT.

“The idea is to reduce tax load on goods and services and at the same time it should be structured in such a manner that revenues of each state and union government also increase,” Dasgupta said.

For this purpose, the JWG would also study models of other countries that are introducing GST.

The ministry has proposed to introduce GST by April 1, 2010.

There are parallel systems of indirect taxation at the central and state levels. Each of the system needs to be reformed to eventually harmonise them.

All states, except Uttar Pradesh, have introduced VAT system and central sales tax, which comes in the way of GST, is being phased out from this fiscal.

However, the centre is yet to merge rates of service tax and cenvat.

Being a tax on inter-state sale of goods, CST comes in the way of the common Indian market that GST proposes to create.

CST was reduced from 4 per cent to 3 per cent this fiscal, and would eventually be phased out by April 1, 2010 when GST is proposed to be introduced. — PTI

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Tamil Nadu registers impressive growth in IT: Survey
Tribune News Service

Chennai, May 5
IT, automobile and auto component industry have registered an impressive growth in Tamil Nadu during October 2006 to March 2007, according to a survey carried out by the Confederation of Indian Industry (CII).

The CII carried out the survey to analyse performance of top five sectors of southern states during October 2006 to March 2007. The key sectors identified are automotive and auto components, IT, textiles, chemicals, fertilisers and sugar.

The report said during October 2006 to March 2007, the IT sector has witnessed a growth rate of 25 per cent as against past six months. The overseas billing has shot up by 5 to 10 per cent and the profit margins have increased by 20 per cent during this period, which has driven the employment scenario.

The IT sector in the state is expected to sustain tremendous growth phase in the next six months too. But, major concern for the industry is lack of skilled labour. It has urged increased availability of bandwidth, office space availability for expansions and better road infrastructure.

The automotive and auto components industry in Tamil Nadu has witnessed a growth rate of 18 per cent in terms of production during October 2006 to March 2007, as against April to September 2006. Sales have also shot up during this period to over 17 per cent.

Exports of automotive and auto component product has witnessed growth rate of 21 per cent, which has driven the production invariably and due to which employment level has also increased by about 9 per cent.

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MLR Motors to roll out cars in 2009
Tribune News Service

Hyderabad, May 5
The long-cherished dream of Andhra Pradesh, to turn into a automobile hub, has finally turned into reality with the laying of foundation stone for a passenger car plant.

The plant is being promoted by the city-based Lokesh Machines Limited (LML) and B V R Subbu, a former chief of Hyundai India operations, who was instrumental in the success of the Korean brand.

With an initial investment of Rs 1,250 crore, the project will come up at Toopran on the city outskirts with an installed capacity of 60,000 cars a year and 40,000

mini trucks.

The state government has alienated 250 acres of land to MLR Motors Ltd, in which M Lokeswara Rao, managing director of the flagship company LML and Subbu will hold 30 per cent and 21 per cent equity, respectively while the rest would be funded by foreign institutional investors (FIIs).

“In the first phase, we plan to invest Rs 1,200 crore. It will be scaled up to Rs 5,000 crore over the next five years,” said Subbu, credited with breaking the monopoly of Maruti and taking Hyundai sales to a million mark in domestic market.

The construction work on the ambitious project would start in July this year and the first car is expected to roll out by middle of 2009.

To begin with, two diesel models with 1,500 cc and 900 cc capacity are expected to roll out from the MLR Motors stable. Subsequently, the CNG and petrol variants will also be planned, Lokeswara Rao said.

The LML, with a turnover of Rs 100 crores, currently supplies automotive machines to several leading automobile companies including Ashok Leyland, Mahindra and Mahindra and Honda Motors.

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Ramesh apprehensive over micro finance Bill
Tribune News Service

New Delhi, May 5
Minister of state for commerce Jairam Ramesh has expressed reservation over some of the clauses contained in the micro finance Bill, pending before a Parliamentary standing committee, that seeks to put restrictions on small lending institutions.

“I have expressed my reservation on the ground that it may not be a balanced law”, Ramesh said in his interaction with self-help groups (SHGs) under aegis of the society for promotion of wasteland development.

He said there were lacunae in the Bill and it did not give role to markets, which could regulate the sector.

The Bill seeks to control small micro-credit institutions through the National Bank for Agriculture and Rural Development (NABARD) requiring them to meet stringent accounting standards.

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Exide eyes US, European market
Nishikant Dwivedi
Tribune News Service

Yamunanagar, May 5
Exide Industries is making efforts to sell batteries to the USA, Germany, France and Mexico for submarines after selling it to the Indian Navy.

The company has plans to become biggest exporter of submarine batteries in the country. The company has quoted tenders to the defence establishments of these countries and is hopeful of favourable response. The company has fixed a target of doubling its turnover in the coming three years.

At present, the industries section of Exide has a turnover of Rs 2,200 core, informed S. Kalla, vice-president of Exide Industries, who was here to launch company's tubular battery, Inva Gold and new version of flat battery, New Inva Queen for inverters. Inva Gold is the country's first battery with zero maintenance for inverters.

Kalla said the company was supplying 20,000 AH batteries to power HDW and other submarines of the Indian Navy. The company supplys two batteries in a year to the navy and each battery costs between Rs 6 crore to Rs 12 crore.

He admitted that the company was facing a tough competition from local battery manufacturers as their batteries were cheaper.

The company, which last year exported batteries worth Rs 200 crore to Europe and other countries, was currently focusing on domestic market.

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Courier firms oppose restriction in FDI cap
Tribune News Service

New Delhi, May 5
The government’s move to restrict foreign shareholdings to 49 per cent in courier companies and amendment in the Indian Post Offices Act, 1898, making their annual registration renewal mandatory.

Assocham president Venugopal N Dhoot has resisted department’s proposal to charge two and half times more to carry postal bags, weighing up to 150 gm for courier companies as compared to speed post tariffs.

If the move is not discouraged, it will bring down employment in the private courier sector as major chunk of business comes from less than 150 gm segment.

Besides, the courier industry supports trade and commerce, directly helping in economic growth of the country.

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Aviation Notes
All-freighter services need boost
by K.R. Wadhwaney

For the last two to three decades, the civil aviation ministry and the Airports Authority of India have been slow in thinking, slower in take-off and slowest in completing projects.

Had they been alive to vital sector of cargo, they would have thought of all-cargo airports at least 10 to 15 years ago.

Now in their own country, they stand miles behind many foreign carriers which have already been operating all-freighter services.

At present, Air- India has 8 per cent share in imported and 11 per cent in exported cargo. By the time Air-India starts operating all-freighter services, the share would further dwindle because foreign carriers are vigorously enhancing their operations.

The cargo movement has been on the rise since mid 70s. It is much more revenue earning sector than passenger traffic. Statistics show that airlines spend more than 75 per cent on picking passenger traffic and only 25 per cent on cargo.

In view of these budgetary details, many foreign airlines have independent cargo unit with separate balance sheet.

When the cargo movement picked up in India, there were directional imbalances and many airlines had reservations about starting all freighter services. Now, these problems do not exist. Worldwide, traders have realised that quick turnover of consignments means quick turnover of money.

Such is rise of cargo movement that many budget carriers are thinking of starting all-freighters.

The ministry has chosen several centres like, Kolkata, Mumbai, Delhi, Chennai and Bangalore, for starting all-freighter operations. Being centrally located, Nagpur will be the hub of cargo.

But, due to some technical problems there is a delay. The authorities are, however, optimistic that these hitches will be sorted out and the work will resume soon.

The government’s liberalisation is genuine. Foreign direct investment limit has been raised from 49 per cent to 74 per cent and there is also a proposal to allow foreign airlines to pick up minority stakes for dedicated cargo operations.

The aviation analysts feel that cargo movement will be far greater success than passenger growth.

Air India proposes to start its first service from Kerala to Gulf. A-310 passenger aircraft will be converted into all-freighter to regain market share.

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Investor Guidance
NRIs can have PAN card
by A.N. Shanbhag

Q. I am a US citizen and have NRE as well as NRO account. I am being taxed on interest earned on my NRO account. It is not very significant but can I still file a return and see if I am eligible to receive refund?

This is the only form of income that I have in India. Also, can a US citizen have a PAN card for filling the interest?
— Hiren

A. Interest on NRO is fully taxable at the rates applicable to NRIs. But, there is no income threshold under which TDS is not chargeable. However, TDS is applicable at the rate of 30.9 per cent. You can only claim refund by filing tax returns. Since you are Indian by origin, you can apply for PAN card, which is must for filing returns.

TDS deduction

Q. The bank credited my pension and interest on SCSS in my saving account on April 1, 2007 without deducting TDS by mistake. Is this interest and pension be consider income of 2006-7 or 2007-8? If TDS is deducted now, can I claim it in IT return of 2006-7?
— Manohar

A. Since this is income has been earned in 2006-7, you will have to file your returns accordingly. As you will be filing the returns in July, you will have received the TDS certificate by then. Otherwise, you show the interest, pay tax on it and state that the TDS is awaited. You may attach it later along with the returns for the next year.

Dividend payout mode

Q. What is the difference between dividend payout mode and dividend reinvestment mode from IT perspective for an individual resident investor? Also, what is the difference between dividend reinvestment mode and growth option for the same?
— Bhandari

A. Dividend payout and dividend reinvestment is the same from tax angle. Both suffer the dividend distribution tax (DDT), if any. Unfortunately, when the entire corpus is redeemed, you may attract short-term capital gains on the recent dividends reinvested and also attract dividend stripping provisions.

Growth bypasses the DDT, but on sale the investor has to pay tax on capital gains, if any. Equity-based schemes do not attract any DDT and are also exempt from long-term capital gains.

No limit to gift amount

Q. I retired from the service of P.S.E.B. on March 31, 2006 and received retirement benefits, GPF, gratuity, leave encashment etc to the tune of about Rs 25 lakh.

I deposited Rs 12 lakh in senior citizen savings scheme, and Rs 3 lakh in M.I.S scheme of post office, naming my mother and myself as first and second holders, respectively, and balance in bank as fixed deposits in joint names of my mother (1st holder) and myself (2nd holder), my children are major and residing abroad and my mother is dependent on me. I named her as the first holder as she is not an income tax assessee and I can reduce the tax burden on myself.

Also, I would like to know that amongst SCSS, PPF, bank fixed deposits (with about 10 per cent interest rate for senior citizens), which is the best option? I get about Rs 3 lakh as pension annually. The interest on SCSS is about Rs 1,12,000 per year.

I have taken home loan of about Rs 11 lakh from HDFC Bank, at 11 per cent rate of interest. Will it be beneficial to prepay the loan, as I get about 10 per cent from bank FDs? I get IT relief on principal and interest payments, which is about principal Rs 84,000 and interest of about Rs 34,000.

— B S Singh

A. You certainly can give a gift to your mother and she can invest the amount in her own name. To safeguard against any hassles, it is advisable to follow proper gift procedure. All that is required is an offer by the donor and acceptance thereof by the donee in black and white, the donee should request the donor for the gift and then the donor should remit the amount to the donee.

Alternatively, the donor can offer the gift. In either case, it is necessary for the donee to accept the gift in writing. Only then it would be considered as a gift. It is preferable to mention the relationship between the donor and the donee.

The SCSS cannot be in the joint name of you and your mother.

Bank deposits have emerged as a better investment avenue than SCSS. Consider premature encashment of MIS as well as SCSS, if feasible and if it is advantageous to pay the penalty and invest at higher rates in the banks. You should open a PPF account and contribute to it.

You should also open a PPF account in the name of your mother. Since there is no limit on the amount of gift you can give, you can take her income up to Rs 2,95,000 and not pay any tax by contributing Rs 70,000 to PPF and Rs 30,000 to some other avenues under Section 80C, preferably ELSS of MFs.

Professional awards taxable

Q. I want to know whether professional award component of salary package comes under taxable income.
— Nilesh

A. Without having the full details, it would be difficult to comment. FA05 has omitted the tax-free gift from an employer to an employee or any family member of the employee on the occasion of some ceremony up to Rs 5,000 per annum.

In your case if the award is a component of the salary, it is certainly taxable.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

Interest rates
Chandigarh, May 5
The State Bank of Patiala (SBoP) has revised interest rates on domestic term deposits with effect from May 1. The interest rates have been increased by 0.25 to 1.25 per cent across different maturities. The new rates have been fixed at 5.25 per cent per annum for a period of 15 to 45 days, 6.25 per cent for 46 to 179 days, 7.5 per cent for 180 days to less than 1 year and 9.5 per cent for 1year to less than 3 years. Senior citizens will get higher interest at 10 per cent for maturity of 1 year to less than 3 years. — TNS

Forex reserves
Mumbai, May 5
India’s forex reserves increased by $254 million to stand at $204.13 billion during the week ended April 27, as against $203.88 billion during the seven-day period ended April 20. The foreign currency assets rose by $245 million to $196.87 billion during the week ended April 27, according to RBI. — PTI

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