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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

3G licence unlikely for foreign Cos
New Delhi, July 22
In a development that could act as a dampener on the plans of foreign companies waiting to offer Third Generation (3G) mobile services in India, the Department of Telecom is unlikely to invite overseas companies to bid for 3G licence. Official sources said DoT would not be calling foreign players to bid for 3G services and the upcoming policy would be in the line with telecom regulator TRAI's recommendations.

Kangra tea no more connoisseur’s delight
Chandigarh, July 22
The famous Kangra tea is no longer the tea connoisseur's delight. The government's apathy towards saving this indigenous tea variety of Himachal Pradesh; decreasing land holdings; and, unfavourable weather conditions have jointly contributed towards the decline in its production and reduction in the total area under tea cultivation.

FDI from B’desh may be allowed
Dhaka, July 22
India today indicated it may soon allow foreign direct investment from Bangladesh on a selective basis and after security checks, with a view to giving a boost to the bilateral economic relations. "It is true that presently India prohibits FDI from Pakistan and Bangladesh for security considerations.


EARLIER STORIES

 
Air-India plans European hub
New Delhi, July 22
State-run carrier Air-India, which is being merged with another national airline Indian, is looking to create a hub in Europe and rationalise its route structure by providing more direct services. Following the footsteps of its private competitor Jet Airways, which has established an operational hub at Brussels, Air-India is holding discussions with aviation authorities in some major cities of Europe.               V. Thulasidas
V. Thulasidas

Market Scan
Tata Steel good for long-term investment
In spite of phenomenal rise in the stock market, there are still some script in which long-term investment can be made gainfully. One such company is Tata Steel — previously known as Tisco. Tata Steel, founded by Jamsedji N Tata, has completed 100 years of remarkable growth and achievement.

Tax Advice
NSS withdrawal attracts TDS
Q. I retired as a senior lecturer from a degree college on March 31, 1998. Being a lecturer of a non-govt. college, I was not given pensionary benefits at all. So, I deposited my P.F. amount with the local post office under M.I.S., where the present rate of interest is 8 per cent p.a.





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3G licence unlikely for foreign Cos

New Delhi, July 22
In a development that could act as a dampener on the plans of foreign companies waiting to offer Third Generation (3G) mobile services in India, the Department of Telecom is unlikely to invite overseas companies to bid for 3G licence.

Official sources said DoT would not be calling foreign players to bid for 3G services and the upcoming policy would be in the line with telecom regulator TRAI's recommendations.

DoT believes there are enough complications in allowing foreign players in value-added services like 3G. They would not have any network infrastructure in the first place and by the time it is developed, the services will be delayed, the sources said.

Even if the foreign operator enters into joint venture with local companies and alloted the spectrum, the partners could part ways following a rift between them, they asked.

Moreover, they said, the most important issue for DoT is making the 3G services affordable for everyone. As foreign players have deep pockets, they can bid very high for the 3G spectrum. But these companies would then offer the services at higher tariff, making it difficult for a non-metro or rural user to access the same, the sources said.

DoT has plans to use 3G services for tele-medicine, health, education in remote areas, which is possible only if rural users can access the service, they said. 3G handset prices are already very high and if services become costlier, the very purpose of introducing them would fail, they added.

Official sources said another problem was the inter-connection arrangement between 2G and 3G networks in case foreign players were allowed.

Since they would be offering 3G services at a high cost, 2G operators would also demand higher interconnection charges to connect to a 3G network. This, in turn, would raise tariffs for 2G services, which operators offer at present, as well.

TRAI has proposed Rs 1,400 crore as base price for bidding for a pan-India presence. The telecom regulator had proposed allowing up to five GSM players in the 3G space. But DoT may reserve one slot for PSUs, BSNL or MTNL, depending on the service area. — PTI

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Kangra tea no more connoisseur’s delight
Ruchika M. Khanna
Tribune News Service

Chandigarh, July 22
The famous Kangra tea is no longer the tea connoisseur's delight. The government's apathy towards saving this indigenous tea variety of Himachal Pradesh; decreasing land holdings; and, unfavourable weather conditions have jointly contributed towards the decline in its production and reduction in the total area under tea cultivation.

The government's decision to create a Special Purpose Tea Fund (SPTF) for rejuvenation and replanting of tea plantations, in the Budget 2007, had raised the hopes of tea growers in the Kangra- Palampur belt. But as the Tea Board of India unfolded its policy recently, tea planters in this belt were left high and dry. With the policy aimed primarily at the planters with large plantations, they would not be able to accrue much benefit from the policy.

The new SPTF, to be implemented from the current fiscal year till the end of the 11 th Plan, has a funding pattern of 25 per cent subsidy, 25 per cent promoters' contribution and the balance 50 per cent by way of bank loan.

Though the policy stands to benefit tea growers in West Bengal and Assam, growers in the Kangra belt are disillusioned. It is estimated that over the past decade, tea plantations in this belt, spread across over 625 hectares, have been abandoned and another 460 hectares of area (previously under tea cultivation) is now lying in a neglected state. Of the remaining 1,200 hectares under cultivation, majority of tea growers (50 per cent) have less than two acres of land holding, and would not be able to avail the SPTF.

K.G. Butail, president of Kangra Valley Small Tea Planters Association, said the small tea growers could not afford to take the 50 per cent loan component in the SPTF.

Over the past seven years, the area under tea cultivation in Kangra valley declined by 47 per cent. Subsequent winter droughts in Kangra valley have led to the subsequent failure of 'first flush' — the first tea leaves to be plucked from a plantation. The first flush generally yields the highest price in market — up to Rs 300-400 per kg. But because of winter drought, the first flush has not been picked and generally the subsequent tea leaves are being picked and processed. Since the price is determined on the basis of the plucking, the tea growers in the valley are getting an average of Rs 70 per kg.

Poor marketing of the Kangra tea and lack of initiative on part of the government to introduce a minimum support price (MSP) for the produce have also led to its gradual decline. Yogesh Sood, a progressive tea grower in Palampur, said Kangra tea was facing competition from tea imported from Kenya, China and Sri Lanka. These foreign tea varieties are cheaper than the Indian tea, primarily because of low labour cost for tea production in these countries. "As a result, we have to sell our produce at much lower rates than the cost of production. For example, the cost of production for Kangra tea is Rs 80 a kg, but it yields a market price of just Rs 60 a kg. It is because of such poor marketing that of the four cooperative tea factories in the Kangra Valley; only one is functional as a cooperative while the remaining three have been privatised. The private tea factories aim to maximise profits and pay less price to the farmers. It is only by introducing a MSP for tea, that the government can help in increasing area under tea cultivation and enhance its production," he added.

Tea planters here also lament about the phased withdrawal of subsidy on farm inputs by the government.

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FDI from B’desh may be allowed

Dhaka, July 22
India today indicated it may soon allow foreign direct investment (FDI) from Bangladesh on a selective basis and after security checks, with a view to giving a boost to the bilateral economic relations.

"It is true that presently India prohibits FDI from Pakistan and Bangladesh for security considerations. We have been reviewing these restrictions with a view to enabling FDI from Bangladesh into India on a case-to-case basis, subject to security clearance," minister of state for commerce Jairam Ramesh said here.

"Hopefully Bangladesh businessmen will receive some good news in this regard soon," an official statement quoted him as saying at the launch of India-Bangladesh Chamber of Commerce and Industry. The chamber aims at increasing collaboration between the two countries.

Ramesh said Bangladesh businessmen were keen to invest in pharma, paper, food processing and textiles sectors in India.

He said the two countries would also be signing a mutual recognition agreement soon, enabling them to recognise each other's conformity assessments. — PTI

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Air-India plans European hub

New Delhi, July 22
State-run carrier Air-India, which is being merged with another national airline Indian, is looking to create a hub in Europe and rationalise its route structure by providing more direct services.

Following the footsteps of its private competitor Jet Airways, which has established an operational hub at Brussels, Air-India is holding discussions with aviation authorities in some major cities of Europe.

"Discussions are going on. Let us come to some final conclusion and then we will let you know," Air- India CMD V. Thulasidas told PTI in an interview.

The carrier, which already flies to several European cities like Frankfurt, London, Paris and Birmingham, "is now looking at other cities which can become our hub," he said.

Asked to elaborate, he said at least five to six daily flights would arrive at the European hub from different parts of India and the passengers transferred to other Air-India planes bound for destinations beyond.

"But the existing flights through European cities where we are already operating, will continue. We will even add flights to these gateways," Thulasidas, who has been appointed to head the merged state-owned carrier, said.

Thulasidas said post-merger, all flights of Indian and Air-India in the international and domestic sectors would be looked into and rationalised, depending on the demand. — PTI

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Market Scan
Tata Steel good for long-term investment
by J.C. Anand

In spite of phenomenal rise in the stock market, there are still some script in which long-term investment can be made gainfully. One such company is Tata Steel — previously known as Tisco. Tata Steel, founded by Jamsedji N Tata, has completed 100 years of remarkable growth and achievement. During the year ended March 31, 2007, Tata Steel acquired 100 per cent shares of Corus Group. Together, Tata Steel and Corus will be a 30million tonne enterprise and the sixth largest company in the world with operations in four continents.

For the year ended March 31,2007, with an equity capital of Rs 580.67 crore, it made net profit (before carrying forward the amount from the previous year) of Rs 422.15 crore. It has an EPS of Rs. 73.06 crore for its Rs 10 face value equity share. Its p/E ratio is 10.46.

Tatas, the promoters of the company, have raised their holding in the company by 7 per cent from 26.79 per cent to 33.77 per cent. The company’s “premium reserve” stands at Rs 2,201.46 crore and “general reserve” at Rs. 5,784.82 crore. In addition, the carry forward in the “profit and loss account” is Rs 4,593.98 crore. Its aggregate of quoted investment with the value of Rs 312.72 crore has a market value of Rs 2,979.19 crore. Its unquoted investment is at Rs 5,793.46 crore.

Rights issue

Tata Steel has announced two rights issue,

(1) In the ratio of 1 for 5 at a price of Rs 300 per share of Rs 10, aggregating to Rs 3,655 crore.

(2) Issue of 2 per cent cumulative convertible preference shares of Rs 100/- to be compulsory converted into ordinary shares of Rs 10/- in the time between 18 to 30 months from the date of allotment with an indicative conversion price in the range of Rs 520 to Rs 600 per ordinary share.

Tata Steel is undertaking expansion at its Jamshedpur works and has also projected to set up greenfield projects in Orissa and Jharkhand. Mittal and South Korean Steel maker Posco have also undertaken to set up their own plants in Orissa. But these greenfield projects by Mittal, Posco and Tata Steel would be completed not before 2015. Tata Steel is the cheapest steel maker in the world and is likely to maintain its status for many years to come. India has the 5th largest iron ore reserves in the world.

Investment in Tata Steel is likely to be rewarding though the market price of its scrip has also already doubled from Rs 360 to Rs 720 during the past one year.

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Tax Advice
NSS withdrawal attracts TDS
by S.C. Vasudeva

Q. I retired as a senior lecturer from a degree college on March 31, 1998. Being a lecturer of a non-govt. college, I was not given pensionary benefits at all. So, I deposited my P.F. amount with the local post office under M.I.S., where the present rate of interest is 8 per cent p.a. My total income in the financial year 2006-07 is as under:

(i) Total amount of interest received from the post office Rs 48,000

(ii) Total amount of re-invested interest (on N.S.C.'s) Rs 9,000

(iii) Amount withdrawn from my N.S.S. account 87 Rs 39,000

(iv) Amount received on account of arrears due to revision of  grade from the college Rs 28,400

Rs 1,24,400

Now, is it essential for me to file I.T. return? Moreover, I am a sr. citizen my D.O.B. being March 7, 1938.

— P.K. Sharma, Jagraon

A. Every person is required to furnish a return on or before the specific date if his total income, in respect which he is assessable under the Act during the previous year, exceeds the maximum amount, which is not chargeable to income-tax. Since your total income, without claiming any deduction under (chapter-VIA is below the maximum amount, which is not chargeable to income-tax in case you are a senior citizen, you are not required to file the return for the assessment year 2007-08. I may, however, add that the amount withdrawn from National Saving Scheme (NSS) account must have been subjected to tax deduction at source and in such a case, you may have to seek the refund of the tax deducted at source which would require the filing of return so as to claim the refund.

Medical reimbursement

Q. The Civil Hospital at Bathinda advised me a treatment of my heart problem at PGI Chd. But before I could reach there, I suddenly felt unconscious and was taken to a private heart centre, Research Institute, Bathinda, where I underwent the necessary surgery.

I approached the distt C.S. with my bill for Rs 2,22,032 explaining why I could not reach PGI for the urgent surgery, which I had to avail at Bathinda. My case was duly considered by the dist. medical board (in light of emergency condition) and other high-level professionals of the state government before being put up to the distt. HQFW Punjab, who is the competent authority designated by the Punjab govt. for sanction/verification of rates in such cases of treatment at private institutes in the state. Detailed guidelines have been given to him, including limitation of rates and other charges to thereof AIIMS. His sanction/verification of the bill or expost facto approval stands for Rs 2,07,446.

I retired from Punjab State Public Undertaking (PSEB), which had adopted the Punjab government's approval for treatment of all employees/pensioners at any private hospital of their choice. The existing panel of private approved hospitals were also abolished with this order/circular. Now, the question is whether my bill is liable to TDS under the circumstances or this payment is exempted like that for treatment at any government hospital/institute?

— G.S. Khurana, Bathinda

A. Sub clause (ii) of proviso to clause (vi) of Section 17(2) of the Income-tax Act 1961 (The Act) provides that perquisites do not include any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family:-

(a) in any hospital maintained by the government or any local authority or any other hospital approved by the government for the purposes of medical treatment of its employees,

(b) in respect of prescribed diseases or ailments in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines.

Rule 3A (2) of Income-tax rules 1962, apart from providing other diseases, includes disease or ailment of heart. You will have to, therefore, check up whether the hospital, where your surgery was undertaken, is an approved hospital under clause (a) or (b) as reproduced above. The list of approved hospitals under (a) above is given in circular no. 603 dated June 6, 1991. In case the hospital is approved, the amount reimbursed to you would not taxable.

Section 80 DDB

Q. Kindly answer my following queries:

(i) Is the enhanced deduction under section 80C to Rs 1,10,000, as announced in this year's budget, implementable in the financial year 2006-07?

(ii) Whether the entire principal amount of the housing loan is allowed for deduction under Section 80C or it is limited to Rs 20,000?

(iii) I have recently undergone heart by pass surgery. Is by pass surgery covered under specific disease under Section 80DDB? Is this deduction independent of deductions available under Section 80C?

— Ashok Bhanot, Jalandhar Cantt

A. The answers to your queries are as under:

(i) The deduction allowable under Section 80C of the Act remains at Rs 1,00,000 and it has not been enhanced to Rs 1,10,000 as pointed out by you.

(ii) The deduction toward the repayment of housing loan is allowable within the overall limit of Rs 1,00,000 and there is no such limit of Rs 20,000.

(iii) The diseases or ailments prescribed under Section 80DDB of the Act do not include by pass surgery. The deduction allowable under Section 80DDB is independent of the deduction allowable under Section 80C of the Act.

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