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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

B U S I N E S S

Coal ministry to allocate 23 blocks
New Delhi, December 30
The coal ministry is in the process of allocating 23 blocks for captive use by public and private sector companies as per directions of Energy Coordination Committee.

Duty-free import of packaging machinery sought
New Delhi, December 30
In a bid to boost the competitiveness of India’s food processing sector, a Ficci survey has recommended a nine-point fiscal incentive package, including zero import duty on packaging machinery and slashing of import duty on finished packaging materials.

Forex reserves to touch $300 b by March: IEG 
New Delhi, December 30
On the back of robust foreign inflow due to sub-prime and other crises in the West, India's foreign exchange reserves are expected to rise by $100 billion to touch $300 billion mark by the end of current fiscal, the Institute of Economic Growth (IEG) has said.


EARLIER STORIES

 
Chinese workers build scaffolding near the ongoing construction of the new China World Trade Center, a landmark of the central business district in Beijing on Sunday.
Chinese workers build scaffolding near the ongoing construction of the new China World Trade Center, a landmark of the central business district in Beijing on Sunday. China's central bank has set a lower target for loan growth rate of 12 percent for 2008 in efforts to curb lending growth and cool the economy, state media has reported. — AFP photograph

Market Update
Markets likely to consolidate in 2008
Bulls for the consecutive year continue to dominate the Indian bourses. Sensex was up from 13,786 to 20,206 (closing of 28th December, 2007) translating into a return of over 46 per cent for year. These are fabulous return by any standard. 

UCO Bank plans insurance biz foray
Kolkata, December 30
Public sector UCO Bank is in talks with with a few foreign companies to foray into non-life insurance business, a top bank official said.

Cellphone you can use in shower
London, December 30
If you love your mobile phone to the extent that you even take it along for a shower but end up damaging it, then 'waterproof' mobiles could be the best solution to this problem.

Tax Advice
NRI can remit up to $1 m p.a.
Q. My son has gone to the USA in June 2006 along with his wife and two children and is doing residency in medicine. He has no intention of coming back. 



Video
Food processing industry turning into a huge market.
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Coal ministry to allocate 23 blocks

New Delhi, December 30
The coal ministry is in the process of allocating 23 blocks for captive use by public and private sector companies as per directions of Energy Coordination Committee.

ECC had recommended allocation of 81 blocks, with a total coal reserve of about 21 billion tonnes, of which the government has already allotted 51 blocks during 2007.

To implement the ECC decision, 44 blocks of CIL that are not scheduled for production during the 11th Plan have been de-allocated for allotment to others.

During 2007, the coal ministry allocated 17 coal blocks to central and state PSUs for commercial selling without the restriction of captive mining.

This was soon followed by allocation of 10 blocks to PSUs exclusively for captive mining for power generation. Another 15 blocks were alloted to private companies for captive use for power generation.

Out of 16 blocks earmarked for the ultra mega power projects, three each were alloted to Orissa and Madhya Pradesh UMPP and one block for that in Jharkhand. Rajasthan Rajya Vidyut Utpadan Nigam Limited was alloted two blocks for power generation.

The screening committee for the coal ministry has already held one round of meeting for allocation of 23 blocks for captive mining to steel and cement sectors.

A total of 172 coal blocks with reserves of 38 billion tonnes have so far been alloted to various private and public sector companies.

Sources in the coal ministry said the government is optimistic of realising a production of 104 MT of coal outside the domain of coal PSUs during 2011-12 as against 25 MT expected during 2007-08.

In another significant initiative, the coal ministry has notified coal gasification and coal liquefaction as eligible end users for allocation of coal blocks under the captive mining provision as incorporated in the Coal Mines Nationalisation Act 1973 by an amendment in 1993.

The ministry, keeping in view the increased number of players in coal production, has allowed the private firms to whom blocks are allocated take up exploration as per the guidelines of CMPDI since the exploration capacity of CMPDI is inadequate to meet the growing demand.

The government has also decided to amend the Mines and Minerals (Development and Regulation) Act 1957 to provide for allocation of coal blocks based on competitive bidding. — PTI 

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Duty-free import of packaging machinery sought
Tribune News Service

New Delhi, December 30
In a bid to boost the competitiveness of India’s food processing sector, a Ficci survey has recommended a nine-point fiscal incentive package, including zero import duty on packaging machinery and slashing of import duty on finished packaging materials.

The Ficci survey on the packaging industry, the first-ever undertaken in the country, said incentives, wherever necessary, should be given to the input side like capital goods, infrastructure development, new technology, etc for the domestic packaging industry.

The aggregate import duty on aseptic packaging machinery is 27.48 per cent, which includes CVD of 16 per cent. Since aseptic filling machines are not being manufactured in India, the government should remove CVD of such machines, it said.

Central excise tax on packaging equipment and food processing equipment may be reduced from 16 per cent to 8 per cent. This will promote innovation in food processing and packaging equipment, thus increasing processing efficiency while cutting costs of food products.

The present excise and customs duty of 16 per cent and 10 per cent, respectively, on corrugated boxes is hampering the growth of packaging industry. Thus, the long-standing issue of excise and import duty reductions to 8 per cent and 5 per cent, respectively, should be considered, it suggested.

Excise duty on packaging machines used for food packaging should be exempted to allow the food processors to offset this cost, it said.

There should be abolition of excise duty on the packaging materials meant for packing fresh F&V and grains. This will enable more items to be packed in modern packaging mediums, it pointed out.

The survey elicited the views of about 225 respondents from across the country, including food processing companies representing all major sectors.  

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Forex reserves to touch $300 b by March: IEG 

New Delhi, December 30
On the back of robust foreign inflow due to sub-prime and other crises in the West, India's foreign exchange reserves are expected to rise by $100 billion to touch $300 billion mark by the end of current fiscal, the Institute of Economic Growth (IEG) has said.

"We expect such flows to continue especially as foreign funds are now diverted to safe havens such as India, following uncertainty about the extent of impact due to sub-prime crisis and potential recessionary signals emanating from US economy," IEG said in its monthly monitor.

"Forex reserves are to reach $300 billion by the end of March 2008," the report projected.

However, for the week ended December 21, forex reserves witnessed a decline of $232 million to touch $272.72 billion, primarily as a result of drop in foreign currency and assets collections.

As per the weekly statistical supplement of the Reserve Bank (RBI) released on December 28, foreign currency and assets dropped by $230 million to $263.93 billion. — PTI  

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Market Update
Markets likely to consolidate in 2008
by Lalit Batra

Bulls for the consecutive year continue to dominate the Indian bourses. Sensex was up from 13,786 to 20,206 (closing of 28th December, 2007) translating into a return of over 46 per cent for year. These are fabulous return by any standard. 

Nifty has gained close to 53 per cent for the year to date. Similarly, BSE mid-cap and small-cap gained close to 65 per cent and 87 per cent, respectively, for the year (This is the exact sentiment that we echoed in our first article of the year).

Strong earning growth on the back of robust FIIs’ inflows continued to drive the markets higher (at-least till the PN notes were banned).

What to expect

We view 2008 as the year of consolidation. The market is expected to stay strong during the initial part of the year, based on the momentum of the past five years. Market may peak around the 25,000-25,500 mark, before it starts to consolidate and correct. The correction may take the index down to 14,000 mark. Having said this, we still view Indian markets in the long term bullish mode and any investor willing to invest in Indian markets for long term may enter the market at any point in time. We will keep revisiting the above targets for the Sensex in case of any extraordinary event.

Review of the 2007 recommendations

All stocks that have been recommended have gained, but for Panacea biotec and Wipro. Understandably so, as both pharma and IT sector remained out of favour for better part of the last year. We are positive on both stocks and investor may continue to hold on to the stock. Going forward, we have recommended that investors’ book profit in the most of the stocks as we believe it is necessary to take home the gains. We maintain but on two stock, namely Surya Pharma and Power Grid as we are of the view that these have significant upsides from current levels. 

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UCO Bank plans insurance biz foray

Kolkata, December 30
Public sector UCO Bank is in talks with with a few foreign companies to foray into non-life insurance business, a top bank official said.

In the insurance venture, UCO Bank would like to have another public sector bank also as a partner. Besides, the bank would start a stock market derivative unit within its treasury wing during the next financial year.

UCO Bank CMD S K Goel told PTI today that the bank was talking to a few foreign companies for entering into the non-life insurance business which it plans to start during 2009-10. — PTI 

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Cellphone you can use in shower

London, December 30
If you love your mobile phone to the extent that you even take it along for a shower but end up damaging it, then 'waterproof' mobiles could be the best solution to this problem.

Electronics companies plan to use military technology, developed to protect soldiers from chemical attack, to make mobile telephones and other equipment waterproof, the Telegraph reported today.

For electronic devices, protection from water is important.

The new technology involves an invisible coating that is chemically bonded to the surface of the instrument, repelling water and preventing it from seeping into the device where it could damage circuitry.

Phones treated with the coating will be protected from moisture, rain and accidental immersion, according to the experts behind the technology. Tests have shown that treated phones can be used in wet environments without damage. — UNI  

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Tax Advice
NRI can remit up to $1 m p.a.
by S.C. Vasudeva

Q. My son has gone to the USA in June 2006 along with his wife and two children and is doing residency in medicine. He has no intention of coming back. 

My query is:

1. How much of his (tax paid) money can he transfer from his NRO/Saving a/c in India to his a/c in the USA?
— C.L. Goyal

A. According to the latest RBI Master Circular dated 02.07.2007, it would be possible for your son to remit up to $ 1 million per financial year (April - March) for all bonafide purposes to the satisfaction of the authorised dealer.

Loan to relative

Q. In reply to a tax related query of one Ankur Singhal of Mohali published in the Tribune recently, you have said that there is no tax liability on the borrowed amount (loan) from relatives. You have also advised to execute a document about loan.

Please tell if there is only a verbal understanding and no written document of agreement about the repayment of this borrowed amount (loan, then what will be the status/ fate of the unpaid loan amount in the event of the sudden death of the loanee or the loaner.
— H.B. Singh

A. In case the amount has been received through banking channels, the acknowledgement thereof stands proved. I presume that the transaction must have taken place through the banking channels as cash loan of Rs 20,000 or above attracts penalty and therefore this course may not have been pursued by the person giving or receiving the loan. In case the transaction is not through banking channels and is not supported by any document in writing, the acknowledgement thereof would depend upon the conscious of the person receiving the loan.

Form 15-H

Q. May I know whether my wife, aged 66 years (Sr. citizen) can submit Form 15-H to the bank or post office to avoid T.D.S. She has Joint FDs with her husband where her name comes first and the husband's second. Since her name comes first, it becomes her own interest income. Since she is a housewife, her savings are from her husband, brothers and other relatives etc. Besides this there is no source of income.
— Kewal Krishan Sanon, Patiala

A. Your wife being a senior citizen can submit Form 15H so as to enable the Post Office not to deduct the tax at source.

II

Q. I am a Sr. citizen with my present total taxable income without availing any rebates under Section 80C etc below Rs 1,95,000/- p.a. I am filing my I.T. returns every year without any tax liability.

I have some interest income in SCSS A/c from a bank. The bank has started deducting TDS on this. Is it permissible to file form 15H with the Bank for not deducting TDS and simultaneously continue filing the I.T. returns every year? Can both these actions run together every year as long as needed in above case?
— S.P. Gambhir, Karnal

A. Yes, you can file Form 15H with the bank. If the said form is filed, the bank would not deduct TDS on the interest income accruing to you. I may add that such form will have to be filed every year for this purpose. The filing of income tax return is not affected by filing Form 15-H. The filing of return is obligatory under Section 139 of the Income-tax Act 1961 (The Act). As against this filing of Form 15H is an option available to a senior citizen. He may chose not to file the Form 15-H.

Rebate to HUF

Q. Why an individual assessee is paying more tax and getting less exemption in tax rebate, than a Hindu Undivided Family (HUF), where both husband and wife are getting rebate of tax in both side. Why the income of husband and wife is separate in case of tax rebate, they are HUF (assessee-2) and income should be shown jointly and combined return in case of where both are Govt. employees.
— Prakash Chand Thakur, Mandi

A. Suggestion given by you has its merits and demerits. You may send your suggestion to the chairman of the Central Board of Direct Taxes for taking cognizance of your views on the subject. 

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