SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Double-digit growth possible, says FM
New Delhi, December 1
Asserting that opening up of the economy has paid rich dividends for the country, finance minister P Chidambaram today said the government planned to increase growth rate to 10 per cent during the 11th Plan period giving a major boost to agricultural production and industrial growth.

Aviation Notes 
Petition against AI-Indian merger

The needless ministerial haste, in bringing about twice-failed merger of loss-making two national carriers, Air India and Indian, into reality, has been the main 'cause and effect' of the Maharaja's moustaches drooping instead of twirling aggressively.

BJP criticises economic policy
New Delhi, December 1
The BJP today lashed out at the UPA saying that its economic policies had created huge disparities and were threatening livelihood of the common man. Initiating a discussion on Appropriation Bills that sought Parliament's nod for additional spending of Rs 33,290 87 crore, BJP MP Ramdas Agarwal said while the economy was growing at 9 per cent and there was "flood" of foreign funds, fruits of it were being confined to few hands.

 


 
A South Korean protester wears a mask of Samsung chairman Lee Kun-Hee  at a rally demanding quick investigation on alleged mass bribery of Korea's largest conglomerate Samsung in front of Samsung Securities headquarters in Seoul.
A South Korean protester wears a mask of Samsung chairman Lee Kun-Hee at a rally demanding quick investigation on alleged mass bribery of Korea's largest conglomerate Samsung in front of Samsung Securities headquarters in Seoul, on Saturday. A number of investigators raided a subsidiary of Samsung early on Friday as part of a probe into alleged mass bribery and bookkeeping fraud, prosecutors said. — AFP photo
Air fares to go up
New Delhi, December 1
Air India today said it will hike fares by Rs 300 effective from Monday even as other airlines are poised to push through a hike due to increase in fuel surcharge this year. Jet and Kingfisher have already declared their hike by Rs 300.

Investor Guidance
Invest LTCG in infrastructure bonds to save tax
Q: On 11.10.07, I sold a plot of land for Rs 11 lakh. It was purchased on 9.12.04 for a consideration of Rs 2.48 lakh. I have also sold a 2BHK flat for Rs 20 lakh on the same day. The flat belonged to my family HUF where the family was staying for ever 50 years. On 15.5.07, the HUF was partitioned totally and this flat was transferred in my individual name as a part of my share. Soon afterwards, I purchased a 3 BHK flat at Rs 31.25 lakh supported by partly from a loan of 25 lakh from HDFC. I have been told that since my own reinvestment in a residential property is only 6.25 lakh (=31.25 - 25) and moreover since I already own a house in which I am currently residing, the burden of the tax on long-term capital gains (holding period of over 1 year) will be very heavy. Kindly let me know i) what is my tax liability and ii) how do I minimise this burden.
— Anil Prayag

 


Top



 

 

 

Double-digit growth possible, says FM
Tribune News Service

New Delhi, December 1
Asserting that opening up of the economy has paid rich dividends for the country, finance minister P Chidambaram today said the government planned to increase growth rate to 10 per cent during the 11th Plan period giving a major boost to agricultural production and industrial growth.

Pointing that increased economic growth only enables the government to provide more funds, grants and loans to states for various developmental activities, the finance minister cautioned against leakages and corruption in implementation of various schemes.

He was replying to the debate on the Appropriation (No. 4) Bill, 2007 and The Appropriation (No. 5) Bill, 2007, which was passed by the Rajya Sabha and returned to the Lok Sabha, which has already passed them.

Underlining the importance of further opening of the economy to register even better growth, the minister said opening up of the economy has paid rich dividend as the growth rate has increased from below 5 per cent to about 9 per cent now.

Noting that double-digit growth during the 11th Plan period could not be achieved unless growth of agriculture sector increased from the present 3.6 per cent to 4 per cent, he said the government has introduced a number of schemes, like the Rashtriya Krishi Vikas Yojna of Rs 25,000 crore along with the Food Security Mission to spur growth in this vital sector.

Chidambaram, however, virtually dismissed the demand for increasing the minimum support price (MSP) for paddy and wheat, saying the support price of paddy was fixed at Rs 100 more than the one recommended by CACP, while the MSP for wheat has been raised to Rs 1,000 per quintal.

He said the government has increased the outlay for irrigation, but the benefit was not reaching the people as contractors were implementing most of the irrigation projects. For effective implementation, he stressed the need for involving people in these projects.

He also pointed out that the government has increased the allocation for agricultural research and education to Rs 2,450 crore and it could be further enhanced.

Refuting the charge made by some opposition members that the subsidy on PDS has been reduced, Chidambaram said neither the quantity of foodgrain being subsidised under PDS has been reduced nor the issue price has increased.

Holding the state governments responsible for poor administration of the PDS, he pointed out that 36.38 per cent of foodgrain issued under PDS was not reaching the intended target as 16.6 per cent was lost due to leakages and ghost ration cards.

Rejecting the members’ demand for abolition of service tax, he said service sector constitute 54 per cent of economy so it could not escape tax. In this context, he said that from April 1, 2010, GST, which would be a combination of excise duty and service tax, would be implemented. 

Top

 

Aviation Notes by K.R. Wadhwaney
Petition against AI-Indian merger

The needless ministerial haste, in bringing about twice-failed merger of loss-making two national carriers, Air India and Indian, into reality, has been the main 'cause and effect' of the Maharaja's moustaches drooping instead of twirling aggressively.

Worldwide, airline mergers, if brought about, are undertaken by knowledgeable and dedicated officials associated with flying and airlines for decades.

Unfortunately, in this country, the merger is initiated by politicians to satisfy their egos instead of rendering the airline service-oriented and financially sound. If Indian skies are heavily crowded with all types of aircraft flying, the ground, particularly runways, are awfully messy as upgradation of Delhi and Mumbai airports is in progress.

Amidst this vex situation, the cabin crew association has filed a petition challenging the merger. If the court, in its judgement, says that the merger is not legal, there will be far more confusion and chaos in the National Aviation Company of India than it exists now.

The post-merger woes are:

1. There is an unsettlement of staff of two carriers as commanders, pilots, engineers, cabin crews, officers and other employees have not blended. There are complaints that Indian Airline officials are not being effectively utilised except for their shuttling between Delhi and Mumbai.

2. Amalgamation and re-routing of flights to 'please' a few VVIPs at the behest of some politicians continues unabated causing an additional quantum of inconvenience to paying passengers and, in the process, of incurring losses and adverse criticism.

3. Nose-diving of discipline and work culture. It has increased manifold problems resulting in delays of flights and even brawls at airports.

4. Over-utilisation of aged aircraft has played havoc leading to an avoidable technical snags and inordinate delays of flights.

5. Mishandling of rules pertaining to seniority of pilots, non-adherence to route-deployment and increase in incidents of duty time limits of cockpit crews and cabin crews have resulted in disturbing the schedule of operations.

6. Misuse and misutilisation of quota and complimentary tickets on grand scale.

7. Total apathy shown in dealing with problems pertaining to fog and bird-hits. The aviation analysts are of the firm view that fringe facilities of tea/coffee and snack to the stranded passengers during foggy fortnight will not redeem the situation. They are of the view that the national carrier should operate international flights from Mumbai airport only and Delhi passengers should be uplifted to take flights from Mumbai.

8. Crashing of the Air Force-Air India pilots pact has resulted because of non-adherence to seniority and pay rules. Only a few Air Force pilots from chosen 30 have joined the national carrier.

Mere words of the chairman and managing director V. Thulasidas to 'pull up socks' will not yield results. Actions speak louder than words.

Top

 

BJP criticises economic policy
Tribune News Service

New Delhi, December 1
The BJP today lashed out at the UPA saying that its economic policies had created huge disparities and were threatening livelihood of the common man.

Initiating a discussion on Appropriation Bills that sought Parliament's nod for additional spending of Rs 33,290 87 crore, BJP MP Ramdas Agarwal said while the economy was growing at 9 per cent and there was "flood" of foreign funds, fruits of it were being confined to few hands.

The economic resurgence had left majority of the population untouched and had increased poverty, he said, adding that "common man has not benefitted from the economic boom".

He said unemployment and poverty were the mother of terrorism in Jammu and Kashmir and the North-East. The present day economic policies were creating similar situations elsewhere in the country, he pointed out.

He said the government in 2004-05 gave concessions to industry worth Rs 1,58,661 crore, but prices of wheat, rice, vegetables and edible oil has risen by 50 to 70 per cent.

Assailing the entry of big corporate houses in retail business, the BJP leader said this was threatening the livelihood of small traders.

He also flayed forward trading system, saying it encouraged speculation and volatility in stock, bullion and commodity market that was being exploited by market players to the disadvantage of commoners. 

Top

 

Air fares to go up

New Delhi, December 1
Air India today said it will hike fares by Rs 300 effective from Monday even as other airlines are poised to push through a hike due to increase in fuel surcharge this year. Jet and Kingfisher have already declared their hike by Rs 300.

The increase in surcharge follows a 12 per cent increase in aviation fuel prices by the oil companies, Air India said in a statement.

In the internatonal sector, Jet Airways has hiked fares by $30 on a one-way ticket to the US, and by $25 on the London sector. — UNI 

Top

 

Investor Guidance by A.N. Shanbhag
Invest LTCG in infrastructure bonds to save tax

Q: On 11.10.07, I sold a plot of land for Rs 11 lakh. It was purchased on 9.12.04 for a consideration of Rs 2.48 lakh. I have also sold a 2BHK flat for Rs 20 lakh on the same day. The flat belonged to my family HUF where the family was staying for ever 50 years. On 15.5.07, the HUF was partitioned totally and this flat was transferred in my individual name as a part of my share.

Soon afterwards, I purchased a 3 BHK flat at Rs 31.25 lakh supported by partly from a loan of 25 lakh from HDFC.

I have been told that since my own reinvestment in a residential property is only 6.25 lakh (=31.25 - 25) and moreover since I already own a house in which I am currently residing, the burden of the tax on long-term capital gains (holding period of over 1 year) will be very heavy.

Kindly let me know i) what is my tax liability and ii) how do I minimise this burden.
— Anil Prayag

A: You appear to be under a wrong impression, rather two wrong impressions.

1. ‘Short-term capital asset’ is a financial asset held for 36 months or less immediately preceding the date of transfer. This holding period is 12 months only for equity shares, units of MFs, zero coupon bonds and listed scrips, bonds, debentures, etc.

2. The reinvestment in a house can come from any source, including a loan.

3. Your holding just one house does not affect the computation of capital gains.

Long-term capital gain (LTCG) is to be computed by deducting from the full value of the consideration i) any expenditure incurred in connection with the transfer ii) indexed cost of acquisition and iii) indexed cost of improvement. In the case of assets, acquired prior to 1.4.81, the option of substituting the fair market value (FMV) in place of original cost is open to the investor. In other words, if the actual cost of acquisition is lower than FMV as on 1.4.81, the investor may adopt the FMV to be his cost of acquisition. On the other hand, if the actual cost of acquisition is greater than the FMV as on 1.4.81, the investor may adopt such cost. The CII based on 1981-82 only will be taken into account, whatever be the choice of the investor.

LTCG is taken as a separate block and charged to tax at a flat rate of 20.6 per cent. If the total income, inclusive of capital gains is over Rs. 10 lakh, the tax rate would be 22.66 per cent. No deductions are allowed under Chapter-VIA like u/s 80C, 80D etc., for LTCG.

The assessee may claim exemption u/s 54 or 54F by purchasing a residential house within 1 year before or 2 years after the date of sale of the old house. Alternatively, he may construct a residential house within 3 years after the date. Sec. 54 is applicable to capital gains arising from transfer of a residential house and requires the amount of capital gains to be reinvested whereas Sec. 54F is applicable for other assets and requires the net sale proceeds (after the related expenses) to be reinvested. In the case of exemption u/s 54F, the assessee should not own more than one house on the date of earning the capital gains. The new house has a lock-in of 3 years. Sale within this period entails the loss of the exemption claimed earlier and the corresponding capital gains is treated as taxable LTCG during the year of sale.

The amount which is not invested before the 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 indexed cost is computed by multiplying the cost of acquisition with the ratio of the Cost Inflation Index of the year of sale by that of the year of acquisition.

STCG is included in the other income of the assessee and taxed at the normal rate applicable to him.

You have earned short-term capital gains on the sale of the land. You should have waited for about 2 months to effect this sale. Then you could have claimed it to be long-term. Now, the total gains of Rs. 8.52 lakh (=11.00 - 2.48) will be added to your other taxable income and taxed at the rates applicable to you.

Nothing can be done to save this tax. Yes, since this short-term capital gain gets merged with your other income, you may use the normal routine tax-savings strategies such as contribution to PPF, insurance premium, etc., available to you, consistent with the requirements of you and your family. Purchase of a new residential house does not affect this tax.

You have earned long-term capital gains on the sale of the house.

1. As per Sec. 47(i) of the ITA — Any distribution of capital assets on the total or partial partition of a Hindu undivided family is not regarded as transfer. Consequently, no capital gains arise on the date of the total partition.

2. As per Sec. 49(1) of the ITA — Where the capital asset became the property of the assessee

(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;

(ii) under a gift or will;

(iii) (a) by succession, inheritance or devolution, or….. the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.

3. As per Explanation(iii) to Sec. 48 — “Indexed cost of acquisition” means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later.

In your case, since your date of acquisition and also the sale falls in the current year, you will have to multiply and divide the assessed cost with the same index. Consequently the long-term capital gains will be Rs 20 lakh, less the assessed cost as on 1.4.81.

4. Finally, the 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 u/s 54 EC. The lock-in period is 3 years. The current interest rate is around 5.5% and this is fully taxable. The ceiling on this investment is Rs 50 lakh per financial year.

Plot in spouse’s name

Q: If I take a plot in my spouses name, will I get loan in of my name from banks or any housing finance companies? What about tax benefits?
— Virendra

A: Purchasing a house in the name of the wife by applying your own funds means that you are using her as a name-lender and this is a ‘benami transaction’. This is illegal.

It is difficult for you to take a loan in your name when the plot belongs to your wife. Even if you find a bank which gives you a housing loan in your name, you would not be entitled to claim any tax benefits associated with the loan, because the house belongs to your wife.

The authors may be contacted at wonderlandconsultants@yahoo.com 

Top

 
BRIEFLY

CPI-IW up
Shimla, December 1
The All India Consumer Price Index Number for Industrial Workers (CPI-IW) on base 2001=100 increased by one point to stand at 134 points in October. The index increased by four points each in Jalpaiguri, Mariani-Jorhat, Lucknow and Rabngapara-Tezpur centres, three in three centres, two in 14 centres and one point in 30 centres. On the other hand, it decreased by one point each in Sholapur, Chhindwara, Delhi and Quilon centres, while remaining stationary in 23 other centres.— UNI

PNB offer
New Delhi, December 1
Punjab National Bank (PNB) today launched a festive bonanza of 'CashBack' incentive scheme for its debit card holders. The offer will enable the customers to get cash back equivalent to 0.50 per cent of the total transacted amount on Point of Sale (PoS). The scheme will be valid for four months till March 31 next year. — UNI

Awarded
New Delhi, December 1
JK Lakshmi Cement has been conferred awards for improvement in thermal energy performance and environmental excellence in plant operation at the conclusion of a three-day conference, organised by National Council for Cement and Building Materials here. The award was presented by N N Prasad, joint secretary, ministry of commerce & industry, to Vinita Singhania, managing director of the company.— TNS  

Top

 



HOME PAGE | Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Opinions |
| Business | Sports | World | Mailbag | Chandigarh | Ludhiana | Delhi |
| Calendar | Weather | Archive | Subscribe | Suggestion | E-mail |