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SBI may lower home loan rates
New Delhi, September 30
Hoping that RBI will bring down interest rates in its upcoming policy review, the State Bank of India today said it could give discount to new housing credit seekers in the festival season and might cut home loan rates.
Eyes overseas buyouts

Pfizer faces $8.5-b suit
Kano (Nigeria), September 30
A court case, brought by Nigeria against Pfizer, resumes on Tuesday with the US drug maker saying it answered a call for help to save the lives of African children during a meningitis epidemic.

BHEL to invest Rs 6,500 cr
New Delhi, September 30
Bharat Heavy Electricals Ltd (BHEL) plans to scale up manufacturing capacity to 20,000 MW by 2012 at an investment of about Rs 6,500 crore as it seeks to gear up for the massive requirement of the electricity sector in the next few years.

Reliance Retail sacks 400 in WB
Kolkata, September 30
After facing resistance in Uttar Pradesh and Orissa, Mukesh Ambani group firm Reliance Retail has sacked 400 employees or half its work force in West Bengal following protests by local traders and political parties that prevented it from rolling out its fresh food outlets.

Reliance Power to go public
Mumbai, September 30
Reliance Energy today confirmed that it has planned an initial public offering (IPO) for its subsidiary Reliance Power though the company did not disclose the size of the IPO.

BEST mulls power generation foray
Mumbai, September 30
The Mumbai municipality-owned Brihanmumbai Electricity Supply and Transport Undertaking (BEST) is planning to enter into the field of power generation.

AI starts Delhi-Kullu flight
Kullu, September 30
The inaugural flight of Air India (AI) from Kullu to Delhi was flagged off today by Raj Krishan Gaur, agriculture minister, Himachal Pradesh, from Bhuntar airport.

Tax Advice
Rebate on service tax on mediclaim policy permissible
by S.C. Vasudeva
Q. I would like to have your advice whether the service tax paid on “Med Claim” policies, is to be taken into account while allowing Income Tax Rebate under Section 80D or not?

Workers remove scaffolding from a newly finished building in Xiangfan, central China's Hubei province, on Sunday.
Workers remove scaffolding from a newly finished building in Xiangfan, central China's Hubei province, on Sunday. According to state media, China has tightened lending to home buyers in an effort to curb speculation in the overheating real estate market. — Reuters photo




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SBI may lower home loan rates

New Delhi, September 30
Hoping that RBI will bring down interest rates in its upcoming policy review, the State Bank of India today said it could give discount to new housing credit seekers in the festival season and might cut home loan rates.

"If it (housing loan rate) needs to be revised, obviously it would be revised downward," SBI chairman O P Bhatt told PTI, adding that the bank would consider either cutting the interest rate or offering festival season discount.

"Whether we revise it downward or offer discount for festival season from October for a month or a couple of months" would be decided by the bank's Asset and Liability Committee, he said. It was possible to offer discount on loans booked during the festival season, he added.

Asked what his expectations were from the Reserve Bank on the interest rate front, Bhatt said, "Rates would definitely not go up. Whether they remain the same or they move down by 25 basis points is anybody's guess... I am not anybody to decide on this... but this is my personal view." The RBI is slated to announce its half-yearly credit policy review on October 30.

On whether RBI should take a cue from the cut in rates announced by the US Federal Reserve, Bhatt said it was just one of the factors. — PTI

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Eyes overseas buyouts

State Bank of India is keen on big overseas acquisitions that will give it a 'strategic fit' along with new products and access to cheaper capital, chairman O.P. Bhatt said today.

Engaged in the process of consolidation domestically by merging seven associate banks, SBI would not be keen on small foreign banks worth a few millions just for the sake of acquisitions, Bhatt said.

The philosophy of SBI is in tune with the global trend as major banks and financial institutions are internationally growing big by mergers and acquisition route.

"In India we have no such plans (for acquisition)...if at all we will go, we will go for bigger banks (overseas) where we feel there is a strategic fit," Bhatt said.

Bhatt said domestically, mergers may happen within the family — the associate banks.

Asserting that SBI was the market leader, Bhatt said merger of seven associate banks with it would help the bank enhance its prudential and exposure norms significantly.

Apart from the State Bank of Saurashtra, SBI is seeking merger of State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore and State Bank of Patiala. — PTI

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Pfizer faces $8.5-b suit

Kano (Nigeria), September 30
A court case, brought by Nigeria against Pfizer, resumes on Tuesday with the US drug maker saying it answered a call for help to save the lives of African children during a meningitis epidemic.

Nigeria alleges Pfizer deceived patients and caused the death of 11 children in 1996 when it performed clinical trials for a new drug.

With the northern state of Kano, it is suing the company for $8.5 billion. — Reuters

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BHEL to invest Rs 6,500 cr

New Delhi, September 30
Bharat Heavy Electricals Ltd (BHEL) plans to scale up manufacturing capacity to 20,000 MW by 2012 at an investment of about Rs 6,500 crore as it seeks to gear up for the massive requirement of the electricity sector in the next few years.

“We will soon take up the proposal in our board to work on increasing capacity to 20,000 MW annually after completing the first phase of expansion to 10,000 MW by December,” BHEL chairman and managing director A K Puri said.

The second phase of expansion, to raise capacity to 15,000 MW, has begun at an investment of Rs 3,200 crore, he said, adding, “In case we decide to go for further expansion, the investment will be more or less similar of Rs 3,200 crore.”

BHEL chairman said 10 ultra mega power projects are also being talked about, and so there would be a spate of fresh orders in the next two years.

On allegations by NTPC that BHEL’s inefficiency was delaying projects, union minister for heavy industries Santosh Mohan Dev said: “There are certain drawbacks which are being looked at, but all assessment made by NTPC is also not totally true. Both are government companies with similar objectives i.e. to provide electricity to all by 2012 and they are working toward that goal.”

BHEL, which joined the Rs 100,000-crore club in terms of market capitalisation last week, has set a target to grow at 20 per cent annually and aims to become a Rs 45,000-crore firm by 2011-12. — PTI

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Reliance Retail sacks 400 in WB

Kolkata, September 30
After facing resistance in Uttar Pradesh and Orissa, Mukesh Ambani group firm Reliance Retail has sacked 400 employees or half its work force in West Bengal following protests by local traders and political parties that prevented it from rolling out its fresh food outlets.

A source in Reliance Retail said the company has terminated the services of 400 persons and another 300 may be given the pink slip. The company had hired nearly 800 persons in West Bengal for its outlets, which were to come up in and around Kolkata.

The development in West Bengal comes on the heels of the company facing protests from traders and political parties in Orissa and Uttar Pradesh.

The company had originally planned to invest Rs 2,000 crore in developing the agri-retail network in West Bengal. — PTI

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Reliance Power to go public
Tribune News Service

Mumbai, September 30
Reliance Energy today confirmed that it has planned an initial public offering (IPO) for its subsidiary Reliance Power though the company did not disclose the size of the IPO.

The decision was taken at the Board meeting of Reliance Energy headed by Anil Ambani.

REL said it would file an application for the proposed public offering with the market regulator soon.

The company said proceeds from the IPO would be used to fund various power projects being set up across the country.

However, reports had stated that Reliance Power planned to raise as much as Rs 12,000 crore, making it the biggest public issue in recent times.

Reliance Energy, along with its subsidiaries, has plans to expand its generation capacity 16 times to 15,000 MW.

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BEST mulls power generation foray
Tribune News Service

Mumbai, September 30
The Mumbai municipality-owned Brihanmumbai Electricity Supply and Transport Undertaking (BEST) is planning to enter into the field of power generation.

BEST general manager Uttam Khobragade said the undertaking was examining a tie-up with the Maharashtra State Electricity Board to operate a gas-based plan in Uran on the outskirts of Mumbai.

The joint venture would enable BEST to generate its own power and cater to the increasing demand for power in its area of operation. As of now, BEST obtains its power from Tata Power Company (TPC) However, TPC would not be able to provide the additional power required by BEST, Khobragade said.

The joint venture would result in 1,040 MW of power being generated from the plant. BEST is expected to contribute 15 per cent of the total cost of the project.

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AI starts Delhi-Kullu flight
Our Correspondent

Kullu, September 30
The inaugural flight of Air India (AI) from Kullu to Delhi was flagged off today by Raj Krishan Gaur, agriculture minister, Himachal Pradesh, from Bhuntar airport.

He said with the re-introduction of flights by the national carrier after 17 years, there would be a big boost to the tourism industry in the state.

He assured the Air India management that the government of Himachal Pradesh would provide all possible help in establishing this route as a profitable sector, so that they could start a daily flight instead of the present four times a week.

Deepak Barara, director, sales and marketing, said Air India was having 5 ATR-320 aircraft of 48-seat capacity and have planned to add 9 more aircraft very shortly.

He said starting of operation by Air India would bring competitive fares on this sector. He said they would soon start a daily flight to Kullu provided they get good response.

Renu Sahani Dhar, Himachal’s resident commissioner at Delhi, said Kullu was the most important destination where traffic was available round the year.

She said Air India should allocate a few seats to the government of Himachal Pradesh so that the VIPs visiting Kullu-Manali did not face last minute problems in getting seats.

The flight would take off from Delhi on Monday, Wednesday, Friday and Sunday at 10.45 am and reach Bhuntar at 11.55 am. The flight would leave Kullu at 12.50 pm for Delhi.

The Hoteliers Associations in Kullu and Manali have welcomed the start of this flight.

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Tax Advice
Rebate on service tax on mediclaim
policy permissible
by S.C. Vasudeva

Q. I would like to have your advice whether the service tax paid on “Med Claim” policies, is to be taken into account while allowing Income Tax Rebate under Section 80D or not?

I had paid Rs 3,267 (Rs 2,907 as basic premium and Rs 360 as service tax) for a Med Claim Policy. My D.D.O. while allowing income tax rebate had ignored the amount paid as service tax and granted the benefit on basic premium amount only.

Whether the action of my D.D.O. for ignoring service tax amount for tax purpose was correct?
— Sandeep Jaggar, Panchkula

A. Section 80D of the Act provides that in computing the total income of an assessee, there shall be deducted such sum not exceeding Rs 10,000 as is specified in sub Section (2) of the said section. Sub-section (2) provides that the sum referred to in sub-section (1) in case of an individual shall be 'any sum paid' to effect or keep in force an insurance on the health of the assessee or on the health of the wife and husband, dependent parents or dependant children of the assessee.

Since the words used by the sub section are ‘any sum paid’ and the service tax being part of the premium charged, should be covered for granting deduction under Section 80D of the Act. In my opinion, therefore, the action of the DDO in this regard is not correct.

Capital loss

Q. I have two accounts with Post Office w.e.f. 07-07-2005, one MIS and the other is SCSS. MIS is a six years account, the payment of interest is monthly @ 8 per cent per annum.

Whereas SCSS is five-year account, the payment of interest is quarterly @ 9 per cent per annum. SCSS account can also be opened at any branch of SBI.

The premature closure of these account is permissible to the depositors subject to the following conditions.

1. MIS (Monthly Income Scheme)- After completion of one year and 3 year of account from the date of its opening an amount equal to 2 per cent and 1 per cent respectively, of the deposit shall be deducted and the remainder paid to the depositor by the Post Office.

2. SCSS (Senior Citizen Saving Scheme)- After completion of one year and 2 year of account from the date of its opening an amount equal to 1.5 per cent and 1 per cent respectively, of the deposit shall be deducted and the remainder paid to depositor by the Post Office/branch of the SBI, where the account was opened.

Please clarify the followings points:-

(i) Whether the above percentage deduction of the deposit amount on amount of premature closure of MIS and SCSS accounts made by the Post Office/branch of SBI (as the case may be) is to be considered as capital loss in the year of premature closure of these accounts in the income tax return for that year.

(ii) Whether (if the above is considered as capital loss) it can be adjusted against the interest earned from Post Office/bank till the date of premature closure of accounts and the interest earned after deposit the withdrawn capital amount from Post Office with bank till the close of that year in I.T. return for that year.
— A.N. Gupta, Karnal

A. (i) The deduction of the deposit amount of premature closure of MIS and SCSS will be considered as a capital loss in the year of pre-mature closure of these accounts. However, such capital loss in my opinion cannot be construed as arising on account of transfer of a capital asset as envisaged under Section 45 of the Income-tax Act 1961 (the Act) read with section 2(47) of the Act.

(ii) Such capital loss cannot be adjusted against the amount of interest earned from post office and/or bank.

Tax on MFs

Q. I have purchased a mutual fund in year Jan '2005 and sold it in year Feb'2007. I have earned Rs 909.00 on it. Kindly tell me that what amount is taxable and on what rate. I also request to inform that which ITR form is applicable on it.
— RK

A. The amount of gain will be treated as a longterm capital gain as units were held by you for a period of more than one year. In case the units were of a equityoriented mutual fund, the capital gain earned on the sale of the units would be exempt from tax under Section 10(38) of the Act.

However, if the units were not of the equityoriented funds, the capital gains tax would be chargeable @ 20 per cent after giving the benefit of the indexation. In case the tax on capital gains so computed exceeds 10 per cent of the capital gain, the tax shall be limited to 10 per cent of the capital gains.

The capital gains tax so computed shall be increased by a surcharge of 10 per cent plus education cess of 3 per cent. The surcharge of 10 per cent will be chargeable in case your total income exceeds Rs 10 lakh. The ITR form applicable in your case would be ITR-2.

Medical reimbursement

Q. Reference the query of Sh Gobinder Singh published on 19.03.2007.

During mid twenties, Punjab Government/ PSEB having realised their inability to adequately provide their own hospitals/institutes for the employees/pensioners in their vicinity extended the scope of medical facilities for them by approving all private hospitals/institutes throughout the state. The employees/pensioners were given full freedom to avail any of these facilities as they may like to do. The earlier practice of maintaining only some of the private hospitals as 'approved' stood abolish being no longer required.

The said general approval was, however, kept under adequate control of the highest professional authorities of the State viz Director Health and Family Welfare Pb. Govt. who had to approve the treatment availed and limit the rates/charges to those of Govt. Hospitals, before payment by departments.

I am, therefore, of the view that such approval by the Govt. as also PSEB is covered under Proviso to Section 17(2) without further approval from Commissioner of I.Tax. These private hospitals stand bracketed with Govt./Boards own hospitals and employees are entitled to tax-free payment of their MR Bills.
— G.S. Khurana, Bathinda

A. In reply to query of Sh. Gobinder Singh, it was explained that 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 pertaining to prescribed diseases or ailments in any hospital approved by the Chief commissioner having regard to the prescribed guidelines is not considered a perquisite within the provisions of section 17(2) of the Act.

In my view, any hospital which is approved by the Punjab Government or PSEB may or may not have been approved by the Chief Commissioner of Income-tax having regard to the guidelines contained in Rule 3A(1) of the Income-tax Rules 1962 (The Rules). In my view, therefore, there cannot be any blanket approval of such hospitals in view of the clear wording of the section read with the Rules as aforesaid.

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