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France may sign bullet train corridor pact
New Delhi, August 11
An expert team from the French Railway is coming to India for carrying out technical feasibility study of the high-speed rail corridor this month-end. The team arriving on August 26 would visit some of the proposed sites for the high-speed corridors to prepare a detailed study report suggesting possible measures for going ahead with the project.

‘Refund banker’ next year
Jalandhar, August 11
Admitting that assesses faced problems in getting their income tax refund on time under the current system, Chairman of Central Board of Direct Taxes B.M. Singh today disclosed that refund banker system would be launched all over the country from next financial year to streamline the process.

Reliance Industries chairman Mukesh Ambani has been appointed the founder president of the Pandit Deendayal Petroleum University in Gandhinagar, a press note stated on Saturday. Reliance Industries chairman Mukesh Ambani has been appointed the founder president of the Pandit Deendayal Petroleum University in Gandhinagar, a press note stated on Saturday. The university, established by a state Act passed in February, is being promoted by the Gujarat Energy Research and Management Institute that was established by state-run Gujarat State Petroleum Corporation.

 


EARLIER STORIES

 


PNB study loans

Chandigarh, August 11
Public sector Punjab National Bank (PNB) today said it will disburse education loans of Rs 100 crore in south Punjab by the end of this fiscal.


A tourist stands on the steps of Federal Hall in the rain outside the the New York Stock Exchange (NYSE). The US Federal Reserve on Friday injected $38 billion into the banking system in an effort to preserve liquidity. A tourist stands on the steps of Federal Hall in the rain outside the the New York Stock Exchange (NYSE). The US Federal Reserve on Friday injected $38 billion into the banking system in an effort to preserve liquidity. The Fed, which has pumped a combined $62 billion into the market in two days, said it stood ready to release more money if necessary as investors ditched mortgage securities and stocks tied to the troubled housing sector. — AFP photo


A child holds a wooden statue at a Kenyan exhibition stall at the International Lifestyle Exhibition in Hyderabad on Saturday. Artists from Kenya displayed a variety of craft at the exhibition which is being held as part of the Independence Day celebrations.
A child holds a wooden statue at a Kenyan exhibition stall at the International Lifestyle Exhibition in Hyderabad on Saturday. Artists from Kenya displayed a variety of craft at the exhibition which is being held as part of the Independence Day celebrations. — AFP photo

IT returns slide in Panchkula
Chandigarh, August 11
The Union Finance Ministry's mantra of widening the income tax net notwithstanding, the income tax department had nothing much to cheer about in the northwestern region as there has only been a modest increase of about 14,000 assessees. According to sources, five zones of the region recorded 14.71 lakh income tax returns this year as compared to 14.57 lakh last year. However, two of five zones — Panchkula and Amritsar — have actually recorded substantial downfall in the number of returns.

Aviation Notes
Pawan Hans plans heliport
K.R. Wadhwaney
If civil aviation continues to face hiccups for inadequate infrastructure, general aviation is suffering because of indifferent maintenance. Most of the aircraft with industrialists are poorly maintained. They become airborne at the command of their boss or boss’ guests without undergoing mandatory checks. This has been one of the major causes for accidents in Indian skies.

Investor Guidance
Profit from F&O is trading income
A.N. Shanbhag
Q: Are capital gain (loss) from stock futures (STT paid) considered short-term capital gains (STCG)? Can loss from these trades carried forward to next year?— Somesh

 

 

 

 

 

 

 

 

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France may sign bullet train corridor pact

New Delhi, August 11
An expert team from the French Railway is coming to India for carrying out technical feasibility study of the high-speed rail corridor this month-end.

The team arriving on August 26 would visit some of the proposed sites for the high-speed corridors to prepare a detailed study report suggesting possible measures for going ahead with the project.

If everything goes well, the team is likely to sign an MoU with the government to assist the Indian Railway in the project, a senior Railway Ministry official said.

The high-speed corridor, also known as bullet train proposal, comprises four routes and is estimated to cost about Rs 25,000 crore for each route.

The proposed routes — Delhi-Chandigarh-Amritsar, Mumbai-Baroda-Ahmedabad, Chennai-Bangalore-Coimbatore and Howrah-Asansol-Patna — were announced in the current Rail Budget. The corridor aims at reducing the travel time drastically.

Besides carrying out the feasibility study by the French team, the Railways would also form a high-speed commission to expedite the project on a public-private participation basis.

Earlier, a preliminary study was conducted by the RITES for 492-km Mumbai-Ahmedabad route. "However, we need a more detailed study to go ahead with the ambitious Rs 1-lakh crore project," said the official involved with the project.

The French team is expected to provide more detailed inputs focusing on technicalities, financial implication, traffic pattern, funding plan, stakeholders' view, fare structure and other related issues before beginning the work.

"Besides France, we are also seeking help from Japan in the bullet train project," said the official adding, the basic research done by Japan and France in high-speed trains are essential ingredients in the project.

The study on bullet train project is required for the involvement of financial institutions and the industry while the government is for viability gap funding.

Since the corridor is expected to cost about Rs 50 crore per km, state governments and civic bodies have also been approached for sharing the expenditure.

"Many states like Gujarat, Haryana, Karnataka, Punjab have agreed to part-fund the project," said the official.
The Rs 1-lakh crore investment in the bullet train project is over a third of the entire Rs 2.5 lakh crore allocation for the Railways under the 11th Plan. — PTI

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‘Refund banker’ next year

Jalandhar, August 11
Admitting that assesses faced problems in getting their income tax refund on time under the current system, Chairman of Central Board of Direct Taxes B.M. Singh today disclosed that refund banker system would be launched all over the country from next financial year to streamline the process.

“As a pilot project, refund banker system has already been launched in New Delhi and Patna and is quite successful. It is expected that by the next financial year, the system would be implemented all over the country,” Singh, who was here to attend a state-level conference on direct taxes, organised by the Jalandhar branch of northern India regional council of Institute of Chartered Accountants of India, told reporters.

He said that e-return system has already implemented in the country and till now 1,46,000 companies had already filed returns through the system. Till now, only companies were allowed to file e-return but by the next financial year anybody would be allowed to file e-return, he added.

The chairman of the supreme body of direct taxes revealed that the income tax department was in the process of comprehensive computerisation. Three-tier system to keep the record of data at several levels was being implemented to make the system foolproof and data was being entered in the computers so that even scrutiny of the return could be streamlined. — PTI

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PNB study loans

Chandigarh, August 11
Public sector Punjab National Bank (PNB) today said it will disburse education loans of Rs 100 crore in south Punjab by the end of this fiscal.

“We have planned to disburse education loan amounting to Rs 100 crore by March 31, 2008,” PNB General Manager (Punjab South zone)I.D. Singh said in a press note here.

Some of the cities which are included in PNB southern zone are Ludhiana, Bathinda, Ferozepur, Faridkot, Patiala, Ropar, Sangrur and Barnala. — PTI

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IT returns slide in Panchkula
Pradeep Sharma
Tribune News Service

Chandigarh, August 11
The Union Finance Ministry's mantra of widening the income tax net notwithstanding, the income tax department had nothing much to cheer about in the northwestern region as there has only been a modest increase of about 14,000 assessees.

According to sources, five zones of the region recorded 14.71 lakh income tax returns this year as compared to 14.57 lakh last year. However, two of five zones — Panchkula and Amritsar — have actually recorded substantial downfall in the number of returns.

In fact, a huge deficit of about 19,000 returns for the Panchkula zone, which received 4.63 lakh returns this year as against 4.82 lakh returns last year, seemed to have caused concern among the income tax top brass. And following the footsteps of Panchkula, Amritsar reported figures of 2.53 lakh against last year's figures of 2.57 lakh.

On the positive side, Shimla zone has reported impressive figures of 1.51 lakh - a giant leap of over 29,000 over the 2006-07 figures. However, Chandigarh, where the department had launched an intensive campaign to woo the income tax payers, recorded a hike of about 8,000 with this year's figure being over 3 lakh to last year's figure of 2.92 lakh.

Officials claimed that 14.71 lakh was only the tentative figure as on July 31 and the actual figure could be much more than this figure. Since these figures did not reflect the e-returns, the final figure is going to be more than current official figure,a senior official told The Tribune here today.

Officials highlighted that since the assessees paying advance tax could file the returns till March 31,2008, the number of actual income tax returns was going much higher than those reflected in the current figures.

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Aviation Notes
Pawan Hans plans heliport
by K.R. Wadhwaney

If civil aviation continues to face hiccups for inadequate infrastructure, general aviation is suffering because of indifferent maintenance.

Most of the aircraft with industrialists are poorly maintained. They become airborne at the command of their boss or boss’ guests without undergoing mandatory checks. This has been one of the major causes for accidents in Indian skies.

Recently, the Chhattisgarh government helicopter crashlanded in a village near Raipur killing all crew members.

As the air traffic mounts and congestion persists on the ground, Pawan Hans Helicopter Limited is contemplating construction of a heliport in Delhi. The Pawan Hans authorities are said to have chosen a suitable land, which is away from the approach of the existing airport, as laid down in rules. Judging from the existing scenario, every metro needs heliport. The Directorate-General of Civil Aviation is said to have approved of the plan.

Airbus in China

If Boeing has placed its manufacturing eggs into the Indian basket, Airbus has targetted China for selling its aircraft. If Boeing is established a repair/maintenance hub in Nagpur, Airbus has signed a deal to manufacture aircraft in China, which will buy 150 A-320s. Airbus will hold 51 per cent stake in the new company, which will be its first assembly plant outside Europe. The Chinese company will retain the remaining 49 per cent stake. The company, based in Tainjim, will be an exact replica of Hamburg (Germany).

The deal underlines that China will remain the preferred choice of Airbus.

Foreign crew

A flourishing private airline, flying on domestic routes, has sought DGCA's permission to appoint foreign cabin crew. Since foreign pilots are allowed to fly on domestic routes, there should be no hitch in foreign cabin crew serving. But there is one problem. The foreign hostesses have to deal with local passengers and, therefore, must be able to speak in Hindi, which becomes imperative during emergency and evacuation exercises.

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Investor Guidance
Profit from F&O is trading income
by A.N. Shanbhag

Q: Are capital gain (loss) from stock futures (STT paid) considered short-term capital gains (STCG)? Can loss from these trades carried forward to next year?— Somesh

A: Profit or loss from futures/options is to be treated as trading income/ loss and not STCG. Loss from these trades should be first set off against house property income or income from other sources, if any. Any left over can be carried forward for eight years for similar set-off. Note that such losses cannot be set-off against either salary income or income from capital gains.

STT and Sec 80C

Q: Can one adjust STT paid short-term gains against 80C deductions? For example, my gross total income is Rs 1,35,002, comprising Rs 30,119 STT paid STCG & Rs 1,04,883 other income. Also, I have paid Rs 39,422 LIP. Now can I safely say that my total taxable income is below the taxable limit? — Nishhit

A: This point was clarified in an earlier article.

STT paid short-term capital gains cannot be adjusted against Sec 80C. But such short-term gains can be adjusted against the basic exemption limit. So yours is an extremely interesting situation. What you would do in your return is to adjust your other income against the LIP first. This would leave a balance of Rs 65,461. Now adjust Rs 65,461 against Rs 1 lakh exemption thereby leaving a balance of Rs 34,539 remaining in the basic exemption. Now since the basic exemption can be adjusted against the STT paid short-term gains, in effect, you reach nil taxable income status.

Senior citizens

Q: As per Rule 9 (b) of the Senior Citizens Savings Scheme, “in case the account is closed on or after the expiry of two years from the date of opening of the account, an amount equal to 1 per cent of the deposit shall be deducted and the balance paid to the depositor”.

Now the question is how to treat this deduction for income tax purpose. Can the ‘deduction’ be treated as reduction from the amount deposited — ‘capital’, or is it to be treated as reduction from the interest paid during the earlier period? If the ‘deduction’ is by way of reduction in the capital, can this be claimed as ‘short term capital loss’, as the holding period is less than three years? — Sharad Hatekar

A: As observed correctly by you, the specified percentage of the deposit shall be deducted and the balance paid to the depositor. It is still not clear whether this deduction is from the capital or the interest. However, Note-2 under the rule states, “In case of premature closure of account, the interest is payable up to the end of the month preceding the month in which the account is prematurely closed.” It is clear that this is a capital loss. This leads us to the next question - is it eligible for being claimed as short/long-term capital loss?

I had dealt with similar situations in my book, ‘In the Wonderland of Investment’. Hereunder is an extract from my book —

“When a financial asset is transferred, the surplus or deficit is a capital gain or loss. Regular income-paying avenues like bank deposits, NSCs, co-FDs, etc, are certainly financial assets and therefore, if we can go strictly by the letter of the law, we can claim long-term capital loss even on such instruments! This is illogical.”

For instance, at the end of the term of 5-year bank deposit, the depositor can use indexation and claim long-term capital loss.

However, in actual practice, no one makes such a claim and even if made, the department is not likely to admit it.

NRI and MFs

Q: I am Canadian citizen migrated in 2001 from India. I am thinking to buy equity-oriented mutual fund for Rs 20 lakh. Please advise how much tax do I have to pay in India for holding the fund for more than one year. If I open NRE & NRO account and redeem 50 per cent of my holdings after one year & fund grows by 25 per cent (assume). I request the mutual fund to deposit my cost of Rs 10 lakh to NRE account which is repatriable & Rs 2.5 lakh to NRO account. My concern is if I visit India can withdraw cash from NRO account to use in India without any restrictions. — Somanath

A: No tax is required to be paid merely for holding the funds, whether for more than one year or not. Tax becomes payable only when you redeem the units.

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 @14.165 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.

If you have used forex for purchasing the units, the sale proceeds are repatriable after payment of tax, if any. The repatriable amount can be credited to NRE account and also to NRO account. You can freely withdraw from either of the accounts for local disbursement.

The authors may be contacted at wonderlandconsultants@yahoo.com

UN assignment

Q: I have a query regarding IT as follows:

I remember having read elsewhere wherein you have stated that GoI bureaucrats’ income earned on any assignment outside India is tax exempt.

In a similar fashion, we academicians get UN assignments on policy advice in couture’s outside India. Please let me know whether such consultancy/honorarium received from the UN institutions like the UNDP is tax exempt.

(Whenever I earn some consultancy income from the World Bank, be it in India or abroad, the World Bank always issues me a certificate stating that the income was tax exempt (under some agreement with the GoI) — Thakkar

A: Salary received from the UN is exempt. Staff assessment is an amount appropriated from the salary by the UN for its own expenses. U/s 2 of the UN (Privileges and Immunities) Act, 1947 (read with Sec. 18 of the Schedule thereto), the rest of the salary and emolument is exempt from tax in India. Even any pension received by ex-employees after their retirement is also exempt from tax — Circular 293 dt 10.2.81.

Unfortunately, we are not aware of any special concession granted to fees for consultancy.

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