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Satyam Saga
CID begins Rajus’ interrogation
Hyderabad, January 18
Andhra Pradesh CID sleuths today took into their custody the disgraced founder-chairman of Satyam Computers B Ramalinga Raju and two other former top executives for interrogation in connection with the Rs 7,000-crore accounting fraud in the company.

Satyam board looks to lenders for funds
No decision on new CEO yet
Hyderabad, January 18
The first meeting of the expanded board of Satyam Computers yesterday decided to continue discussions with banks and financial institutions to improve the liquidity position in the fraud-hit software company.

‘Corporates must upgrade security’
Bangalore, January 18
KPMG, one of the largest professional services firm in the world, has asked business houses in India to take the terrorism factor into account when drawing up disaster management and business continuity management (BCM) plans.



EARLIER STORIES



A shopper gives vouchers to a clerk at a counter of a supermarket next to a sign that reads "Welcome use of shopping coupons" in Taipei on Sunday. Taiwan started handing out shopping vouchers to each of the island's residents, as part of a $ 2.5-billion scheme aimed at boosting the island's flagging economy.
A shopper gives vouchers to a clerk at a counter of a supermarket next to a sign that reads "Welcome use of shopping coupons" in Taipei on Sunday. Taiwan started handing out shopping vouchers to each of the island's residents, as part of a $ 2.5-billion scheme aimed at boosting the island's flagging economy. — AFP 

Experts predict further decline in growth
New Delhi, January 18
The worst is yet to come for India as leading economists and think tanks projected a further decline in the growth rate in 2009-10 mainly on account of the global financial meltdown on the country. The growth rate, expected to slip below seven per cent in the current fiscal from a high of 9 per cent in 2007-08, will decline further.

HDFC to cut auto loan rates
New Delhi, January 18
In a major relief to auto-loan seekers, the country's second largest private sector lender, HDFC Bank, has decided to slash interest rates on personal and commercial vehicles by up to 150 basis points from tomorrow.

Airtel to launch IPTV services
New Delhi, January 18
Soon after launching DTH cable operations, India's largest private telecom firm Bharti Airtel is all set to start IPTV (Internet Protocol on Television) services or popularly known as triple play (voice, data and video) in the country.

According to sources close to the development, Airtel may announce launch of services in next one or two days. IPTV refers to TV delivered through broadband. — PTI 

Tax Advice
No rebate on tuition fee paid abroad
Q. My son has been admitted to a graduation course in New Zealand. Tuition fee payable in respect of the course is pretty high. Please let me know whether I am entitled to a deduction in respect of such a tuition fee.

 





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Satyam Saga
CID begins Rajus’ interrogation
Tribune News Service

Hyderabad, January 18
Andhra Pradesh CID sleuths today took into their custody the disgraced founder-chairman of Satyam Computers B Ramalinga Raju and two other former top executives for interrogation in connection with the Rs 7,000-crore accounting fraud in the company.

The police team arrived at Chanchalguda jail in the morning, where Raju, his brother and former managing director Rama Raju and former CFO V Srinivas are lodged, and took them to CID office in Masab Tank area for questioning.

This followed a local court order yesterday, remanding the three executives to CID custody for four days.

The sixth additional chief metropolitan magistrate D Ramakrishna laid down a condition that the police should question the accused only during the day time in the presence of their lawyers.

The magistrate also directed the CID to ensure that medical treatment is available to them during the course of examination.

During the interrogation, the CID officials would try to figure out the extent of fraud committed by Raju and find out whether he had siphoned off the company's money and diverted it to Maytas Infra and other firms owned by his family members.

In his confession, Raju had said he fudged the books for several years, inflated the profits and showed non-existent cash and bank balances.

The CID would also probe the reports that Raju had used Satyam funds to buy vast tracts of lands across the state and outside and also floated several benami companies.

Though Raju had claimed, in his resignation letter, that none of the directors in the company knew about the fraud, the police would probe the role played by other directors and senior officials in the scandal.

Market regulator SEBI has also moved the court seeking permission to question Raju. The petition will come up for hearing on Monday.

The bail petition moved by the Raju brothers would also come up before the court on Monday. The fallen IT icon and his brother were arrested by AP police on January 9, three days after he confessed to committing the accounting fraud in the software company he had floated 21 years ago.

The duo was booked under non-bailable IPC Sections 120 B (criminal conspiracy), 420 (cheating), 409 (criminal breach of trust), 468 (forgery) and 471 (falsification of records).

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Satyam board looks to lenders for funds
No decision on new CEO yet
Suresh Dharur/Tribune News Service

Hyderabad, January 18
The first meeting of the expanded board of Satyam Computers yesterday decided to continue discussions with banks and financial institutions to improve the liquidity position in the fraud-hit software company.

“The last week had seen definite improvements on collections and this will be a major priority in the ensuing weeks. All efforts are being made to ensure that the employees are paid their salaries on time,” a company release said after the meeting.

No decision was taken on the issue of choosing new CEO and CFO for the company. The deliberations were centered around measures to enhance the liquidity and the issues relating to customer concerns.

The scheduling of vendor payments was also discussed, the release said.

“Till such time a chairman is appointed by the Central Government, it was decided that one of the members of the board will chair the meeting by rotation,” the release said.

The meeting, first after the Union government appointed three more directors on the board, was chaired by Deepak Parekh.

The business leaders of Satyam’s verticals made a detailed presentation to the board.

The board members reiterated that they were in touch with key customers and so far not heard of deliveries being affected in any way. “The customers have expressed their continued support which is a very encouraging sign,” it said.

Meanwhile, the board constituted an Audit Committee comprising of T N Manoharan (chairman), C Achuthan and S B Mainak (members).

It also appointed Chennai-based chartered accountants Brahmayya & Co. as internal auditors of the company with immediate effect.

Amarchand & Mangaldas & Suresh A. Shroff & Co., have been appointed as legal advisers to the board.

The new board has a challenging task of taking the scam-hit company out of the woods and restoring the confidence of investors, customers and 53,000-strong employees.

The first priority of the government-appointed board is to assess the correct financial position of the company, the required liquidity to pay salaries for the staff and to determine whether they need to borrow funds immediately for the day-to-day operations.

Besides revisiting the figures, the board will also hunt for right candidates for CEO and CFO posts. Parekh had recently said the company had receivables (payments due from customers) of Rs 1,700 crore, a figure that gives comfort to the anxious employees.

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‘Corporates must upgrade security’
Shubhadeep Choudhury
Tribune News Service

Bangalore, January 18
KPMG, one of the largest professional services firm in the world, has asked business houses in India to take the terrorism factor into account when drawing up disaster management and business continuity management (BCM) plans.

KPMG also asked business houses to do thorough background checks of all employees before induction. It also asked business establishments to learn from intelligence agencies to “better understand the alerts and react appropriately” in case of a terrorist situation.

The state of unpreparedness of corporate India with regard to terrorist strikes came to light in the latest survey on the subject conducted by the KPMG’s forensic services division. The survey results showed that the current security measures of most companies needed upgradation.

The report said although the fight against terrorism was considered to be primarily in the domain of the government, with corporate assets and executives becoming vulnerable, organisations can no longer treat organisational security as only an administrative issue. Corporates should assume a more proactive role in ensuring that their premises and personnel did not become victim of such attacks on account of negligence.

The survey conducted by KPMG with select companies in India from various sectors, majority of them with an annual turnover of over $150 million, assessed the security apparatus of the companies in the light of the emerging threat of terrorism. The survey revealed that more than half of the respondents (53%) did not conduct any threat analysis. The preparedness to threats was found to be drastically low with only about a quarter (24%) of the respondents having a comprehensive response plan and rest of the respondents either having none or very general security response plans.

Deepanker Sanwalka, head of forensic Services, KPMG India, said “Organisations across the globe are obliged to provide for a safe working place. Therefore, it is imperative that corporates draw effective emergency plans to ensure proper security to their employees, assets and business.”

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Experts predict further decline in growth

New Delhi, January 18
The worst is yet to come for India as leading economists and think tanks projected a further decline in the growth rate in 2009-10 mainly on account of the global financial meltdown on the country.

The growth rate, expected to slip below seven per cent in the current fiscal from a high of 9 per cent in 2007-08, will decline further.

"We think the growth rate for the current fiscal would be about 6.3 per cent and next year it should be between 5 per cent and 5.5 per cent," ICRIER director Rajiv Kumar said.

Expressing a similar view, Yes Bank chief economist Shubhada Rao said the Indian economy was expected to grow at 6.7 per cent for the current year and it could fall to 6.2 per cent in the next fiscal.

Global financial services firm Citi has also projected the growth rate slowing down to 6.8 per cent for 2008-09 and 5.5 per cent for the next fiscal.

The Indian economy grew at 7.8 per cent in the first half of the current fiscal compared with 9.3 per cent in the same period in the last fiscal.

The country's exports, which posted a robust 30.9 per cent growth rate in the first half of this fiscal, contracted by 12.1 per cent in October — the first time in five years.

The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion in the year-ago period.

In order to reverse the economic slowdown, the government has announced two stimulus package, seeking to raise public spending and making available easier credit for sectors such as exports, housing and small industries.

Simultaneously, the RBI also cut key policy rates and ratios to infuse liquidity into the banking system, in addition to signalling a soft interest rate regime.

In December last year, the government slashed excise duty by four per cent across the board and announced raising public expenditure by Rs 20,000 crore in the current fiscal.

In spite of these measures, the former chairman of the PM's economic advisory council, C Rangarajan, expects the economy to grow at a moderate level of around 7 per cent in the current fiscal and the next. He sees bounceback only in 2010-11. — PTI

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HDFC to cut auto loan rates

New Delhi, January 18
In a major relief to auto-loan seekers, the country's second largest private sector lender, HDFC Bank, has decided to slash interest rates on personal and commercial vehicles by up to 150 basis points from tomorrow.

In addition, the bank will also cut interest rates on corporate loans and wholesale credit, a move that will benefit small and medium enterprises and large companies.

Car and commercial vehicle loans will become cheaper by 125 basis points, while interest on two-wheeler loans will be reduced by 150 basis points, HDFC Bank head (retail assets and credit cards) Pralay Mondal told PTI.

At the same time, the bank will reduce interest rate on personal loan by 75-100 basis points, from existing 17-17.5 per cent.

"We have been able to pass on such a massive reduction to customer as cost of fund has eased and it is slated to come down further in the coming months," he said.

The bank is doing it as a pre-emptive measure, which will give a fillip to the slackening auto sales in particular and the SME and manufacturing sector in general, he added. — PTI

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Tax Advice
No rebate on tuition fee paid abroad
by S.C. Vasudeva

Q. My son has been admitted to a graduation course in New Zealand. Tuition fee payable in respect of the course is pretty high. Please let me know whether I am entitled to a deduction in respect of such a tuition fee. — O.P. Minocha

A. As per the provisions of Section 80C of the Income-tax Act 1961(the Act), a deduction of tuition fee paid whether at the time of admission or thereafter to any university, college or school or other educational institutions situated within India for the full time education of any of his/her two children is allowable. The maximum deduction allowable under Section 80C of the Act is Rs 1 lakh. In the given case, the tuition fee is payable to an institution situated outside India. Accordingly, you would not be entitled to any deduction of such a tuition fee under the provisions of Section 80C of the Act.

Rent from father

Q. My son is settled abroad. He has a house property in India which has been let out. The property was purchased by remittance from abroad. The tenant presently occupying the house is likely to be vacating the house by 31st March, 2009. I intend taking the said house on rental. What would be the consequences? — N.K. Chabbra

A. The rent received from you by your son would be taxable and assessable as his income. In case you are entitled to house rent allowance from your employers, the net tax payable by you can be reduced by claiming the deduction of the house rent allowance subject to the conditions specified in the Act.

Tax liability

Q. I am 61 years old. I have received a pension of Rs 1,20,000 and arrears of pay allowances of Rs 60,000 during the year 2008-09. I have an accrued interest from fixed deposits to the extent of Rs 1,00,000. I have also earned interest on senior citizen savings account of Rs 56,000. I have paid an amount of Rs 66,000 towards the tuition fee of my daughter undergoing B.Tech degree course and interest and principal toward the repayment of loan taken for construction of a house at Rs 43,000 and Rs 1,18,000 respectively. Please let me know my tax liability for the Assessment Year 2009-10. — R.C. Sharma, Ambala Cantt

A. On the basis of the figures given in the query, the net taxable income excluding income from house property would work out at Rs 2,36,000/-. This is because the deduction under Section 80C of the Act would be limited to Rs 1,00,000/- as against the amount of Rs 1,84,000/- spent by you towards the tuition fee of your daughter as well as towards the repayment of loan from bank for construction of house. The income from house property has not been computed as the relevant figures have not been given in the query. The amount of interest paid on the loan taken for construction of the house is deductible against the income from house property, the figures of which as stated above are not available in the query. The tax on total income therefore cannot be computed.

Prize money taxable

Q. I have won a gift item costing about Rs 40,000 by winning a competition announced in a weekly magazine. Am I liable to pay tax at source in respect of the gift so received? — S.K. Chopra

A. The term ‘income’ includes any winning from lottery, crossword puzzles, races, including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever. The term “lottery” has been defined to include “winnings of prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called”. The term “card game and other games of any sort” have been defined to include any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game. In case the prize received by you is covered within the aforesaid definition, it would be subjected to deduction of tax at source under Section 194B of the Act as the amount of prize is more than Rs 5,000. The deduction of tax at source in this case would be @ 30% plus applicable additional surcharge in respect of education cess. I may add that the entire amount of gift/prize whether received in any kind or in cash is taxable.

Insurance by employer

Q. My employer has effected insurance on my life in view of the valuable services I am rendering to the organisation. The premium paid on such insurance has been added to my income and subjected to tax deduction at source. Is the treatment given by my employer correct? Please advise. — T.P. Srivastava

A. Amount payable by an employer, directly or indirectly, to effect an insurance on the life of the assessee or to effect a contract for an annuity is taxable in the hands of an employee. This rule is not applicable in the case of employer’s contribution towards recognised provident fund, approved superannuation fund. Moreover, insurance premium paid by the employer under certain schemes such as Group Insurance Schemes, Employees’ State Insurance Scheme and Fidelity Guarantee Scheme, are not regarded as perquisites in view of the fact that an employee has merely an expectancy of benefit in such a scheme. 

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