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B U S I N E S S

Satyam staff get January salary
Hyderabad, January 31
Bringing cheers in an otherwise gloomy atmosphere, the fraud-hit Satyam Computers has paid January salaries to its employees.

SBI freezes home loan rate at 8%
Mumbai, January 31
Country's largest lender State Bank of India today announced freezing interest rates on new home loans at eight per cent for a period of one year.

Govt promises substantial stimulus in next budget
Davos, January 31
Fiscal stimulus in India figured prominently in the global meet of world political and business leaders here with an assertion that if the UPA government comes back to power there will be a "substantial" package in the next budget.


EARLIER STORIES


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS


A sales assistant arranges gold jewellery at the newly launched "Reliance Jewels" in Ahmedabad on Saturday. Gold prices on Saturday surged by Rs 230 to a new peak of Rs 14,400 per 10 gram on aggressive buying by jewellery fabricators for marriages amid a firming global trend.
A sales assistant arranges gold jewellery at the newly launched "Reliance Jewels" in Ahmedabad on Saturday. Gold prices on Saturday surged by Rs 230 to a new peak of Rs 14,400 per 10 gram on aggressive buying by jewellery fabricators for marriages amid a firming global trend. — AFP

Aviation Notes
Strengthen DGCA to regulate growing traffic

Much noise about trifles. The aircraft’s noise during some nights around Vasant Kunj may be high but noise is not so noisy to cause any concern or worry to residents, according to renowned analysts of  civil aviation. The outcry, according to analysts, is a brain-wave of some who want to throw Indian civil aviation, already in tatters, into further spin.

Investor Guidance
PAN not required for receiving gift

Q: 1. Can a person give any number of gifts in a financial year or it should be given only once?







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Satyam staff get January salary
Suresh Dharur
Tribune News Service

Rajus’ custody extended till Feb 7

A magistrate court on Saturday extended till February 7 the judicial custody of Satyam's disgraced founder Ramalinga Raju, its former managing director B Rama Raju and ex-CFO Vadlamani Srinivas. The court also extended till February 7 the judicial custody of Gopalakrishna Raju, the general manager of SRSR Holding —through which Ramalinga Raju's family held stake in Satyam. — PTI

Hyderabad, January 31
Bringing cheers in an otherwise gloomy atmosphere, the fraud-hit Satyam Computers has paid January salaries to its employees.

Ending suspense and uncertainty over the financial position, the software giant informed its staff, through an email, that their salaries have been credited to their respective bank accounts and the pay-slips would be uploaded in due course.

The embattled company also informed the employees that it had remitted the provident fund contributions on time. Earlier, there were doubts in the minds of Satyam employees over payment of January salary in view of an unprecedented crisis that hit the company following disgraceful exit of its founder chairman B Ramalinga Raju after confessing to a massive Rs 7,100-crore accounting fraud.

The government-nominated members of Satyam board had held several rounds of meetings where the focus was mainly on raising the liquidity to meet the operational costs.

In a bid to boost the morale of the staff amid a flurry of negative reports in the media, the company brought out an in-house newsletter, christened as News Today, giving details of the recovery plans.

Providing assurance to the staff that the things were well under control, the newsletter mentioned that there was continuity in business. Satyam has bagged two new significantly large projects in the insurance space in the last two weeks — one of them being in the global top five. “Healthy receivables could see through the company’s operational expenses, once it could offset the outstanding short-term operational expenses accrued over the last few months with the financial help being extended by institutions against the company’s assets,” the internal circular said.

The company has approached certain financial institutions for funds against its encumbered assets and it will remain self-sufficient, it said.

The additional funding requirements were more to meet the outstanding dues accumulated over the last few months, Satyam marketing and communications chief Hari Tallapally said in his note.

“We are quite confident that once these accrued obligations are met, Satyam will continue to remain self-sufficient to meet regular operational expenses on the basis of healthy receivables," he said.

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SBI freezes home loan rate at 8%

Mumbai, January 31
Country's largest lender State Bank of India today announced freezing interest rates on new home loans at eight per cent for a period of one year.

For its existing customers, SBI has introduced a scheme — SBI Lifestyle loan — under which customers can avail eight per cent interest rate for a period of one year.

However, this facility would be available to the extent of 10 per cent of their home loans but up to a maximum of Rs 5 lakh, an SBI release said.

The new scheme of eight per cent interest rate will be offered for loans taken during February 2 and April 30, 2009, the bank said.

The bank would reset the interest rate after the freeze period to the same rate as originally applicable under the respective schemes, a press release issued here said.

SBI's existing borrowers under the two home loan schemes — loans up to Rs 5 lakh and Rs 5-20-lakh bracket — would also be given loans at eight per cent for a period of one year, the bank said.

Here as well, after one year of freeze period the originally contracted rate will be applicable, it said.

The bank has also introduced a new package for SME borrowers —SME Care — under which an additional working capital facility of 20 per cent of the fund based limits to customers, the release said.

"The loan will be given to take care of inventories of raw materials, finished goods as also delayed payments from their buyers in the current downturn at an interest rate of 8 per cent," SBI said. The loan will be repayable in one year, it said.

Besides, the bank has also introduced SME Help — under which term loans will be offered to purchase fixed assets, including generator sets, with concessionary interest rate of eight per cent for the first year, the bank said. — PTI

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Govt promises substantial stimulus in next budget

Davos, January 31
Fiscal stimulus in India figured prominently in the global meet of world political and business leaders here with an assertion that if the UPA government comes back to power there will be a "substantial" package in the next budget.

"The real budget will be presented by the government after the elections. But we are working on what that budget should be. And certainly, if this government comes back, as I hope it will, then that budget will include a very substantial fiscal stimulus aimed at infrastructure sector", Deputy Chairman of the Planning Commission Montek Singh Ahluwalia said.

He told a press conference on the sidelines of the World Economic Forum meeting that it was not a political issue and whatever the government "this is what I would recommend to".

However, speaking at India Brand Equity Foundation function at the WEF, Commerce and Industry Ministry Kamal Nath regretted that liquidity injected by the government and the central bank has not reached the cash-starved industry and consumers.

"...the liquidity is still not credit. Now the challenge is to make banks lend", he said.

In view of the general elections due sometime in April-May, the government will come out with an interim budget in the brief session in February to carry on the essential financial business for first four months of the next fiscal. The final budget is likely to be presented sometime in July-August.

Ahluwalia said that International Monetary Fund (IMF) may not be taking into account the probable plans of the new government and that was why they may be "a little more pessimistic about India in 2009 than I think we should be." He said in 2008-09, India expects a growth rate of 7 per cent or a little bit lower. "I think the Prime Minister mentioned the range of 6.5 to 7 per cent. I am hoping we will be nearer to the upper end of that range." The Planning Commission Deputy Chairman said the expectations and hope were that in 2009-10, India's economic growth rate should not have to decelerate compared to the previous year. — PTI 

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Aviation Notes
Strengthen DGCA to regulate growing traffic
by K.R. Wadhwaney

Much noise about trifles. The aircraft’s noise during some nights around Vasant Kunj may be high but noise is not so noisy to cause any concern or worry to residents, according to renowned analysts of 
civil aviation.

The outcry, according to analysts, is a brain-wave of some who want to throw Indian civil aviation, already in tatters, into further spin.

The Indira Gandhi International Airport (IGIA) is already reeling under the curfew of night flying in certain countries and any further restrictions will cause further turmoil in the corridors of the Indian civil aviation.

The statistics reveal that India, particularly Delhi, is adhering to all 'noise norms' of the International Civil Aviation Organisation (ICAO) and the problem for Vasant Kunj residents is more imaginary than real.

The authorities have suggested that they are working on the premises of using new third runway for only take-offs and, if this proposal becomes a reality, the Vasant Kunj residents will not face even 'imaginary problem of noise pollution'.

The Director-General of Civil Aviation (DGCA) Naseem Zaidi has gone on record as saying: "We are in the process of considering some short-term measures. How it will still take a while to draw any conclusion". How can any one draw conclusion without knowing the measures envisaged by the DGCA?

The dangerous problem of 'safety of passengers and machinery' persists. The US Federal Aviation Administration (FAA) is pressing for strengthening the regulatory mechanism in the department. If the directorate fails to take the action, India's rating will have to be downgraded.

Instead of bringing about diplomatic influence to delay downgrading, why can't the ministry and directorate take measures to strengthen DGCA and prove that it is a body equipped enough to regulate the country' growing traffic.

The truth of the matter is that there are several competent personnel who are not being utilised for certain unknown reasons. The Flight Inspection Desk has to be strengthened.

The ICAO's rules pertaining to 'drunk pilots' are specific and clear-cut. Every pilot is required to undergo medical test before he is allowed to take command of the aircraft. The examination is mandatory. Yet many 'drunk pilots' get the command because of lax authority.

Why not punish them instead of formulating stricter set of rules and waiting until March 2009 for their implementation? Why wait for disaster to take place?

Another 'funny' rule has been issued. It says that cabin crew on domestic flights will have to interact every 30 minutes with pilots over intercom to ensure that commanders are awake.

This rule has been formulated because there have been instances when pilots have flown beyond their destinations.

Calling this rule with six new guidelines as 'joke' , the analysts say why not punish defaulting commanders instead of issuing 'advisories' and fresh set of guidelines? The pilots are already a 'pampered tribe', why pamper them further?

While qualified Indian pilots are cooling their heels at homes after spending lakhs of rupees in acquiring licences, the foreign commanders at exhorbitant salaries are being appointed by private carriers and even subsidiary of the 
National Aviation Company (NAC).

Following loud protests, the DCGA has formulated stricter tests for expat pilots so that the quantum of foreign pilots is reduced. This is a happy move.

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Investor Guidance
PAN not required for receiving gift
by A.N. Shanbhag

Q: 1. Can a person give any number of gifts in a financial year or it should be given only once?

2. Am I required to have any documentation done for the gift given to my parents (senior citizens) or my married son?

3. If a senior citizen receiving gifts does not have any taxable income and the amount being gifted is less than Rs 10 lakh, is it necessary for him to have PAN, provided that he will invest the money in a prop-rietary/partnership firm who does not deduct TDS? — R K Maru

A: 1. You can give any number of gifts during a year, there is no limit as such. Note that the gift has to be out of your post-tax income, i.e. there is no tax deduction available on making gifts. Also, gifts above Rs 50,000 to non-relatives are tax-free.

2. A letter offering the gift to your family member(s) and a return letter from such member accepting the gift is good enough.

3. There is no requirement of having PAN in order to receive the gift.

PPF account

Q: I took voluntary retirement from the Reserve Bank of India in December 2003. I do not have a PPF account. Can I open a PPF account now? Is it advisable to open a PPF account as late as now? I am 57 years old. — Jaya Narayanan

A: It is our considered opinion that each and every assessee should have a PPF account ticking for him. Even those who are not taxpayers at the current juncture, but are likely to come into the net in near or even distant future, must own a PPF account. The 8% tax-free interest, by itself, overrides all other considerations.

Capital gains

Q: I booked a residential apartment in December 2004 and paid Rs 33 lakh (Rs 18 lakh cash + 16 lakh home finance) which is now priced at Rs 73 lakh. The apartment is now ready for possession. But instead of taking the possession I want to sell it. What if I sell it now? Does it attract capital gains? How much? How to plan the savings? How long do I have to invest in bonds? Or how can I save the tax? — Subhransu Kanti De

A: If you sell the property before taking possession, you are selling a right to own a flat. The cost of acquisition of this right is the total cost of the flat you have paid (including penal interest) and the date of its acquisition is the date on which you made the very first payment, whether in instalments or lump sum.

In your case, since the period of 3 years has elapsed, you have earned long-term capital gains after indexations which are taxable @20.6%.

After the house is ready and you have taken possession, it becomes a different species. The clock for long-term or short-term starts once again from the date of your taking possession. If you sell the flat after taking possession, you will have earned short-term capital gains which are chargeable at the normal rates applicable to your total income, inclusive of the short-term gains.

The tax on all long-term capital gains which are chargeable can be saved by investing within 6 months the amount of capital gains in infrastructure-related Bonds of NHAI or REC u/s 54EC. 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.

Cancellation of policy

Q: I have invested Rs 1 lakh in my wife’s name in a recently offered single- premium insurance plan. However, after reading more about the same I feel I have been taken for a ride by the hidden rules. Is it possible to cancel my policy or deposit at this stage? — Ashok

A: For any life insurance plan, the entry is easy but exit entails a heavy loss. The loss is so heavy that it becomes necessary to stay put. Fortunately, most insurance plans have a free look period that ranges from 15 days to a month. The policy can be cancelled or reversed if you so desire during this free look period. Check this clause in the case of the particular plan that you have invested in.

Investment by NRIs

Q: 1. As an NRI, can I invest in India in real estate?

2. If so, what requirements I will have to follow.

3. My income in India, by these investments, earns profits, say by rentals or dividends, what are the government and tax rules that I have to follow? — Sridhar Alampalli

A: The NRIs can freely invest in Indian real estate. The RBI has granted general permission for this purpose and there is no requirement of getting any specific authorisation from any authority for this purpose. Rental income would be taxable and if the same is above Rs 1.50 lakh, a tax return would be required to be filed. Both the rental income as well as any capital gains from the sale of property may be remitted abroad after payment or provisioning for due taxes. Note that though there is no restriction on purchase and sale, in the case of residential property, sale proceeds of a maximum of two properties may be repatriated abroad. A certificate from an Indian chartered accountant would be required to be submitted to the banker before effecting the remittance. This is as far as direct investment in property is concerned. If the intention, however, is to invest in a company which in turn would invest in real estate, the FDI guidelines in this regard will need to be followed.

The authors may be contacted at wonderlandconsultants@yahoo.com

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