SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Indian Economy
Worst is over: Nath
New Delhi, March 1
The worst is over for the Indian economy which has started responding to the government's different stimulus packages and country's growth would pick up momentum in the last two months of this fiscal, Commerce and Industry Minister Kamal Nath said here.

Nano on a pilgrimage
New Delhi, March 1
The Tatas' Nano is on a pilgrimage across the country and will visit sacred sites of all religions before it hits the road commercially. According to industry sources, Tata Motors is taking the Nano, touted as the world's cheapest car, to as many pilgrimages as possible of all religions.

16 US banks collapse in two months
New York, March 1
With the financial meltdown continuing unabated, the US has already seen the collapse of 16 banks in the last two months — which is more than one-fourth the total number of failures in the past nine years. With 10 bank collapses in February, a total of 68 banks have failed since 2000 in the US.



EARLIER STORIES



Workers prepare a stand of Panasonic for the upcoming CeBIT fair inside a hall in Hanover
Workers prepare a stand of Panasonic for the upcoming CeBIT fair inside a hall in Hanover on Sunday. The world's biggest IT fair CeBIT with 4,300 exhibitors from 69 countries opens its doors to the public on March 3, and runs through March 8. — Reuters

Market Update
Weakness may persist
by Lalit Batra
In a highly eventful week, the bulls managed to hold their breath, thanks largely to the latest tax cuts announced by the government to spur demand. The government also announced fresh measures for recession-hit export sectors. Expectations of interest rate cuts escalated after inflation hit a 14-month low of 3.36 per cent.

Tax Advice
Foreign income of NRI not taxable in India
by S.C. Vasudeva
Q. I and my wife are Canadian citizens and senior citizens. We are holding OCI Card (Registration Certification) (Overseas Citizens of India) which gives us lifelong visa to live in India. We live about six months in India from October to March.





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Indian Economy
Worst is over: Nath

New Delhi, March 1
The worst is over for the Indian economy which has started responding to the government's different stimulus packages and country's growth would pick up momentum in the last two months of this fiscal, Commerce and Industry Minister Kamal Nath said here.

"I believe the worst is over," Nath said adding that the last two months of the current fiscal would be much better in terms of growth. The Indian economy grew by 5.3 per cent in the third quarter, a low of over five years, against a whopping 8.9 per cent a year ago, as agriculture and manufacturing output contracted.

Farm sector contracted by 2.2 per cent while manufacturing shrank by 0.2 per cent.

The April-December growth works out to 6.9 per cent against 7.1 per cent shown in the government estimates.

Nath said the government was aware of the sluggish growth in the economy during the October-December quarter and that was why it announced the stimulus package. He said the government took steps to address the issue of sluggish growth in the economy more evident in the third quarter.

"We were seized...we did not know the figures but certainly we were seized that there is a sharp decline, that is why we did announce a stimulus package," said Nath adding that the measures have started yeilding results.

"If you see January and November figures of auto, cement, steel there is a big jump," he pointed out.

In less then three months since December the government has announced three stimulus packages reducing excise duty, service tax and providing more funds for the infrastructure sector.

Export sector employing over 150 million people has taken the worst hit from recession in Europe and the US. After showing an impressive growth in the first half the fiscal, overseas shipments have started contracting from October onward. — PTI

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Nano on a pilgrimage

New Delhi, March 1
The Tatas' Nano is on a pilgrimage across the country and will visit sacred sites of all religions before it hits the road commercially.

According to industry sources, Tata Motors is taking the Nano, touted as the world's cheapest car, to as many pilgrimages as possible of all religions. The company is currently conducting test drives of the car in different cities and terrains to check the Nano's endurance, they added.

The Nano has already sought blessings at Golden Temple in Amritsar and Hazrat Khwaja Moinuddin Chisti's dargah in Ajmer.

When contacted, a company spokesperson said, "The Nano is being tested in different parts of the country. The route included passing through cities like Ajmer and Amritsar, and our colleagues considered it appropriate to visit the pilgrimage centres."

The company will launch the Rs 1-lakh car on March 23 in Mumbai and bookings would start from April this year. The Nano was unveiled at the Auto Expo in Delhi in January 2008. The Nano was to be launched in the second half of 2008, but the process got delayed after the company was forced to shift the manufacturing base from Singur in West Bengal to Sanand in Gujarat.

The company's website, featuring the 'Nano', has registered 30 million hits or visits since the car, with a base-price tag of Rs 1,00,000, was first unveiled.

Tata Motors chairman Ratan Tata had said last year that he would retain the price tag at Rs 1,00,000 (for the base model) despite input costs shooting up. But since then, steel prices have plunged by up to 40 per cent from early 2008-levels and overall demand in the economy too has witnessed a slump. — PTI

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16 US banks collapse in two months

New York, March 1
With the financial meltdown continuing unabated, the US has already seen the collapse of 16 banks in the last two months — which is more than one-fourth the total number of failures in the past nine years. With 10 bank collapses in February, a total of 68 banks have failed since 2000 in the US.

Moreover, 16 bank failures this year is more than half of the total collapses in 2008. Last year, a whopping 25 banks went belly up, mainly after the financial crisis turned severe with the bankruptcy of Lehman Brothers in September. — PTI

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Market Update
Weakness may persist
by Lalit Batra

In a highly eventful week, the bulls managed to hold their breath, thanks largely to the latest tax cuts announced by the government to spur demand. The government also announced fresh measures for recession-hit export sectors. Expectations of interest rate cuts escalated after inflation hit a 14-month low of 3.36 per cent. The BSE Sensex rose 48 points to 8,891 and S&P Nifty rose 27 points to close the last week at 2,763.

Indian economy has also started to feel the pinch of global slowdown as its gross domestic product (GDP) grew a slower than expected at 5.3 per cent in December quarter of 2008 over December 2007 quarter.

Going forward, the domestic bourses are likely to track global markets in the near term. Fears of more bad news from the US financial sector are likely to keep sentiments subdued. Moreover, with the US market breaking its November lows same more downside is expected in the coming week (though merger of Reliance Industries with RPL may propel the market in the initial part of the week).

In our view, the market is on the last leg of the decline (another 15-20 per cent decline is not ruled out) that started last January and retail investor may start investing on declines in the frontline stocks with a minimum of two to three years perspective. Investors may invest at least 20 per cent of their investment surplus in a phased manner in the next quarter or so. Investors should also be prepared for a roller coaster ride in the interim but then any decline should be used to accumulate rather than getting jittery.

Gold ETFs

At the very outset, though we concede the fact that we are a little late in recommending in investing in gold (Gold has appreciated by over 25 per cent since the meltdown in the Indian stock market started in January 2008 but nevertheless we have always advocated that an investor must hold a portion of their portfolio in gold from an asset allocation perspective. Undeniably, Gold ETFs (Exchange traded funds) offer investors a convenient means to invest in gold. this will hold especially true for investors who are pressed for time and don’t have a reliable source to buy gold from. Gold ETFs are open-ended funds which track prices of gold. They are listed and traded on a stock exchange; hence, they can be bought and sold like stocks on a real-time basis. These funds are passively managed and they mirror domestic gold prices. By enabling investors to invest in gold without holding it in physical form, Gold ETFs offer a rather unique investment opportunity to investors.

Although the mode chosen for investing in gold would entirely depend on investors, Gold ETFs do offer some distinct advantages vis-a-vis investing in physical gold like convenience, quality, transparent pricing and ease of re-sale. Another major advantage of gold ETFs is the tax efficiency. In Gold ETFs, long-term capital gains tax is applicable after 12 months from the date of purchase vis-a-vis three years in the case of physical gold. Also, unlike physical gold, investments in Gold ETFs are not subject to wealth tax.

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Tax Advice
Foreign income of NRI not taxable in India
by S.C. Vasudeva

Q. I and my wife are Canadian citizens and senior citizens. We are holding OCI Card (Registration Certification) (Overseas Citizens of India) which gives us lifelong visa to live in India. We live about six months in India from October to March. My query is as under:

(i) Sometime back, I read in some Punjabi newspaper in Canada, that OCI Card Holders are at par with Indian citizens, except that they cannot buy agriculture land and cannot take part indections. It was also stated therein that they can make any kind of investment in India, including opening SB/FD accounts in banks after getting PAN No. Is this correct, and if not what is actual position?

(ii) My wife proposes to bring some of her Canadian earnings through bank draft, open FC/NR(E) account and out of this to deposit some in FD in some bank up to the limit of interest earning not more than Rs 2,25,000, so that she won’t need to file IT return. She would have no other income except this. Would it be ok?

(iii) Is foreign income taxable in India of OCI card holders.

(iv) How it will effect such investments (FD Deposits) if:

a) stay in India for less than 182 days.

b) more than 182 days in a financial year.

— Inder Singh Sidhu

A. (i) Yes, to some extent what you have stated is correct because for investment in shares and stocks separate procedure has been laid down by SEBI.

(ii) It is possible for a non-resident Indian to open a savings bank account or a fixed deposit account in India. In case of women who is not a senior citizen (i.e. less than 65 years of age), the maximum amount not chargeable to tax in her case for assessment year 2009-10 is Rs 1,80,000. The limit of Rs 2,25,000 is applicable for the said assessment year in case of a senior citizen. Your wife can open a Non-Resident External Account by transferring her earnings in Canada and the interest income thereon would not be taxable in India. In case the amount is deposited in a NRO account, the same would become taxable provided the amount of interest earned is above the limit stated herein above.

(iii) The taxability of the foreign income would depend upon the residential status of a person and the tests given in Section 6 of the Act will have to be applied for finding out the status of the person concerned every year.

(iv) The foreign income is not taxable in case of a person having status of a non-resident. However, in case of resident but not ordinary resident foreign income is taxable if it arises from a business or profession controlled from India.

(v) The interest income arising in India in respect of fixed deposit (NRO Account) would be taxable in India in the event of a person staying in India for more than 182 days.

Gift to relative

Q. 1. Please advise if a daughter can give cash loan (money) to her mother, where the yearly income of the daughter is Rs 1,75,000 per annum. Amount that can be gifted is token of love and affection.

2. Can a son-in-law give money as gift to his mother-in-law and what is the maximum amount in case-

(i) He is taxpayer – pays income-tax

(ii) He is non-tax payer – (Income does not attract income-tax)

3. Can a person give gift for the amount he can afford in view of his bank balance, please confirm.

— Gurbachan Singh, Hoshiarpur

A. (i) A daughter can give a cash loan to her mother. However, in case the cash loan is of Rs 20,000 or more it will be subject to a penalty equivalent to the amount to the loan paid. The penalty is leviable on the person accepting such loan. It would thus be advisable that in case the cash loan is to be given the same should be below Rs 20,000.

(ii) A son-in-law can gift to mother-in-law if he has the resources to make such a gift. The fact that he is a taxpayer or not would not have any relevance so long as it can be proved that the amount has been gifted out of the funds belonging to him.

(iii) A person can make a gift to anyone provided he has the resources to make such a gift. However, the person receiving the gift will be subjected to tax in case the amount received is more than Rs 50,000 in aggregate in a financial year. However, in case the gift is received from a relative, the amount received by the recipient would not be taxable as his income. The relative for this purpose means

(i) spouse of the recipient individual;

(ii) brother or sister of the recipient individual;

(iii) brother or sister of the spouse of the recipient individual;

(iv) brother or sister of either of the parents of the recipient individual;

(v) any lineal ascendant or descendant of the recipient individual;

(vi) any lineal ascendant or descendant of the spouse of the recipient individual;

(vii) spouse of the person referred to in clauses (ii) to (vi).

Family pension

Q. My wife died a year ago and had declared me her nominee for family pension payment. She did not leave any Will.

My question is whether the amount of family pension is to be shared by me along with my sons (both major and married) or not?

In case it is to be shared, how the standard deduction of Rs 15,000 allowed from the family pension will be taken care of? Whether each of us will be allowed full deduction or that too will be 1/3rd for three of us?

— R. Khanna, Panchkula

A. (i) The amount of family pension received by you can be shared with your sons. This is on the basis of the provisions of the Hindu Succession Act 1956 as applicable to the devolvement of the property of a female Hindu dying intestate.

(ii) In my opinion, each one of your should be entitled to a standard deduction of Rs 15,000 as permissible under Section 57 of the Act.

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