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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Prime Minister Manmohan Singh Subsidies not yielding results may go: PM
New Delhi, December 15
Asserting that equity does not always imply offering subsidies, Prime Minister Manmohan Singh today called for a re-look at subsidies that have failed to achieve the objective of reducing inequities.

Gold loses shine
New Delhi, December 15
Gold suffered a major setback on the bullion market here today on emergence of selling by stockists, triggered by weakening trend in the global market.

Hong Kong keen on tax pact with India
New Delhi, December 15
Hong Kong has urged New Delhi to speed up the process for signing Double Taxation Avoidance Agreement (DTAA) and has sought more direct flights from India to further boost economic relations between the two countries.

‘The Next Door’ at Parklands
Chandigarh, December 15
BPTP, one of the fastest growing real estate company, today organized ‘bhoomi pujan’ for the exclusive commercial complex – The Next Door. Strategically located in BPTP Parklands at Faridabad ‘The Next Door’ is the unique modern commercial and retailing destination.

Globus Infocom offers hi-tech classrooms
Dehradun, December 15
Education imparting in the near future is all set to undergo a technological revolution if one has to believe what Globus Infocom Limited, an ISO 9001-2000 company into providing hi-tech interactive communications systems, has to offer. Indeed, the mind boggling technological advances in interactive and technology driven classroom can drive you simply mad.



EARLIER STORIES

 

Investor Guidance
Interest on Senior Citizen Savings Scheme taxable
Q: Last week the government reintroduced the bonus on post office monthly income scheme (MIS). After this, what would be the effective rate of return on the investment? Secondly, is the interest on Senior Citizen Savings Scheme and term deposits been exempted too?

Aviation Notes
Discipline need of the hour
Don't worry. Be happy. This is the crux of advertisements issued by the civil aviation ministry during air safety week (December 10-15). Among other things, it says: “...Delhi and Mumbai airports are now handling traffic equivalent to some of the world’s busiest airports. It is equally true that the Indian skies are one of the safest in the world.” The advertisement concludes by saying: “Any airline, any airport, any time, you are safe”.

 

 

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Subsidies not yielding results may go: PM
Tribune News Service

New Delhi, December 15
Asserting that equity does not always imply offering subsidies, Prime Minister Manmohan Singh today called for a re-look at subsidies that have failed to achieve the objective of reducing inequities.

“If subsidies do not reach the poor, they do not in fact address the objectives they are meant to… I find we spend far too much money funding subsidies in the name of equity, with neither equity objectives nor efficiency objectives being met,” the Prime Minister said speaking at the golden jubilee celebrations of the Institute of Economic Growth (IEG).

“Can we find more rational solutions to the problems of imbalances and inequities in growth?” he asked addressing top economists and academicians at the function.

Recently, while chairing a meeting of the Planning Commission, the Prime Minister had expressed concern of mounting food, fertiliser and petroleum goods subsidy, which is likely to exceed Rs 1,00,000 crore in the current financial year.

Listing rural-urban divide and the inter-regional divide as the two major concerns, Singh said “any long-term strategy for addressing both challenges must focus on agricultural development and agrarian change on the development of human resources and on promoting labour intensive industrialisation in these regions.”

Asserting that India needs to constantly renew its commitment to economic reforms, Singh said the momentum of growth needs to be sustained by accelerating investment and savings rates, increasing investment in social and economic infrastructure and providing focused attention on agriculture sector and energy security issues.

Emphasising that the state governments will have to play a major role in meeting these two challenges, the Prime Minister said “Our government has taken several steps… However, the government alone cannot alter the dynamics of regional imbalance. Nor, indeed, can the central government alone reduce such imbalances, if concerned state will not do their bit.”

Noting that migration of labour force was due to lack of employment opportunities in their native place, he said “we have to move from a situation where people are migrating to where jobs exist, to a situation where jobs migrate to where people live.”

Regretting that “mixed economy” often becomes “mixed up economy”, the Prime Minister said, the country needs to look for a new middle path for development that “combines the efficiency considerations of the market with the equity considerations of a liberal economy.”

He hailed the IEG’s important role in strengthening research in applied economics and in promoting inter-disciplinary social science research. The IEG has an impressive record of research in demography, agriculture, environment, industrial development, technology policy and project evaluation and has also contributed substantially to planning process and to policy making, Singh noted.

Earlier, the Prime Minister released two volumes of a book called “Growth, equity, environment and population: Economic and sociological perspectives”, edited by IEG director Kanchan Chopra and chairman of its board of governors C H Hanumantha Rao.

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Gold loses shine

New Delhi, December 15
Gold suffered a major setback on the bullion market here today on emergence of selling by stockists, triggered by weakening trend in the global market.

Trading sentiments turned bearish following a steep fall in the prices in international market and reduced offtake by jewellery fabricators in view of ending marriage season. In New York, gold lost $6 at $798 an ounce.

In the domestic market, standard gold and ornaments suffered a setback of Rs 185 each at Rs 10,230 and Rs 10,080 per 10 grams, respectively. Sovereign, followed suit and shed Rs 25 at Rs 8,675 per piece of eight gram. — PTI

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Hong Kong keen on tax pact with India
Tribune News Service

New Delhi, December 15
Hong Kong has urged New Delhi to speed up the process for signing Double Taxation Avoidance Agreement (DTAA) and has sought more direct flights from India to further boost economic relations between the two countries.

“I met Indian finance minister P Chidambaram and both of us felt the need to sign DTAA at the earliest. I have also sought more direct flights to Hong Kong from India, especially from places like Mumbai, Chennai, Bangalore, Kolkata, Hyderabad, etc, to boost economic relations,” the visiting financial secretary of Hong Kong Special Administrative Region John C Tsang told newspersons last evening at a reception hosted in his honour by Punjab National Bank.

Pointing that about 1,500 Indian firms are at present operating from and doing business in Hong Kong, Tsang hoped that his visit, along with business delegation, would enhance the economic relationship between the two countries.

Speaking on the occasion, PNB chairman K.C. Chakrabarty appreciated the speedy manner in which the Hong Kong administration sanctioned the licence to the bank to open its branch in that country.

He hoped that the Hong Kong Branch of PNB would be opened in early 2008.

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‘The Next Door’ at Parklands
Tribune News Service

Chandigarh, December 15
BPTP, one of the fastest growing real estate company, today organized ‘bhoomi pujan’ for the exclusive commercial complex – The Next Door. Strategically located in BPTP Parklands at Faridabad ‘The Next Door’ is the unique modern commercial and retailing destination.

Spread over 1.72 acre, ‘The Next Door’ comprises of office and retail space of leading and reputed brands. It will entail features like centrally located courtyard, modern architecture, 100% power back-up plus elevators, a peripheral driveway amidst a beautiful landscape… that makes it a treat for businessmen and professionals.

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Globus Infocom offers hi-tech classrooms
Raju William
Tribune News Service

Dehradun, December 15
Education imparting in the near future is all set to undergo a technological revolution if one has to believe what Globus Infocom Limited, an ISO 9001-2000 company into providing hi-tech interactive communications systems, has to offer. Indeed, the mind boggling technological advances in interactive and technology driven classroom can drive you simply mad.

A look at the demonstration-cum-display of North India 's first-of-its- kind interactive classroom is enough to turn imagination into reality.

Unveiling its exclusive and most ultra modern technologically loaded interactive classrooms, Globus Infocom today gave live demo of what future of classrooms is going to be.

Fitted with modern electronic gadgets, which make the interactive learning so much easier and interesting, the latest technology-supported classrooms on display offered a profitable experience for several academicians, educationists, teachers and even students who had the real time feel of the classroom as they themselves operated the interactive systems.

Manish Dham, vice-president, Globus Infocom, explained that students would now be able to access information at the touch of a button attached to their PCs on their seats.

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Investor Guidance
Interest on Senior Citizen Savings Scheme taxable
by A.N. Shanbhag

Q: Last week the government reintroduced the bonus on post office monthly income scheme (MIS). After this, what would be the effective rate of return on the investment? Secondly, is the interest on Senior Citizen Savings Scheme and term deposits been exempted too?

— Madhur

A: Earlier, the monthly income scheme of the post office offered a 10 per cent bonus. This was discontinued in February 2006. Now instead of the erstwhile 10 per cent bonus, a 5 per cent bonus has been introduced. This takes the effective rate to 8.9 per cent p.a. However, note that the interest is fully taxable. The interest on term deposits as well as Senior Citizen Savings Scheme (SCSS), too, is fully taxable. It is only the principal investment on which Section 80C offers a tax break.

Rebate on tuition fee

Q: My daughter is now getting admitted to her nursery class. I am doubtful about earning any tax benefit towards her tuition fees & admission fees until she reaches Standard-1.

Will I get any relief under Section 80C, towards her tuition fees & also admission fees in this financial year?

— Vandana

A: Section 80C benefit is available for tuition fees paid, whether at the time of admission or thereafter, to any university, college, school or other educational institution situated within India for full-time education of any two children of the individual.

If these criterion are satisfied by your children, then you are eligible for the benefit.

Tax liability of NRIs

Q: I am residing in the US for the past five years working for an Indian multinational. Last year, I sold some shares of my company and my company has sent me a W2 (equivalent to Form-16) for the shares that I sold which are taxable under short-term capital gains. The price my company has put to calculate the taxable amount is the FMV (Fair Market Value). I am still not a green card holder in the US.

Here is what my company has to say about this.

“This income needs to be included as ordinary income of the employee on the W2 form. Further, withholding of taxes by employer is not required for this and the employee would have to pay the taxes applicable”.

By sending me a W2, my company is forcing me to pay tax in dollars. Don’t I have an option to pay the same tax in INR?

Moreover, I have never come across any situation where a company having say in tax outside the regular salary and benefits the company pays to the employee.

Also here is something that I did not understand which stated by my company’s payroll department. “For any TDS or Tax WH you can claim benefit while filing return with ITO”.

Need some understanding on what exactly is meant by filing return with ITO. Do I have to file returns again in India?

— Ramesh

A: You are a tax resident of the USA and it seems from the query that the US tax laws are made applicable. If you are an NRI and you are earning income/salary abroad, the same is not taxable in India and Indian tax laws won’t apply. Legally, we cannot opine on US tax laws at this forum. However, it is possible that you have sold the shares after the vesting within such period in the US tax laws that make such shares short-term assets and hence the income will be added to your normal income. Our only interpretation of the line “For any TDS or Tax WH you can claim benefit while filing return with ITO” is that credit for taxes withheld can be claimed while filing your tax return.

Post office schemes

Q: Recently, I read that investments in Post Office schemes and Senior Citizen Saving Scheme will be eligible for the Section 80C benefit. What is the effective date of this amendment? In other words, from which date can I make the investments so that I can avail of the tax advantage?

— Noushad

A: Investments in Senior Citizen Saving Scheme and Post Office Term Deposits of five years only have been granted the Sec. 80C benefit. Other post office schemes and term deposits of lesser duration are not eligible for the Sec. 80C benefit. Also, any investment made during the FY 07-08 will get the tax advantage. To that extent, the beneficial amendments are retrospective in nature.

Tax and SIP

Q : For saving my taxes can I invest in SIPs (Systematic Investment Plans)? What is the tax benefit associated with SIPs?

— Geetanjali

A: SIP is nothing but investing periodically, say monthly, bi monthly or six monthly in an MF scheme. In other words, it is akin to what recurring deposit is with respect to investing in Fixed Deposits. Therefore, SIP per se, does not offer any tax benefit as it is not a product but a strategy for investing. The tax benefit u/s 80C is offered by ELSS schemes of MFs. However, you can invest in ELSS using the strategy of SIPs.

Investment by NRI

Q: I am an NRI settled in the US. My brother owns a successful event management firm and is looking for some additional funds to expand his business. As per the regulations, will I be allowed to invest in his business as a partner? And if yes, will I be allowed to transfer my share of the profits back to the US as and when required, of course, after payment of the applicable tax?

— Shrinath

A: NRIs/PIO have to seek prior permission of Reserve Bank for investment in sole proprietorship concerns/partnership firms with repatriation benefits.

Under the general permission, an NRI or a PIO may invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis. Investment with repatriation benefits requires permission of the RBI. A person resident outside India other than NRI/PIO also require the prior approval for making investment by way of contribution to the capital of a firm or a proprietorship concern or any association of persons in India.

In other words, the general permission is not available even for large listed companies. Special permission is required for repatriability.

The authors may be contacted at 
wonderlandconsultants@yahoo.com

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Aviation Notes
Discipline need of the hour
by K.R. Wadhwaney

Don't worry. Be happy. This is the crux of advertisements issued by the civil aviation ministry during air safety week (December 10-15). Among other things, it says: “...Delhi and Mumbai airports are now handling traffic equivalent to some of the world’s busiest airports. It is equally true that the Indian skies are one of the safest in the world.” The advertisement concludes by saying: “Any airline, any airport, any time, you are safe”.

Should this message be taken on its face value? The renowned aviation officials are unwilling to subscribe to the ministry’s words. They observe that the year’s happenings on airports and in skies are more negative than positive.

The death and injuries to passengers on Delhi tarmac, several instances of missed mid-air collisions, repeated technical snags leading to delay and cancellation of flights (on one particular day, Air India’s five flights were affected) and several other incidents paint a very pathetic picture of the civil aviation in the country.

Considering Delhi as an ugly airport, one foreign correspondent says: “The marble walls and floors of the Indira Gandhi International Airport (IGIA) are the colour of dead flesh under the fluorescent lights, the carpeting is a thin scarlet runner, and paan stains are splattered in corners. Creative comforts are negligible. Passport control takes an eternity. Half the trolleys are broken down... The taxi drivers charge passengers several times the rate of the regular fare. Duty free shops are a joke...”

At Mumbai airport, the situation is no different. The passengers of Jet Airways had a harrowing time. It was just a providence that nothing untoward happened. But it was a fore-warning for the authorities to wake up from their deep slumber. The fact is that risky incidents have become common.

As if all these happenings have not been enough, on Wednesday a jackal was found on the main runway of the IGIA. The commander of a private airline informed the tower which immediately acted in the matter.

One national newspaper said the animal was ‘dead’. If so, there should have been spots of blood on the busy runway. The other version — this seems more plausible — is that the animal was dumped at the runway to create panic and malign Delhi International Airport (DIAL), a private body entrusted with the responsibility of renovation and upgradation.

The hovering of birds around the airport is understandable. But presence of dogs and jackals is totally unwarranted. During Dakota era, an amusing incident occurred. A commander radioed tower: “I find an ass on the runway”. The tower reacted promptly. The controller replied: “The landing fee that you pay, are you expecting an elephant?”

The fact is that two agencies, private and government, have not blended. Pin-pricking continues unabated. As there is little understanding between them, the ugly incidents are on the rise. The ministry should enforce discipline so that the situation does not deteriorate.

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