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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Badal plans boards to firm up industry
Ludhiana/Chandigarh, July 14
Faced with plethora of problems from trade and industry in Ludhiana, Chief Minister Parkash Singh Badal today decided to dedicate July 27 and 28 exclusively to Ludhiana industry.

India prime job creator for UK
London, July 14
Indian investment in Britain during 2006-07 created 5,130 jobs, the second largest number of new jobs created after the US, whose companies created 13,326 jobs during the year, figures with the Department of Trade and Industry reveal.

RBI directive on export finance
Mumbai, July 14
The Reserve Bank of India today asked all commercial banks to reduce interest rates on export finance by two percentage points in keeping with the government's decision to grant subsidy to exporters affected by rise in the value of the rupee.

Maran seeks probe into BSNL tender
New Delhi, July 14
Lying low ever since his exit from the union cabinet, former telecom minister Dayanidhi Maran today urged Prime Minister Manmohan Singh for a probe into BSNL's GSM tender issue, on which his successor A Raja has raked
up a controversy.

Choudhary is PTL chief
Mumbai, July 14
Punjab Tractors Ltd (PTL) today announced the appointment of Anjanikumar Choudhary as new chairman and Bishwambhar Mishra as managing director and CEO of the company.

Aviation Notes
Code knot entangles AI-Indian merger
When the merger plan was initiated, it was given to understand that the staff of two airlines, Air-India and Indian (airline) would be treated on par as 'twin brothers'.

Ratan Tata
Chairman of Tata Group Ratan Tata is seen in this file photo. Tata has been made an honorary fellow of the London School of Economics and Political Science at a function held in London on Friday. — AFP

EARLIER STORIES

  Investor Guidance
Form ITR-2 erroneous?
Q. Regarding the new income tax return forms, there is a difficulty in filling OS Sche
dule of Form No. ITR-2. By adding column no. 1 (a to f) my (1g) total is say Rs X.

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Badal plans boards to firm up industry
Tribune News Service

Ludhiana/Chandigarh, July 14
Faced with plethora of problems from trade and industry in Ludhiana, Chief Minister Parkash Singh Badal today decided to dedicate July 27 and 28 exclusively to Ludhiana industry.

He would meet the representatives at Chandigarh in the presence of the officials of different departments so that on-the-spot decisions could be taken. He announced that the state government would initiate "special and concrete measures” to rejuvenate the industrial economy of the state.

The Chief Minster said he would be meeting the Central ministers and bureaucrats shortly on the issues pertaining to Punjab industry. Issue of freight equalisation would also be taken up with the union government, he said.

The Chief Minister said the government was about to bring a new comprehensive industrial policy and was constituting two state-level boards, including Industry Development Board and Trade Development Board, which would be headed by the prominent personalities of trade and industry.

He said the government was laying special emphasis on the strengthening of infrastructure and big projects costing Rs 7,000 crore had been taken up during the first four months of the SAD- BJP rule. As a result, Badal claimed, big investments in the industrial sector, amounting to Rs 44,000 crore had been recorded including the revival of Bathinda Oil Refinery, costing Rs 18,919 core.

Earlier, yesterday the Chief Minister had announced setting up of a 250-acre state-of-the-art industrial park in Doaba, regularisation of Gadaipur industrial estate in Jalandhar and setting up of district industrial advisory committees.

These decisions were taken during a meeting with a high-powered delegation of various industrial associations under the Jalandhar chamber of industries and commerce, Laghu Udyog Bharti (Punjab unit) and the federation of Jalandhar industrial traders associations led by BJP MLA KD Bhandari at Punjab Bhawan late last evening.

Badal said that the new industrial park would be set up on the Jalandhar-Kapurthala road and the formalities with regards to this project would be completed within a month. He asked the town planning department to submit a comprehensive case for the regularisation of Gadaipur Industrial estate positively within three days for his approval.

The CM also announced the facility of automatic extension in power load up to 25 per cent in addition to ensure a level playing field for Punjab industry in view of the huge concessions granted to the neighbouring states. He also ordered a review of the existing 12 per cent VAT structure and to slash it to 4 per cent.

In another significant decision Badal said the system of deemed assessment would be re-introduced for both trade and industry and said that the requirement of C and D-Forms would be dispensed away.

The proposed district level advisory committees would thrash out the issues pertaining to industrialists with regards to early clearance of NOC from Punjab Pollution Control Board (PPCB) and extension of power load to cut short the procedural delays.

Badal said an NOC has to be within one month of the receipt of the application. Punjab Government also earmarked Rs 100 crore to open new tourist complexes in the state.

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India prime job creator for UK

London, July 14
Indian investment in Britain during 2006-07 created 5,130 jobs, the second largest number of new jobs created after the US, whose companies created 13,326 jobs during the year, figures with the Department of Trade and Industry reveal.

During the year, Britain recorded 1,431 investment projects from overseas companies, representing a 17 per cent rise since 2005-06, and nearly 80 per cent more than in 2003-04.

The US was the biggest overseas investor in Britain, with 540 projects, way ahead of second-placed France with 95. Indian companies set up 69 new projects during the year, the figures reveal.

John Hutton, secretary of state for business, enterprise and regulatory reform, said: "For the fourth consecutive year, the UK has attracted a record number of investment successes, maintaining its position as the largest recipient of foreign direct investment in Europe and second only to the US worldwide.

"From Siemens to Amgen, Sega to Airbus, the UK has won projects from world-class overseas companies - proving we can compete on the international stage, despite increasing competition and the challenges of globalisation.

"Increased headquarter projects and the growing number of expansions from existing investors suggest companies are recognising, and capitalising on the UK's 'multiplier effect'. Not just an investment destination, the UK acts as their catalyst for global growth."

Services, with the financial and IT sectors to the fore, accounted for over a third of the new jobs, with manufacturing, R&D and distribution following.

The figures, published by UK Trade and Investment, demonstrate the increasing importance of India and China to the British economy.

Foreign Secretary David Miliband said: "Established economies continue to be a very important source of FDI for the UK, yet increasingly we are seeing more investments and projects from the high growth economies.

"Over the next decade, our economy is expected to grow by roughly 25 percent, while China and India will triple the size of their economies and boast over 40 per cent of world growth. These are compelling statistics.” — IANS

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RBI directive on export finance
Tribune News Service

Mumbai, July 14
The Reserve Bank of India today asked all commercial banks to reduce interest rates on export finance by two percentage points in keeping with the government's decision to grant subsidy to exporters affected by rise in the value of the rupee.

In a notification issued today, the RBI said the two percentage points interest subsidy should be given to nine sectors — textiles, leather products, readymade garments, handicrafts, engineering products, sports goods, processed agriculture products, marine items and toys.

The benefit will be extended to small and medium exporters whose investment in plant and machinery does not exceed Rs 10 crore.

Following the RBI's directive, credit to these categories of exporters will be available at 4.5 per cent less than the prime lending rate, which is in the range of 12 per cent. Earlier, the difference was 2.5 per cent.

This rate will apply to pre-shipment and post-shipment credit disbursed between April and December 2007. The subsidy of 2 per cent would be borne by the Centre.

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Maran seeks probe into BSNL tender

New Delhi, July 14
Lying low ever since his exit from the union cabinet, former telecom minister Dayanidhi Maran today urged Prime Minister Manmohan Singh for a probe into BSNL's GSM tender issue, on which his successor A Raja has raked up a controversy.

"It is unfortunate to note that a totally unwarranted controversy has been raked up relating to BSNL's GSM 2G/3G tender and this subsequent strike by the unions of BSNL," he said in a letter to the Prime Minister.

The letter of Maran comes in the context of an ongoing controversy over the tender issue with Raja claiming that the lowest tender cleared during Maran's time could result in a loss of about Rs 10,000 crore.

"I believe that a sinister campaign is being carried out systematically against me through the media by certain vested interests. "As a minister, it was always my practice to stay out of the tendering process of not only BSNL but also MTNL. The tender, in question, was finalised only by the BSNL board." — PTI

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Choudhary is PTL chief

Mumbai, July 14
Punjab Tractors Ltd (PTL) today announced the appointment of Anjanikumar Choudhary as new chairman and Bishwambhar Mishra as managing director and CEO of the company.

The board of directors of the company announced the new appointments after a meeting.

The new board comprises nine members, of which three are the nominees of Mahindra & Mahindra Ltd and Mahindra Holdings & Finance Ltd and two are full-time directors, the company said in a statement here today. — UNI

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Aviation Notes
Code knot entangles AI-Indian merger
K.R. Wadhwaney

When the merger plan was initiated, it was given to understand that the staff of two airlines, Air-India and Indian (airline) would be treated on par as 'twin brothers'.

Sadly, it is not so and apprehensions have reinforced in Indian that they may not get due justice. If this happens, it will give rise to unrest as staff has been agitating that the wage agreement has not been in keeping with the promises made by the union leaders.

Many are vocal in saying that the union has been won over by the authorities.

As if these twin problems are not bad enough, the National Aviation Company, the merged entity, intends to keep using the code of AI and IC for at least the period until merger in real sense comes about. This may not be permitted by the International Air Transport Association (IATA). Chairman V. Thulasidas is engaged in a dialogue with the IATA bosses.

The IATA authorites are sympathetic but feel little diffident in creating a precedent. Judging from these developments, there is every likelihood of merger getting delayed.

The overall situation is fluid. In the meantime, Jet Airways chief Naresh Goyal has gone on record as saying that he would like to have an alliance with the AI.

Is this new strategy for Jet to further stabilise itself in razor-sharp competitive aviation sector, or is Goyal concerned that another private carrier may steal a march over Jet?

GMR’s contract

The three-member consortium, known as GM Rao's (GMR) infrastructure, will be constructing Sahiba Gokcen Airport in Istanbul (Turkey). The contract is lucrative.

Aviation analysts feel that Bangalore's company is spreading its wings too rapidly. They feel the company is having too much in its plate to chew properly. As a result, some airports, like Delhi and many others in other parts of the country, may be deprived of quality work.

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Investor Guidance
Form ITR-2 erroneous?
A.N. Shanbhag

Q. Regarding the new income tax return forms, there is a difficulty in filling OS Schedule of Form No. ITR-2. By adding column no. 1 (a to f) my (1g) total is say Rs X.

Amount in column 2 is nil. Column 3 is (1g +2) and therefore is Rs X. Column 5 is (1g+2+3+4c) will then become 2X. Surely, this total should be X.

I am also getting family pension and deduction under Section 57 (iia). How shall I show and claim deduction in ITR-2?
— Mukund

A. Yes, you are right. There is a mistake in the form. The total should have been either (1g+2+4c) or (3+4c). Inclusion of ‘3’ was absolutely unnecessary.

Then again, the taxable salary is arrived at by subtracting from gross, professional tax. In case of family pension, which comes under salaries, Section 57(iia) grants a deduction of 33.33 per cent with a ceiling of Rs 15,000. Both these items have no place in the ITR-2 Form.

Yes, the assessee can do well by ignoring inclusion of item ‘3’ and also show the net figure of salary after taking into account these two deductions.

We shall point out these deficiencies to the CBDT to enable them take corrective action while printing the forms for the next year.

Post office deposit

Q. I am a retired person. Please guide me as to how to get back deposit money without paying income tax on post office deposit under NSS-87?
— Sriniketan

A. As per NSS-87 rules, if the withdrawal amount is Rs 2,500 or more during any financial year, the TDS rate is 20 per cent. Note that since the amount can be withdrawn only in multiples of Rs 100, the effective threshold for TDS is Rs 2,400. The withdrawn amount is treated as income.

A nice strategy for unlocking funds from NSS-87 can be used by those whose income has fallen below the tax threshold. The focal point of the strategy is built around withdrawing only that much part of the balance from NSS, which, along with your other income, takes you very near the tax threshold.

Even beyond this limit, you can withdraw up to Rs 1 lakh and reinvest the same amount in PPF and other avenues under Section 80C and still remain in the non-taxable zone.

The withdrawal adds to your income to bring you in the tax zone and the reinvestment in avenues under Section 80C reduces the income to below tax threshold. This strategy is more potent after retirement and also for senior citizens and now for junior female assessees.

The 7.5 per cent tax-free interest is quite attractive, especially for high net worth individuals and most importantly, payment made to the legal heir of the account holder is not subjected to any tax.

Home loan

Q. I am a software engineer working for an Indian company and deputed in the USA for two years. I have a home loan in India, which I would like to do a partial payment for.

For that I want to send money to my father’s account in India, so that he can do the needful. My father is working as a consultant and is filing his returns till date.

If I transfer a high value amount, say Rs 2,00,000, to my father’s account, will it attract tax. If yes, then can you advise a better way to deal with this situation.
— Veer Singh

A. This amount transferred to your father will be treated as gift and since tax is not applicable on gifts received from close relatives, there will be no India tax incidence on either you or your father irrespective of the amount transferred. However, once you transfer funds to your father, you lose title to the funds and it becomes your father’s asset. So, it would mean that your father will be paying for an asset that belongs to you. In future, this could lead tax problems if and when you sell the property, as your father would be taken to be the beneficial owner. To avoid any clash with the department, it is better to transfer the money to your own account and make the payment to the housing finance company therefrom. This will also enable you to claim the income deductions on repayment of loans, if any, for tax purposes.

The authors may be contacted at wonderlandconsultants@yahoo.com.

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