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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE
TERCENTENARY CELEBRATIONS
B U S I N E S S

BSNL launches 3G services
Chennai, February 22
State-owned Bharat Sanchar Nigam Ltd today launched next generation 3G mobile services in the country even as the private operators are still waiting to get spectrum through auction process.

Punjab signs MoU with Metro Cash and Carry India 
Chandigarh, February 22
The Punjab government today signed a memorandum of understanding (MoU) with Metro Cash & Carry India, the global leader in self-service business-to-business wholesale company, under the mega project policy of the state.

EPF rate to stay at 8.5 pc for 2008-09
New Delhi, February 22
The Central Board of Trustees, Employees Provident Fund, today recommended a rate of interest of 8.5 per cent for the year 2008-09.


EARLIER STORIES



RBS to slash over 20,000 jobs
London, February 22
The Royal Bank of Scotland (RBS) is all set to go for a dramatic rescue restructuring, wherein assets worth billions of pounds will be put up for sale and there will be more than 20,000 job cuts, media report says.

Tax Advice
No rebate on repayment of personal loan

Q. I am a senior citizen aged 71 years and a pensioner. Recently I have taken a personal loan of Rs 1 lakh from a mank. Since my total income is taxable, can I avail my deduction on principal or interest on loan? If so under what section?






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BSNL launches 3G services

Chennai, February 22
State-owned Bharat Sanchar Nigam Ltd today launched next generation 3G mobile services in the country even as the private operators are still waiting to get spectrum through auction process.

BSNL and another PSU MTNL (for Delhi and Mumbai) were given 3G spectrum last year ahead of auction for private players keeping in mind the cumbersome tendering process involved in the public sector procurement system.

Lowers mobile tariffs 
Initiating another round of tariff war, state-run BSNL on Sunday announced a new plan offering local and STD call at just 50 paise a minute across all network, while the charges would be 20 and 30 paise for BSNL to BSNL.
The new tariff plan — "India Golden Fifty" — would be available from March 1. BSNL chairman Kuldeep Goyal told reporters that the Golden Fifty plan would be available to consumers for a monthly rent of Rs 375 inclusive of taxes.

For the private operators, the government has referred the issue of 3G spectrum auction to a Group of Ministers in view of inter-ministerial differences over the reserve price.

The Department of Telecom (DoT) had earlier announced a reserve price of Rs 2,020 crore for pan-India 3G spectrum but later the Finance Ministry proposed doubling it.

The DoT later took the matter to the Cabinet Committee on Economic Affairs (CCEA), which referred it to the GoM, which is yet to meet for the first time.

The 3G mobile services would be made available on commercial basis from April 20 this year in Tamil Nadu, BSNL CMD Kuldip Goyal said.

Goyal said 3G services customers would have three monthly subscription options of Rs 350, Rs 650 and Rs 1,350. Apart from this, customers would also get the 3G services through a bundle offer.

Goyal said the subscribers would be offered a plethora of services like live TV, high-speed mobile broadband and movie download through 3G services.

Tamil Nadu Chief Minister M Karunanidhi marked the formal nationwide launch by making the first video call to Union Communication and IT Minister A Raja.

The 85-year old DMK president, who is convalescing at a hospital here after a spine surgery, launched the services through video conferencing.

Lauding Raja, who belongs to the DMK, for unveiling the 3G services from Chennai, Karunanidhi said he was happy to note that BSNL was launching the technology, which so far was available in developed nations in the country.

Later speaking to reporters, Raja said the 3G services would be launched in 13 more cities —Lucknow, Agra, Ambala, Dehradun, Jammu, Shimla, Jaipur, Jalandhar, Patna, Durgapur, Haldia, Ranchi and Bhubaneshwar — by this month-end.

Goyal said that of nearly five million subscribers base for BSNL, five per cent would migrate to 3G service. — PTI 

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Punjab signs MoU with Metro Cash and Carry India 
Tribune News Service

Chandigarh, February 22
The Punjab government today signed a memorandum of understanding (MoU) with Metro Cash & Carry India, the global leader in self-service business-to-business wholesale company, under the mega project policy of the state.

Principal Secretary Industries and Commerce S.S. Channy and member of the executive board of directors Frits van Peski signed on behalf of Punjab government and Metro Cash & Carry India in the presence of Punjab Chief Minister Parkash Singh Badal and Local Government and Industries Minister Manoranjan Kalia.

Appreciating the commitment of the company to supplement the income of the farmers, Badal said the plan of the German retail enterprise to open six wholesale centres with an investment of Rs 900 crore within next two to three years would certainly boost the agriculture economy in the state. He claimed these ventures would result in creation of 27,000 jobs for local youth besides sourcing vegetables, fruits and other fresh items directly from local farmers thereby eliminating the middlemen.

While thanking the Chief Minister for the supportive attitude, Frits van Peski said, "I am confident that our unique model will catalyse the progressive attitude of Punjab by providing a one-stop solution for wholesale purchase, improvements in assortments and high quality products to our professional customers."

The German retailer plans to strengthen local suppliers by building their capabilities and providing them with marketing opportunities — up to 90 per cent of the products offered will be supplied locally. Metro Cash & Carry also plans to run a farmer-training programme intended to build the capacity of farmers by improvements in marketing and supply chain. 

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EPF rate to stay at 8.5 pc for 2008-09

New Delhi, February 22
The Central Board of Trustees, Employees Provident Fund, today recommended a rate of interest of 8.5 per cent for the year 2008-09.

The decision was taken at the 186th meeting of the Central Board of Trustees, EPF, which was the fourth regular meeting of the newly-constituted Board conveyed here under the chairmanship of Oscar Fernandes, Minister of State for Labour and Employment and chairman, CBT (EPF).

The board considered the statutory item to recommend rate of interest for the year 2008-09 for crediting to the subscribers account at 8.5 per cent. However, the employees' representatives were in favour of a higher rate of interest and during the deliberations, they recorded their dissent.

The board also considered the coverage of contract employees under the EPF Act and better extension of social security cover to existing employees. The matter will be further taken up in a subsequent meeting after obtaining the views of various members. — PTI 

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RBS to slash over 20,000 jobs

London, February 22
The Royal Bank of Scotland (RBS) is all set to go for a dramatic rescue restructuring, wherein assets worth billions of pounds will be put up for sale and there will be more than 20,000 job cuts, media report says.

"The Royal Bank of Scotland (RBS) is to be split into a "good bank" and "bad bank" in a dramatic rescue restructuring in which assets worth several hundred billion pounds will be put up for sale," the Sunday Times said.

Besides, RBS chief executive Stephen Hester will cut costs by more than one billion pound a year, a move expected to lead to 20,000 job losses, more than half of which will be in Britain, the newspaper reported.

The group still employs more than 1,80,000 people around the world, including 1,00,000 in Britain. RBS has already cut more than 12,000 jobs in the past year.

The report further said "the asset sell-off would be one of the biggest ever seen, and would lead to a substantial reduction of the banks one trillion pound balance sheet." Meanwhile, Hester is expected to outline his cost cutting plan of over £1 billion this week as he unveils Britain's biggest-ever corporate loss of up to £28 billion. — PTI 

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Tax Advice
No rebate on repayment of personal loan
by S.C. Vasudeva

Q. I am a senior citizen aged 71 years and a pensioner. Recently I have taken a personal loan of Rs 1 lakh from a mank. Since my total income is taxable, can I avail my deduction on principal or interest on loan? If so under what section?

— B.D. Kalra

A. Section 80C of the Income-tax Act 1961 (the Act) provides for a deduction of an amount paid towards the repayment of amount borrowed for the purposes of construction or acquisition of a residential house. The above deduction is permissible from the total income within the limit of Rs 1 lakh. In view of the fact that the amount has not been borrowed by you for the purpose as aforesaid, no deduction in this respect is permissible from your total income under any provisions of the Act.

Compensation exempted

Q. My husband died in an accident in a factory while he was on the job. Apart from the various payments received under the provisions of Workmen Compensation Act, Provident Fund Act and Payment of Gratuity Act, the employers have made voluntary payment of Rs 5 lakh. Is the above amount of Rs 5 lakh taxable?

— Sumitra Rani

A. According to Circular No. 573 dated 21st August, 1990, the Central Board of Direct Taxes has clarified that lump sum payment made gratuitously or by way of compensation or otherwise to the widow or other legal heirs of an employee, who dies while in active service in not taxable. In view thereof, the amount of Rs 5 lakh received by you would be exempt from tax.

Tax on arrears

Q. I am a Central Govt. employee. After the implementation of 6th Pay Commission report, we have received 40% arrears of pay and balance 60% would be received in the next financial year.

In view of the above, I along with my other colleagues want to know the following points:

1. What is the responsibility of the DDO with regard to the re-assessment of the income tax for the last 3 years of arrears i.e. 2005-06, 2006-07 and 2007-08?

2. Our DDO is not clear about the re-assessment of income tax for the period of accrual of arrears. Please clarify whether he would issue the revised Form-16 for each of the past 3 years.

3. Whether the individual will have to file the revised income tax return for all the 3 years after the Income Tax is re-assessed.

4. If a part of amount is deposited in the GPF out of the arrears, whether the individual is eligible for the rebate under Section 80-C for the respective year or otherwise.

— Baldev Singh, Kurukshetra

A. Your queries are replied hereunder:

(i) The DDO has no responsibility with regard to the re-assessment of tax for the last three years i.e. 2005-06, 2006-07 and 2007-08. The amount of arrears would be included in the salary income payable for the financial year 2008-09 and DDO would deduct tax by including the said amount of arrears in your total income. There is no provision for the issuance of a revised Form 16 for past three years.

(ii) It will not be possible to revise the return for the financial year 2005-06. You may be able to revise the return for the financial year 2006-07 and 2007-08 by 31st March, 2009 and 31st March, 2010 respectively.

(iii) It would be advisable to file the return for the year ended 31st March, 2009 including the arrears received by you and seek the relief under Section 89 of the Act by filing Form 10E with DDO for giving you the relief under said section.

(iv) You are entitled to claim a deduction under Section 80C of the Act subject to a maximum amount of Rs 1 lakh. In case any amount is contributed towards the general provident fund within the above permissible limit, you would be entitled to claim a deduction of such sum from your total income.

Tax on gratuity

Q. I retired from the service of LIC of India on 28.02.1994. I was paid an amount of Rs 1,08,000 as gratuity. After availing exemption of Rs 1 lakh under Income Tax Rules, I paid income tax on the balance of Rs 8,000 during assessment Year 1994-95. Consequent upon revision of pay scales w.e.f. 1.8.1992 in 1996, I was paid arrears of pay and other allowances but I was denied difference of gratuity of Rs 1,04,400 for which I had to file a Civil Writ Petition in the High Court in 1997 and ultimately case went to Hon'ble Supreme Court which ordered for payment of balance of gratuity based on revised salary. In June 1996, I was paid an amount of Rs 1,04,400 towards difference in gratuity along with simple interest @ 10% amounting to Rs 1,24,410 (Total amount of Rs 2,28,810).

My queries are:-

1) Whether the total amount paid to me will be treated as gratuity or gratuity and interest separately?

2) Whether the interest paid as penalty under court orders on gratuity due in 1996 and paid late after 12 years in 2008 will form part of gratuity and taxed as such U/S 10(10) or it will be treated as long-term capital gain?.

3) Whether the rules of exemption u/s 10(10) applicable on the date of retirement i.e. 1992 (limited to Rs 1lakh) or date when payment became due 1996 (limited to Rs 1 lakh) or the date of actual payment of gratuity 2008 (limited to Rs 350 lakh.) will apply?

4) Whether the amount of Rs 35,000 spent by me on court case to recover the amount of gratuity will be allowed as expenses and deducted from amount of interest, if taxable?

5) Whether there are any cases on the subject and, if so, kindly mention the same.

— M.L. Gandhi, Panchkula

A. Your queries are replied hereunder:

(i) The amount received by you will be treated as gratuity to the extent of Rs 1,04,400 and the amount of interest received would be taxable separately under head 'income from other sources'.

(ii) The amount of interest would not form part of the gratuity. It cannot be treated as a long-term capital gain. As stated above it would be taxable as interest income.

(iii) The exemption to the extent of Rs 3,50,000 has been specified as a limit in case of retirement on or after 24.09.1997 vide notification No. 10772 (F.No. 200/77/97 - IT (A1) dated 20th January, 1999. Since you have retired on 28th February 1994, the applicable limit would be Rs 1 lakh only.

The amount of Rs 35,000 spent on court case is not allowable as deduction against the salary income.

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