SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Vodafone to invest $2 b
New Delhi, May 26
British telecom giant Vodafone plans to invest $2 billion in India to accelerate its penetration in the country with introduction of low-cost handsets.

TN gears up for IT boom
Chennai, May 26
Tamil Nadu will soon surpass Gurgaon and Bangalore, known to be IT hubs of India, with software exports from the state expected to cross Rs 20,700 crore this year. Last year, Tamil Nadu recorded software exports of Rs 14,115 crore.

100 pc financial inclusion targeted for Punjab, Haryana
Chandigarh, May 26
Banks in Haryana have done exceptionally well in terms of priority sector and agriculture advances by achieving higher targets than the set national goals. The ratio of priority sector to the total credit was 60 per cent against the national goal of 40 per cent, while credit to agriculture sector constituted 30 per cent of the total credit against a national goal of 18 per cent.

EPF board meets today
New Delhi, May 26
Amidst strong protests against any cut in the rate of EPF, its Central Board of Trustees will meet here tomorrow to take a final decision on the interest to be paid to four crore subscribers for 2006-07 and 2007-08.



 
A Chinese engineer shows a locally designed electric train at a hitech expo in Beijing on Friday. Radiation fears have prompted China to shelve a $4.3-billion extension of its high-speed magnetic levitation train in Shanghai, amid concerns the German technology could contaminate residents.
A Chinese engineer shows a locally designed electric train at a hitech expo in Beijing on Friday. Radiation fears have prompted China to shelve a $4.3-billion extension of its high-speed magnetic levitation train in Shanghai, amid concerns the German technology could contaminate residents. — AFP

TCS buys residual stake in Brazil arm
New Delhi, May 26
TCS has acquired the remaining 49 per cent stake in its Brazilian joint venture for $33.4 million, giving the company 100 per cent ownership.

Aviation Notes
A-380 jumbo: Luxury or necessity?
Airbus Industrie’s A-380 is an exceedingly likable ‘bird’, despite its hugeness. It is so impressive that every impressionable Indian airline baron wishes to own it, as was the case in 1970s when Boeing 747 adored the Indian skies.

Investor Guidance
Investments in ELSS not deductible
Q: I saved Rs 25,000 in mutual fund’s ELSS in favour of my minor child. Am I eligible to claim tax rebate under Section 80C?

 

 

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Vodafone to invest $2 b

New Delhi, May 26
British telecom giant Vodafone plans to invest $2 billion in India to accelerate its penetration in the country with introduction of low-cost handsets.

According to media reports, Vodafone CEO Arun Sarin, in a letter to finance minister P Chidambaram, said his company will make new capital investments of nearly $2 billion in the first year of its operations.

The company will also put in place network-sharing arrangements with Bharti Airtel to accelerate rural coverage and bring benefits of its global enterprise services to Indian customers.

A Vodafone spokesperson, on being contacted, however, refused to confirm or deny the reports.

“Vodafone has not made any announcement today. If we have anything to say, we will do it publicly,” he said.

The company will be renamed Vodafone-Essar and will market services using the Vodafone brand in due course, Sarin reportedly told Chidambaram.

The Vodafone chief, in March, had invited local mobile service providers like Bharti to build infrastructure for mobile penetration in the country, especially in the rural areas.

“The Mittals and others can come and join us in building up mobile network infrastructure,” he had said, adding that Bharti could help Vodafone penetrate the rural market through infrastructure sharing.

After winning the bid for much-coveted majority stake of Hutchison Telecom in the Indian venture, Vodafone had unilaterally announced Bharti as a preferred carrier for NLD and ILD traffic.

“India is a large country which is yet to be serve with mobile service. We will reach the potential rural areas by having network sharing agreements with local providers,” Sarin said. — UNI

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TN gears up for IT boom
Arup Chanda
Tribune News Service

Chennai, May 26
Tamil Nadu will soon surpass Gurgaon and Bangalore, known to be IT hubs of India, with software exports from the state expected to cross Rs 20,700 crore this year. Last year, Tamil Nadu recorded software exports of Rs 14,115 crore.

According to a policy note of the IT department, software export was expected to grow by 46 per cent against 32 per cent last year.

At present, 10 leading IT majors from India have operations in Tamil Nadu. While the Tamil Nadu Industrial Development Corporation (TIDCO) has floated bids to establish a world class second IT park at Taramani here through a joint venture, the IT-ITES special economic zone developed by ELCOT on the outskirts of the metropolis is also fast taking shape.

Besides, work is going fast for another IT Park at Siruseri, which is being developed by SIPCOT. The government was also speeding up work on establishing IT parks in Trichy, Coimbatore, Madurai, Salem and Tirunelveli.

The Tamil Nadu Government is also initiating steps to boost the IT hardware industry. It has obtained sanction from the union HRD ministry to set up an Indian Institute of Information Technology, Design and Manufacturing, a national centre of excellence at Kancheepuram, 70 km from here.

Even before the institute takes shape, it has been planned to launch the course from coming academic year with a student intake of 30. The course will be taught temporarily at the Indian Institute of Technology, Madras.

The Tamil Nadu Government has also drawn up a comprehensive multi-sectoral development plan for Chennai, Coimbatore and other towns to meet the infrastructural challenges posed by rapid increase of population on account of phenomenal growth of the IT sector. A metro rail and other mass transportation projects have been planned in these places.

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100 pc financial inclusion targeted for Punjab, Haryana
Tribune News Service

Chandigarh, May 26
Banks in Haryana have done exceptionally well in terms of priority sector and agriculture advances by achieving higher targets than the set national goals. The ratio of priority sector to the total credit was 60 per cent against the national goal of 40 per cent, while credit to agriculture sector constituted 30 per cent of the total credit against a national goal of 18 per cent.

This was revealed by S C Gupta, chairman and managing director of Punjab National Bank, while presiding over the 100th State Level Bankers Committee (SLBC) meeting held here today. He said the total advances of the bank had increased from Rs 46,584 crore in March 2006 to Rs 59,403 crore in March 2007, while advances increased from Rs 29,903 crore last year to Rs 37,254 crore in March this year.

Pawan Kumar Bansal, minister of state for finance, said after achieving a 100 per cent financial inclusion in Yamunanagar and Bhiwani, the state should now achieve this objective in ten other districts. He laid emphasis on stepping up lending to ex-servicemen, their widows, women, weaker sections and unemployed youth.

Meanwhile, Punjab, too, has decided to achieve a 100 per cent financial inclusion in Bathinda, Faridkot, Ferozepur, Muktsar, Sangrur and Tarn Taran, after achieving 100 per cent financial inclusion in Gurdapur and Mansa. This was announced during SLBC meeting for Punjab, which was held here yesterday. It was informed that as per the monetary policy, 2007, various measures had been initiated for small and marginal farmers, like dispensation of no dues certificate for loans up to Rs 50,000, introduction of credit guarantee scheme for distressed farmers and loans of up to Rs 1 crore to corporates for agriculture and allied activities to be treated as direct agriculture advances.

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EPF board meets today

New Delhi, May 26
Amidst strong protests against any cut in the rate of EPF, its Central Board of Trustees will meet here tomorrow to take a final decision on the interest to be paid to four crore subscribers for 2006-07 and 2007-08.

With Left parties going hammer and tongs against further slashing of the interest from 8.5 per cent, the board will weigh all options carefully before finalising the rate.

The Leftist trade unions have been suggesting that since some banks were at present giving up to 10.5 per cent interest, the EPF rates should be hiked accordingly and it was for the CBT to explore ways to do it.

However, the CBT, during its five meetings so far this year, has expressed helplessness in paying 8.5 per cent interest saying it would be left with a deficit of Rs 450 crore.

Even Labour Minister Oscar Fernandes, who is the Chairman of the EPF Board, has admitted that it was "difficult task" to hike the rate. — PTI

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TCS buys residual stake in Brazil arm

New Delhi, May 26
TCS has acquired the remaining 49 per cent stake in its Brazilian joint venture for $33.4 million, giving the company 100 per cent ownership.

TCS do Brasil recorded a top line of $66.5 million for the year ended March 31, 2007 and has over 1,700 employees, the company said.

The Brazilian unit operates software centres in Sao Paulo and Brasilia and serves over 30 customers, including ABN Amro, Good Year and Brasil Telecom among others, it said.

In 2002, TCS had entered the emerging high growth Brazilian market through a 51:49 joint venture with Grupo TBA.

In the synergistic relationship, Grupo TBA bought local market knowledge and client relationships, while TCS contributed world-class methodologies process and quality systems.

Over the last five years, TCS do Brasil has been successful in scaling its business, achieving market penetration and enhancing delivery capabilities. — PTI

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Aviation Notes
A-380 jumbo: Luxury or necessity?
by K.R. Wadhwaney

Airbus Industrie’s A-380 is an exceedingly likable ‘bird’, despite its hugeness. It is so impressive that every impressionable Indian airline baron wishes to own it, as was the case in 1970s when Boeing 747 adored the Indian skies.

Air-India and at least three private carriers have evinced keen interest in buying it. Airbus’ chief operating officer (customers) John Leahy seized this opportunity to praise his product and also speak highly of Indian airline barons on board the flight.

The dispassionate aviation analysts, however, firmly believe that this aircraft is a luxury. It is not a necessity in the present environment. The time is not yet ripe for it to hit Indian skies because Indian civil aviation continues to be languishing at the bottom.

The bigger the aircraft, the more are expenses on fuel and ‘over-head’. The parking and landing levies are also enormous. Maintaining maintenance at different airports is also an ordeal.

Profitability of airlines is actively dependent on two factors: load and optimum utilisation of aircraft. In other words, the aircraft must have 5 to 6 landings a day.

To cut even on this aircraft, minimum load required is 55 per cent. Can any airline claim that it can secure at least 400 passengers even on ‘golden’ route most days in a week? Also, can any airline claim to have 5 to 6 landings? Keeping aircraft on ground is as costly as flying. The cash-starved carriers are already passing through a difficult phase and they will be in more trouble if they undertake responsibility of flying A-380 on domestic routes.

Private airlines are having their own intense competition. They are baying for each other's head when they are not fighting with Air-India or Indian. Pulling down the other is in Indian blood. They can’t see their own man rising!

In an all-economy configuration, A-380 carries 855 passengers. This is 100 passengers more than Rajdhani carries. China, for example, is aware of the usefulness of this aircraft. But it has refrained itself from placing an order although it has much wider market than India. There are several other affluent airlines which have not been tempted by A-380. India, on the other hand, takes decisions in haste and regrets at leisure.

The competition between Airbus and Boeing has sharpened. Allegations are being subtly levelled. The bottom line is that no costly product can be sold without giving bribe and kickbacks.

A-380 is meant for long haul and not domestic short routes.

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Investor Guidance
Investments in ELSS not deductible
by A.N. Shanbhag

Q: I saved Rs 25,000 in mutual fund’s ELSS in favour of my minor child. Am I eligible to claim tax rebate under Section 80C?

— Prasad

A: Investments in the name of minor child in ELSS is not eligible for deduction in the hands of the parent.

Tax deduction

Q: I live in a self-occupied property for which I am claiming tax deduction for payment of interest. This is under salary head. Can I claim the same interest paid as loss toward residuary income and adjust it against salary?

— Vinita

A: It is not that you are claiming tax deduction on payment of interest under salary. It continues to be under head income from house property. However, your company is giving you credit for the same by way of lower TDS against your salary income.

In any case, the same item cannot be used twice for a tax break.

Cap on gift

Q: I have a doubt on the “Liberalised Remittance Scheme” announced by the RBI. Total amount allowed per year for gifts, donations and other current and capital account transactions is $ 50,000. My question is:

1. Can the entire amount of $50,000 be sent as gift?

2. Can my wife and me each send $50,000 gift to my son and daughter-in- law in the USA separately? Total gift sent would be $1,00,000.

— More

A: The answers to both of your questions is positive. Entire amount can be sent as gift and each one of you can send up to the maximum limit even to the same person. Incidentally, a recent circular has enhanced the limit of $ 50,000 to $1,00,000. Now, you and your wife can send in all $2,00,000 in a calendar year to any person of your choice. Such person need not necessarily be related to you.

IT return

Q: Last year finance minister announced that cash flow statement is required to be submitted along with tax returns of assessment year 2007-08. It was hoped that this year FM will announce that cash flow statement is not required to be submitted but there was no mention of it. Please clarify whether it is required to be attached along with the tax returns.

— Sohil

A: The authorities have introduced new returns forms in ITR series on April 30, 2007. Yes, while it has dropped the requirement of providing cash flow, it has introduced a slew of other problems like requirement to divulge annual information return (AIR) details. The authorities say they have done away with any schedules and annexures, but it is found that these have become a part and parcel of the form itself.

Exemption on donation

Q: I am a PSU employee with a gross salary of Rs 2.80 lakh in the year 2006-2007. In December, 2006, I donated Rs 14,400 to Iskcon. As per their receipt, the amount is exempted up to 50 per cent under Section 80G for income tax exemption. I asked my (employer) finance department for exemption adjustment, but was told that it is adjusted only at the time of IT-returns submission. What is my position?

— Ranjan

A: As per CBDT Circular NO.11/2006 [F.No.275/192/2006-IT(B)], dated November 16, 2006, deduction for donations from salary income is generally not allowed except in specified charitable institutions. Iskcon does not feature in this list. The tax relief on such donations, as admissible under Section 80G of the Act, will have to be claimed by the tax payer in the return of income.

Tax on NSCs

Q: I invested Rs 50,000 in National Savings Certificates (NSCs) in 2001. It matured in February 2007. How much tax do I have to pay on the interest gained? The total maturity value is Rs 95,060.

— Kamdar

A: The tax on NSC interest is required to be paid on accrual basis. Only then you can claim benefit of Section 88 up to financial year 2004-05 and Section 80C thereafter. Similarly, benefit of deduction under Section 80L could be claimed up to year 2004-05. This section was also discontinued thereafter.

It appears that you have neither paid tax on the interest income nor claimed tax benefits.

The only course open to you now is to pay tax on Rs 45,060, which is the cumulative interest. The tax concessions under Section 88, 80C and 80L are lost to you.

Long-term capital gains

Q: I bought a house in January 2005 for which I had availed a loan from HDFC. I am still repaying the loan. In October 2006, I sold my old house. How can I save tax on the long-term capital gains (LTCG)? Can repayment of the house loan save me any tax?

— W Sharad

A: LTCG is taken as a separate block and charged to tax at a flat rate of 20.4 per cent. No deductions are allowed under chapter-VIA like Section 80C and 80D for LTCG.

Tax on all long-term capital gains, which are chargeable to tax, can be saved by investing within 6 months the amount of capital gains in infrastructure-related bonds of NHAI or REC under Section 54 EC. The lock-in period is three years. Current interest rate is about 5.5 per cent and is fully taxable.

The assessee may claim exemption under Section 54 by purchasing a residential house within a year before or two years after the date of sale of the old house. Alternatively, he may construct a residential house within three years after the date. Section 54 is applicable to capital gains arising from transfer of a residential house and requires the amount of capital gains to be reinvested. The new house has a lock-in of three years. Sale within this period entails loss of the exemption claimed earlier and corresponding capital gains is treated as taxable LTCG during the year of sale.

The amount which is not invested before filing of returns for the year or the statutory last date for filing the returns, whichever is earlier, is required to be parked in ‘capital gains account scheme’ with a bank in India.

The repayment of loan for the house purchased in January 2005 does not entitle you to any benefit against LTCG tax payable. If you had sold the old house within a year from purchase of the second house, you could have availed of the exemption under Section 54.

The repayment of the housing loan will entitle you to the benefit of deduction under Section 80C for repayment of the capital to the extent you are eligible.

We would prefer you to continue the loan and buy infrastructure-related bonds of REC or NHAI to save capital gains tax under Section 54EC.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

Tata Tele CEO resigns
New Delhi, May 26
Tata Teleservices chief executive officer Darryl Green, the only expatriate holding that position in any Indian telecom company, has resigned from the company after a two-year stint. The parting was amicable, a source said when asked whether the move was a fallout of differences he might have had with the Tatas. Green had joined Tata Teleservices in June 2005. — PTI

Forex reserves decline
Mumbai, May 26
India’s forex reserves decreased by $9 million to $203.982 billion during the week ended May 18 as against $203.991 billion in the previous week. The foreign currency assets decreased by $8 million to $196.485 billion during the week ended May 18, as per the RBI figures released here today. — PTI

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