SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

RIL to reopen fuel pumps
New Delhi, April 18
Reliance Industries, which surrendered only-for-export status for one of its two refineries to enable domestic fuel sales, is set to start reopening its shut petrol pumps in next few days.

Luxury car makers eye A2 segment
Chandigarh, April 18
With the global economic downturn beginning to take its toll in India, luxury car makers are now eyeing the small car segment. Honda Siel Cars, General Motors, Toyota Kirloskar Motors, Nissan and Renault are all vying with each other to launch their small cars. At least three small cars are set to be launched in India within the next four months, and another six are expected to be launched by 2010, thus crowding the A2 segment.

Jet, KF hike fuel surcharge
New Delhi, April 18
Battling rising operating costs and liquidity pressure, Jet Airways and Kingfisher Airlines, as also their low-cost subsidiaries, today hiked fuel surcharge on domestic flights by up to Rs 300 per passenger.



EARLIER STORIES





A kid looks at the bimetallic 10 rupee coins launched by RBI in Hyderabad on Saturday. — PTI

Aviation Notes
When pilots sleep on flight
In the apex outfit, Directorate-General of Civil Aviation (DGCA), there are two rules in operation — one for favourite pilots and another for commoners. The influential pilots, with political backing, get away even when they are involved in major incidents and accidents, while commanders, without ‘mai-baap’, are punished. The discrimination is the case for increasing indiscipline in the organisation.

Investor Guidance
2nd home loan: No cap on interest deduction
Q: I have taken second home loan in August-2008 and property was under construction. Now I have got possession of this property in Feb-2009. So I want to understand can I not claim the interest component on second property as a tax deduction? My company has denied it. I was thinking about claiming the same during filing of income-tax return.

 





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RIL to reopen fuel pumps

New Delhi, April 18
Reliance Industries, which surrendered only-for-export status for one of its two refineries to enable domestic fuel sales, is set to start reopening its shut petrol pumps in next few days.

"Now that Reliance can sell fuel from its old refinery locally, petrol pumps will start reopening. All preparatory work is in progress and the first pump in Gujarat may start retailing petrol and diesel as early as tomorrow," an industry source said.

Reliance had a year ago shut its 1,432 petrol pumps as it could not compete with the subsidised rates of PSU retailers.

With oil prices falling, the margins on auto fuel have turned positive again. "The (old) refinery, which was operating as an export-oriented unit (EoU), will now operate as a non-EoU refinery with effect from April 16 to cater to increasing demand of petroleum products in the country," a company press release said.

Reliance had captured 15 per cent market share in diesel, selling about 4 million tonnes of fuel annually.

With the shedding of EoU status, the refinery with a processing capacity of 6,60,000 barrels per day will now be able to cater to both domestic and export markets efficiently, it said.

Reliance had sought to end the EoU status of its 33- million-tonne a year refinery, now known as J-1, by making a formal application to the Finance Ministry. J-1 was converted into an EoU with effect from April 16, 2007 for three years to tap the clean fuel markets in Europe and the US.

The EoU status, which was valid for three years to 2010, also enabled the company to avoid sale into domestic market which had become loss-making for the private refiner as it could not compete with subsidised rates of state-run firms.

Sources said Reliance will continue to export most of the fuel from J-1 but will also sell petrol and diesel in domestic market. It may sell 2.5-3 million tonnes of diesel to public sector fuel retailers — Indian Oil, Bharat Petroleum and Hindustan Petroleum — to meet the deficit they are expected to have in 2009-10.

Though the margins on petrol and diesel had turned positive with the fall in international oil prices since October 2008, Reliance still could not sell fuel from J-1 through the petrol pumps as the EoU status made it prohibitive for the company to sell fuel locally.

The EoU status gave the company the benefit of duty-free import of crude oil and tax exemptions in exchange for exporting at least two-thirds of the products. As per the law, if an EoU was to sell fuel locally, double customs and excise duties were levied, making petrol and diesel dearer by Rs 9-10 a litre. — PTI

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Luxury car makers eye A2 segment
Ruchika M. Khanna
Tribune News Service

Chandigarh, April 18
With the global economic downturn beginning to take its toll in India, luxury car makers are now eyeing the small car segment. Honda Siel Cars, General Motors, Toyota Kirloskar Motors, Nissan and Renault are all vying with each other to launch their small cars. At least three small cars are set to be launched in India within the next four months, and another six are expected to be launched by 2010, thus crowding the A2 segment.

With over 75 per cent of the car market in India being the A2 segment market, most carmakers want to capture the maximum share of this huge pie. Interestingly, while recession has led to a slowdown in sales in the sedan segment, this mid-level segment has been witnessing a steady growth. With the cars in A2 segment being more fuel efficient, all carmakers are thinking of expanding their product base here.

Talking to TNS here today, Jnaneswar Sen, vice-president, marketing, Honda Siel Cars, said they were all set to launch their small car (premium hatchback), Jazz, in June. “This will surely be the growth driver for Honda in India this year. Though last year was a year of degrowth for us in India, this fiscal will see us consolidating our market position with the launch of Jazz and the high sales of the Honda City, which was launched in a new avatar last year,” he said. Last year, Honda had sold 52,420 units as against 62,801 units in 2007-08.

Karl Slym, president and managing director of General Motors India, during a recent interview with The Tribune, too, had said that the small car segment was going to give the big push to the company this year. “Thus we will be launching our premium hatchback - a mini car and introduce an LPG variant of Spark,” he had said.

Maruti Suzuki is all set to launch Ritz, a hatchback, in May, while Hyundai will be coming up with a diesel version of i20 in the later part of the year. Fiat Grande Punto and Fiat Bravo are the other two cars which are likely to hit the Indian roads in 2010.

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Jet, KF hike fuel surcharge

New Delhi, April 18
Battling rising operating costs and liquidity pressure, Jet Airways and Kingfisher Airlines, as also their low-cost subsidiaries, today hiked fuel surcharge on domestic flights by up to Rs 300 per passenger.

The increase in surcharge follows hike in Aviation Turbine Fuel last week. State-run oil companies had on April 15 raised prices of jet fuel for the third time in a month, by about 6.7 per cent.

Consequently, Jet and Kingfisher announced an identical hike of Rs 200 for sectors below 750 km and Rs 300 for over 750 km, which would also be applicable on flights of their budget carriers JetLite and Kingfisher Red. The hike would be effective midnight tonight.

The Naresh Goyal-owned airline is in the midst of a restructuring exercise to cut costs, which may include closing down some of its sales offices in major cities. Reports also suggest that about 400 of Jet's employees may lose jobs.

For Jet Airways, the total fuel surcharge would now be Rs 3,000 for distances above 750 km and Rs 2,150 for below 750 km. The total fuel surcharge levied by Kingfisher now stands at Rs 3,250 and Rs 2,400. An Air India spokesperson said that the flag carrier had "no immediate plans" to revise fuel surcharge. — PTI

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Aviation Notes
When pilots sleep on flight
by K.R. Wadhwaney

In the apex outfit, Directorate-General of Civil Aviation (DGCA), there are two rules in operation — one for favourite pilots and another for commoners. The influential pilots, with political backing, get away even when they are involved in major incidents and accidents, while commanders, without ‘mai-baap’, are punished. The discrimination is the case for increasing indiscipline in the organisation.

The situation has dived to such abysmal level that ‘fatigued’ commanders get control of the aircraft and slept on flights while over-shooting the destinations. The DGCA has admitted this apathy and has also said that it is a ‘serious safety hazard’. The admission becomes meaningless if no action is taken against errant pilots.

The official, it is learnt, makes a thorough probe and submits his findings, but, sadly, the department and ministry sleeps over the matter because the involved defaulters are ‘influential commanders’.

The recent circular , issued by the DGCA, says: “There are a few incidents in the recent past wherein cockpit crew operating the aircraft fell asleep during the flight. This resulted in aircraft passing over the destination airport”.

This was bad. The worse was that the pilots did not respond to the air traffic controller’s calls. On the Jaipur-Mumbai flight, the pilot woke up from the deep slumber only when the ATC was forced to resort to alarm buzzer. The pilot, already in the vicinity of Goa, woke up and returned to land at the Mumbai airport.

Similar is the situation of the recent near-miss incident between Air India flight and Air Force helicopters carrying the President of India. The probe has been made. The report filed. But it has not been officially made public because defaulting pilots are ‘well connected’. No wonder, India is facing the possibility of being downgraded in adhering to safety norms.

During foggy months, the instruments landing system (ILS) often works indifferently. What is, however, cause for concern is that it works erratically even during normal weather conditions. In the second week of April, it blinked. Several flights were delayed and diverted causing insurmountable problem to passengers. The brand new third runway has not fully settled down. One or the other problem continue to cause this or that snag.

The operations from the new terminal will function efficiently only when all other connected parameters and gadgets are working as well-oiled machine. This requires a healthy coordination between private developer and Airports Authority of India (AAI). The two vital outfits should forget their ‘internal bickerings’ and work together for the effective service to the travellers.

While the domestic traffic has yet to pick up, the air travel on both international and national circuits is likely to become costlier because fuel prices continue to be unstable. If the fuel prices increase, it will mean raise of prices in fares The analysts that the aviation sector in the country is destined to face a few more hiccups. The road is extremely slippery.

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Investor Guidance
2nd home loan: No cap on interest deduction
by A.N. Shanbhag

Q: I have taken second home loan in August-2008 and property was under construction. Now I have got possession of this property in Feb-2009. So I want to understand can I not claim the interest component on second property as a tax deduction? My company has denied it. I was thinking about claiming the same during filing of income-tax return.

— Zare

A: One self-occupied property may be taken by the assessee to be tax-free. The second property even if not let out will be deemed to be let out and such notional rental income will be brought to tax. On the tax-free property, the limit on interest deduction is Rs 1.50 lakh. On the let out/deemed let out property, there is no limit on interest deduction; the entire amount of interest can be taken as tax deduction. If your company doesn’t consider the deduction through payroll, you are free to claim the same through your tax return.

Medical reimbursement

Q: I am working in a bank and I have got reimbursement of Rs 24,000 as domiciliary treatment from the bank for the heart ailment in this financial year. As this amount is more than Rs. 15000 p.a., will it be included in my income for this year? My employer is deducting TDS on Rs. 9,000 which is the amount over and above Rs. 15,000.

— Lubana

A: U/s 17, some of the perquisites are either totally exempt or exempt up to prescribed limits. The following are the perquisites related with health.

  • Medical facility provided to the employee or any family member in hospitals, clinics etc., maintained by the employer.
  • Reimbursement of expenditure incurred by an employee or any member of his family in hospitals, dispensaries etc., maintained by the government, a local authority or in other approved hospitals.
  • Payments for prescribed ailments by the employer directly to any non-government hospital approved by a CIT. The employee should attach with his returns a certificate from the hospital specifying the ailment and also the receipt for the amount paid.
  • Group medical insurance for employees under any scheme approved by the Central Government or IRDA or reimbursement of insurance premium to the employees who have taken such medical insurance for themselves and their families. Only the amount received by the assessee under the health insurance policy taken by his employer is taxable as perquisite u/s 17(2v), not the contributions made by the employer towards other insurance policies. The assessee has not acquired any vested right over the contribution and the policy’s benefit is contingent in nature, being dependent on the relevant insurance plan. [JCIT vs T. Adachi FY 1995-96].
  • Reimbursement up to Rs. 15,000 in a year, for medical treatment for himself and his family members from any doctor.

If your case falls in any of the above mentioned categories (except the last one), you are entitled to get the benefit. Otherwise, your case is governed by the last category and your employer is justified in deducting tax on the extra Rs 9,000.

Rebate on LTC

Q: I would like to know the rebate for LTC Expenditure. Particularly, I would like to know --

1. Income tax section under which rebate is to be claimed and the maximum amount.

2. Running LTC block year for claim.

— S P Sinha

A: As provided by Sec. 10(5) read with Rule 2B --- Reimbursement of expenses incurred by the employee and his family for travelling to any place in India while on leave or after retirement from or termination of his service is exempt up to:

  • Where the journey is by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination.
  • Where the origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination.
  • Where the origin of journey and destination or part thereof are not connected by rail, the exemption shall not exceed i) where a recognised public transport system exists, the first class or deluxe class fare by the shortest route and ii) where such system does not exist, air-conditioned first class rail fare applicable to the distance.

This exemption is limited for 2 journeys in a block of 4 calendar years. Where an individual has not taken any LTA during one block, he can avail of it during the first year of the next block. If he does not travel during any of these years, he loses the privilege.

Current block of 4 years is from 1.1.06 to 31.12.09. Normally tax matters deal with the FY but for LTA it is the calendar year.

The authors may be contacted at wonderlandconsultants@yahoo.com

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BRIEFLY

China sets up $10-b fund for SE Asia
Boao (China):
Chinese Premier Wen Jiabao on Saturday announced the establishment of a $10-billion fund to help promote infrastructure projects in Southeast Asia. Speaking at the opening of the Boao Forum on the tropical island of Hainan in south China, Wen stressed the importance of developing infrastructure in the region in the face of the global financial crisis. — AFP

Govt to raise Rs 12,000 cr
New Delhi:
The government on Friday announced that it would raise Rs 12,000 crore through sale of two bonds on April 24. A sum of Rs 8,000 crore would be raised through auction of government paper bearing coupon rate of 6.05 per cent maturing in 2019 while another Rs 4,000 will be mopped up through government paper bearing 7.5 per cent coupon rate maturing in 2034. — PTI

Big TV special offer
New Delhi:
Anil Ambani-promoted direct-to-home service provider Big TV has announced new promotional offers for subscribers. "The Smart 1790 offer would provide customers a free subscription along with a free of charge regional pack for the period of first three months at Rs 1,790," Big TV said in a statement. — PTI

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