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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

SBI cuts lending rates for SMEs
Mumbai, April 11
The country's largest lender, State Bank of India, today cut lending rates on loans for small and medium enterprises (SMEs) and announced measures to improve credit flow to the fund-starved sector.

DLF’s buyers protest against delayed projects
New Delhi, April 11
Disgruntled buyers at realty player DLF's two upcoming housing projects today resorted to 'Gandhigiri' protest at the firm's headquarters here, accusing lack of transparency on the part of the developer and failure to start construction work.

Infosys sacks 2,100 staff
Bangalore, April 11
With companies keen on maximum utilisation of employees and low tolerance to poor performance in the backdrop of global economic turmoil, nearly 2,100 employees in software firm Infosys have faced the axe.

Avoid protectionism, India Inc asks Obama
New Delhi, April 11
India Inc has asked the Obama administration not to yield to public pressure on protectionism, stating that the 'Buy American' restrictive policy would dent America's credibility among global trading nations.





EARLIER STORIES



The Volkswagen Golf VI has been declared the 2009 World Car of the Year on Friday at the New York Auto Show. Over 1 million visitors are expected to visit the auto show which is on till April 20.
The Volkswagen Golf VI has been declared the 2009 World Car of the Year on Friday at the New York Auto Show. Over 1 million visitors are expected to visit the auto show which is on till April 20. — AFP

Aviation Notes
New domestic terminal at IGIA soon
By mid-May, all domestic departures by scheduled and no-frills airlines will be from new terminal 1D at Indira Gandhi International (IGI) Airport in Delhi. This terminal is equipped with all ultra-modern gadgets. It is spacious, much bigger than the existing one, and 'corner rooms' are comfortable with sufficient rolls of paper to do the 'paper-work’.

Investor Guidance
Karta of HUF can’t purchase NSCs on behalf of HUF

Q: I have invested in NSC in my HUF account of Rs 60,000. This investment is matured on 22-2-2009. On maturity the post master said that no interest would be given since the investment was in the name of HUF, only the principal amount would be paid. Is this correct? I have also invested in PPF in the name of my HUF.





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SBI cuts lending rates for SMEs

Mumbai, April 11
The country's largest lender, State Bank of India, today cut lending rates on loans for small and medium enterprises (SMEs) and announced measures to improve credit flow to the fund-starved sector.

SBI has reduced lending rates for new SME loans up to Rs 5 lakh to eight per cent and that for loans of Rs 5-25 lakh to 10 per cent, SBI chief general manager B S Bhasin said.

"The idea is to help SMEs in the face of economic downturn. With today's rate reductions, SBI is now offering cheaper loans to customers that would help them tide over the crisis," Bhasin told PTI.

SBI used to offer SME loans up to Rs 5 lakh for 8.5-10.5 per cent and loans of Rs 5-25 lakh for 9-11 per cent.

The rate reductions will be available for the next two years and will be applicable for working capital and term loans provided they are covered under CGTMSE cover, Bhasin said.

After two years, the bank will review the rates according to the prevailing market conditions, the bank said.

SBI has also extended the SME Help and the SME Care schemes, under which it offers loans to SMEs at eight per cent, to September 30, 2009.

Additionally, loans under SME Help will now be available for a period of two years at eight per cent, it said. SBI currently has 12 lakh SME customers.

SBI has so far disbursed Rs 300 crore through its special schemes — SME Help and SME Care — out of which, nearly Rs 250 crore was disbursed under SME Care, Bhasin said.

SMEs currently contribute 20 per cent to the bank's total revenue and the performance is likely to improve in the period ahead with an expected revival post-September, Bhasin said.

"The sector expects a recovery from the downturn post-September, which would have a positive impact on the bank's SME business as well," Bhasin said.

SBI has begun the restructuring process of 41,000 SME accounts, Bhasin said. — PTI

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DLF’s buyers protest against delayed projects

New Delhi, April 11
Disgruntled buyers at realty player DLF's two upcoming housing projects today resorted to 'Gandhigiri' protest at the firm's headquarters here, accusing lack of transparency on the part of the developer and failure to start construction work.

Over 150 people gathered at DLF's corporate office at Connaught Place and offered roses in protest against the developer's failure to commence construction work, even after one year of launch of the two projects - New Town Heights and Express Greens - in Gurgaon.

Alleging that DLF has so far collected about Rs 900 crore from the bookings of about 4,500 apartments in the two projects at Gurgaon, said chartered accountant Dinesh Verma, who has booked a flat in New Town Heights, adding that the booking started in January 2008 and on an average over 40 per cent of the total cost has already been made.

"It is strange that DLF still doesn't have environmental clearance certificate to start construction work," he said.

Sushil Chawla, who booked an apartment in Express Greens, said, "DLF has money for IPL sponsorships, but not for us." When contacted a company spokesperson declined to comment. A senior DLF official, however, said the protesters consist of only a handful investors. — PTI

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Infosys sacks 2,100 staff

Bangalore, April 11
With companies keen on maximum utilisation of employees and low tolerance to poor performance in the backdrop of global economic turmoil, nearly 2,100 employees in software firm Infosys have faced the axe.

"Some of these employees have been asked to go while some have left on their own," V Balakrishnan, CFO of the city-headquartered Nasdaq-listed company, told PTI today.

"Tolerance to poor performance is very low given the current economic scenario," said Infosys CEO Kris Gopalakrishnan.

Both officials said the sacking was part of the annual routine, which usually formed five per cent of the total number of employees but this time it was much lower. Some of the employees had been "outplaced", Kris said, which refers to the firm hiring the services of placement agencies to help the employees to get placements in other firms. Infosys has a workforce of 1,05,000, including trainees. — PTI

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Avoid protectionism, India Inc asks Obama

New Delhi, April 11
India Inc has asked the Obama administration not to yield to public pressure on protectionism, stating that the 'Buy American' restrictive policy would dent America's credibility among global trading nations.

Indian industry leaders were reacting to protests early this week in the US against use of India-made steel for an oil pipeline project in Illinois, the home state of President Barack Obama.

"It is disappointing. The US administration should not give in to such demands, as protectionist measures go against the spirit of global trade," Ficci president Harsh Pati Singhania said.

Assocham said it reflects the increasing internal pressure on developed economies against outsourcing.

"...Those who are advocating free economy are more for adopting protectionist measures because they are under internal pressure," Assocham secretary-general D S Rawat said. — PTI

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Aviation Notes
New domestic terminal at IGIA soon
by K.R. Wadhwaney

By mid-May, all domestic departures by scheduled and no-frills airlines will be from new terminal 1D at Indira Gandhi International (IGI) Airport in Delhi. This terminal is equipped with all ultra-modern gadgets. It is spacious, much bigger than the existing one, and 'corner rooms' are comfortable with sufficient rolls of paper to do the 'paper-work’.

A disabled and children-friendly, the terminal is fitted with as many as 360 close-circuit TV cameras. In keeping with 'current difficult times', the authorities have done well in having a special security control room from where Central Industrial Security Force (CISF) can keep an eye on every passenger. There will be as many as eight entrance gates and 72 check-in counters. There will also be 16 self check-in kiosks for those who have reported late for whatever reason. There are other facilities, including recreational ones, for children.

The shifting of airline offices and other users' outfits will be done in two phases. The first exercise will begin from mid-April to 26 and then second shifting will start. By the time all shifting is done by mid-May, all terminal will be humming with activity. There will also be a smoking room. All is all, the new terminal will retain its grandeur for at least 25 years and another round of modernisation will have to be undertaken, according to analysts who are connected with airport designs and modernisation.

Though new terminal and facilities there-in are modern in keeping with country's mammoth development, sadly, travellers don't get 'value for money' because officials, senior and junior, manning counters and sitting in well-furnished rooms, are not as friendly as they ought to be. The private developing outfit and Airports Authority of India (AAI) should train personnel of different and divergent sections. The airline officials and others have yet to realise that 'customer is one, who provides them salary and other wages' and they should be handled with care and respect.

In this particular aspect, the biggest defaulter has been the AAI which, since its inception, has never been 'service-oriented'. It makes money from several areas like rental from airlines, parkings, lanings and take-offs, but, sadly, does precious little for the customers.

Recently, the Foundation for Aviation and Sustainable Tourism (FAST) held a seminar wherein it was emphasised the importance and need of customer service. The seminar was inaugurated by the AAI new chairman V P Agarwal. He, among other things, highlighted 'the problem faced by the airport operators, specially because of the environment in which they operate'.

Whatever may be AAI's internal problems, the fact of the matter is that it has been raised to cater to the needs of passengers and visitors. It should serve passengers and other users for which it exists. The AAI has 'customer relations section' which should sort out passengers' problems instead of multiplying them.

The AAI top officials must realise that 'worldwide, good behaviour evokes good behaviour'. Similarly, its staff should be courteous to passengers, particularly to elderly. The AAI should take a leaf out of the books of several foreign countries and uplift its working before the international conference is held here in September this year.

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Investor Guidance
Karta of HUF can’t purchase NSCs on behalf of HUF
by A.N. Shanbhag

Q: I have invested in NSC in my HUF account of Rs 60,000. This investment is matured on 22-2-2009. On maturity the post master said that no interest would be given since the investment was in the name of HUF, only the principal amount would be paid. Is this correct? I have also invested in PPF in the name of my HUF. Can I continue to invest in PPF and will the interest be paid or will that too result in only return of capital?

— Garg

A: 1. Re NSC-VIII: D.G.P. & T. No. 3-26/78-SS dt 21.4.79 states, “A question has been raised whether the 7-year National Savings Certificates can be purchased by the Karta of the Hindu Undivided Family by adding the words ‘HUF’ after his name to differentiate between his own investment and those of Hindu Undivided Family. It has been clarified by the D.G.P. & T in consultation with the Ministry of Finance that joint type certificates can be issued to only two adults under the rule. As such karta of the Hindu Undivided Family can purchase the certificates in his own name by adding the name of one of his co-parceners, such a co-parcener should be an adult. He cannot purchase the certificates on behalf of the Hindu Undivided Family so as to bind his co-parcerners whose names are not stated as joint holders in the certificates.

Subsequently, when NSC-VII was introduced on 8.5.89, the above mandate was breached by many of the post offices. Therefore, the authorities issued MOF (DEA) letter No. F.2/8/2005-NS.II dt 20.5.05 stating, “Certificates issued to trusts and HUF before 13.5.05 shall continue till maturity and will not be extended further, the maturity values shall be allowed to be paid in accordance with the said rules.”

You appear to have invested in NSC-VIII before 20.5.05 and therefore, in our opinion, you are entitled to get the maturity value of the certificates without any penalty.

2. Re PPF: Notification GSR 291(E) dt 13.5.05 has discontinued opening of the accounts on behalf of HUF, AOP or BOI. Such accounts opened by mistake after 13.5.05 shall be treated as void ab initio. As and when (and if) the error comes to light, the account shall be closed and the amount refunded to the depositor without any interest. The existing accounts can continue up to their maturity without the privilege of post-maturity continuation.

Computing LTCG

Q: I inherited my father’s 40-year-old house on his death in the year 2006-07 and sold it in year 2008-09. My questions (for the purpose of calculating LTCG) are:

1. Whether the benefit of cost indexation shall be available to me on the basis of fair market value of house on 1.4.1981 and from that date?

2. Or whether the same shall be available to me from year 2006-07 and on the basis of fair market value prevailing that year (2006-07)?

— Amrita

A: For computing long-term capital gains arising out of the subsequent sale by the donee or the legatee, the cost of the property is the cost incurred by the donor when he originally acquired it, or if the property was acquired by the donor prior to 1.4.81, the Fair Market Value as on 1.4.81 as assessed by an official chartered valuer, whichever is higher. Explanation ‘iii’ to Sec. 48, defines ‘indexed cost of acquisition to mean an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later’.

This means that in the case of an inherited or gifted property, the cost of acquisition is the cost to the original holder (or FMV as on 1.4.81) but the date of acquisition for indexing should be taken as the date of the inheritance or the gift. However, the character of long or short-term depends upon the date of acquisition of the original holder. In case this original holder has also acquired the property by way of gift or inheritance then it will be the date of very first holder who purchased or constructed the property.

This may end up in some strange results. For instance, if and when you sell the property, it will be treated as sale of a long-term capital asset, irrespective of your holding period but the ratio for computation of indexed cost will be the CII of FY in which you have sold the property and the FY in which you became its owner.

Repatriation of rental income

Q: I am an NRI residing in US. I am in the process of buying a residential house in India. I am planning to rent it out when it’s complete.

My questions are

1. Can I repatriate the rental income to US in terms of US$?

2. What type of accounts should I open with banks for this purpose?

3. If I choose to sell the property after few years, can I repatriate the sale proceedings?

4. What type of documentation do I need to keep to prove that the property was acquired by remittance of foreign currency (US$)?

5. I understand that the rental income will be subject to Indian tax. Is there any deduction I can use (e.g. maintenance, municipal tax etc)?

— Sorab Kapadia

A: 1. Yes you can repatriate your rental income after payment of taxes.

2. You may open NRE and NRO accounts (unless you already have these).

3. Yes you can repatriate the sale proceeds after payment of appropriate taxes

4. The proof of payment in foreign currency in terms of entries in your bank passbook and photocopies of cheque slips. Your Bank in India (of NRE account) can help you.

5. The Rental income is liable to income-tax. The municipal taxes can be deducted. You will also be entitled to standard deduction for maintenance of the property @30% on the balance.

Capital gains tax

Q: I owned three pieces of land. Subsequently I sold two of my pieces of land to my brothers and purchased a new piece. Can I avail of the benefit of set off to claim capital gains tax exemption since land sold is being replaced by land purchased. The whole transaction is between four brothers and family matters.

— Nilesh H Gajjar

A: Capital gains tax exemption on sale of land is only available if the net sale proceeds are reinvested in another residential property and not land. This is as per Sec. 54F of the Income Tax Act.

Rebate on SCSS

Q: In the Tribune edition dated 8.3.2009, you have stated that investments in Senior Citizens Savings Scheme (SCSS) are not eligible for rebate of Income Tax under Section 80-C. But this rebate is admissible for the assessment Year 2009-10 if the investment is made during April 2008 to March 2009. Please clarify the correct position immediately

— N.L. Sharma

A: Yes, the Senior Citizen Scheme indeed is eligible for deduction u/s 80C up to a limit of Rs. 1 lakh. The lock-in in case Sec. 80C deduction is claimed is five years.

We have received similar feedback from several readers. This was an oversight on our part and the same is sincerely regretted.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

China’s foreign exchange reserves at $1.95 trn
Beijing:
China's central bank said on Saturday its foreign exchange reserves rose 16 per cent from a year earlier to $1.95 trillion by the end of March, but growth slowed in the first quarter as exports and foreign investment slumped. China's reserves, already the world's largest, increased by $7.7 billion in the first quarter — $146.2 billion less than during the same period last year, the People's Bank of China said in a notice on its website.— AP

US budget deficit nears $1 trn
Washington:
The US budget deficit accelerated in March to hit a record nearly $1 trillion in the first half of the current fiscal year as the government moved to bail out troubled institutions, government data showed. The deficit for the first six months of the fiscal year which began on October 1 was $956.80 billion, said the Treasury's monthly statement of receipts and outlays. — AFP

Tata Steel to begin production in SA next year
Kolkata:
World's sixth largest producer Tata Steel on Friday said it would begin production at Sedibang mine in South Africa from next year. "A small iron ore mine at Sedibang in South Africa will begin production next year. We would get two million tonnes per annum," Tata Steel managing director B Muthuraman said here. — PTI

PNB branch in Hong Kong
Jaipur:
Public sector lender Punjab National Bank has expanded its international operations with the opening of a new branch in Hong Kong, its CMD K C Chakrabarty said here on Saturday. He said the bank recently opened a second branch at Kowloon, Hong Kong. Besides, the bank has representative offices at Shanghai, Almaty, Dubai and Norway and a subsidiary in London.— PTI

Gold strengthens further
New Delhi:
Gold prices continued to rise for the second straight day in the bullion market here rising by Rs 15 to close at Rs 14,465 per 10 gram on increased local buying for the ongoing marriage season. Marketmen said increased demand from jewellery fabricators and local parties for the ongoing marriage season mainly pushed up the prices of precious metals.— PTI

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