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India Inc gives thumbs up to UPA
New Delhi, May 16
The Indian industry today gave a thumbs up to the UPA and wished it would speed up reforms and spur the economy through policies. Economists, market analysts and corporate honchos hailed the victory of the UPA, which, they felt, can take "bold" decisions without "hotch-potch" partners.

It is a vote for stability ... The UPA need not worry about hotch-potch partners. The Congress can clearly pursue its policies without the need to convince the Left — Vijay Mallya, UB Group chairman We need to expand reforms to revive private sector growth in the country. The UPA win is a triumph of hope over fear ... (when) the global economy has not yet come out of the crisis — Nandan Nilekani, Infosys co-chairman  The pending insurance and the pensions reforms would go through with a "decisive, honest and efficient government" coming to power— Rahul Bajaj, Bajaj Group chairman The industry is happy that we have a verdict which is clear and not fractured... This will help the government take quick and decisive action — Harsh Pati Singhania, Ficci president 


EARLIER STORIES



Gurpreet Brar Samsung to set up IT brand shops
Chandigarh, May 16
Exponential growth in high-end netbook segment has prompted digital technology leader, Samsung India, to set up Samsung IT brand shops in all major cities across the country.


Gurpreet Brar

Aviation Notes
‘Desi’ crew more consistent
Desi cabin crew and ‘desi’ cockpit crew are much more advantageous in every sphere of airline functioning than recruiting foreign crews. Both crews in respect of technical knowhow, command on language, loyalty, and also in etiquette are far more consistent than foreign crews.

Investor Guidance
HUF can’t extend PPF account
Q: I have PPF a/c in the name of my HUF opened on 25-3-1994. This PPF a/c has completed 15 years on 31-3-2009 and I am being informed by my friends that HUF PPF a/c once having completed 15 years cannot be renewed and has to be closed. In other words, HUFs are not allowed to open new PPF accounts although the HUF may be taxable. I am not getting proper guidance even from bank where I have HUF PPF a/c. At present contribution made to HUF PPF a/c is claimed for tax deduction in HUF return.






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India Inc gives thumbs up to UPA
Bhagyashree Pande
Tribune News Service

New Delhi, May 16
The Indian industry today gave a thumbs up to the UPA and wished it would speed up reforms and spur the economy through policies. Economists, market analysts and corporate honchos hailed the victory of the UPA, which, they felt, can take "bold" decisions without "hotch-potch" partners.

Clarity, continuity and stability of economic agenda is how the industry has termed the verdict to the UPA government for its 15th Lok Sabha election victory.

Cutting down on fiscal deficit and government expenditure, putting the economy back on high growth trajectory from the current low of 6 per cent, overhauling taxes on certain industries like exports, bringing down interest rates and rolling out a welcome mat for foreign direct investment (FDI) will be high priority for the UPA government’s economic agenda in the next five years.

In Parliament, passing two critical Bills that have been pending due to opposition of the Left parties, the Insurance Amendment Bill and Pension Bill, will also be on high priority.

Besides, what is expected is that foreign investment in the stock markets are likely to be more sure footed and for long term. The FIIs have already pumped in $1 billion in the past 14 days this month. This is likely to increase and India will be the favoured investment destination for stock market investments. Analysts say that the immediate reaction on Monday, when the market opens, will be a jump in Sensex of 700-800 points.

In addition to this, there will be fresh flow of funds in sectors such as steel, cement, fertiliser, which were earlier with UPA’s erstwhile partner Ram Vilas Paswan of the LJP.

Sectors such as steel were languishing due to lack of clear policies of iron and coal mine allocation and lack of proper policy framework. Much of this will be sorted out now, say industry sources.

The thrust of the UPA will be on infrastructure building and this will give a boost to the cement sector too. For instance, low-cost housing and development of concrete roads will be good for the sector, say cement manufacturers.

With the continuity of rural employment programme like NREGA, which has given a boost to rural economy and has been a buffer during the downturn, it is hoped that consumer goods industry will get a further boost. There is likely to be a boost in car, two-wheeler, and white goods sales like refrigerator, television etc.

With the inflation coming down to lower levels, it is expected that new investments will be made in various sectors. “To give a boost to the small and medium enterprises, we will press the government to bring down the lending rates, to start with a 0.5 per cent cut,” said CII Director General Chandrajit Banerjee.

On the tax front, the industry is confident that the implementation of Goods and Services Tax (GST), the roadmap of which has been prepared, will be implemented by 2010.

Moreover, the unorganised sector welfare schemes, like insurance and pension for the unorganised labour, is also likely to continue in the new government.

As regards the issue of disinvestment, the UPA government, as promised, may disinvest certain share from profit-making PSUs and banks to raise funds, which will be used to monetise fiscal deficit.

“We will suggest the government to monetise a part of fiscal deficit, around Rs 3 lakh crore, as has been done in the West to arrest the rising deficit,” CII said. “We will also suggest cutting down of government expenditure in the coming year, which is reaching very high levels, so that the health of the economy improves,” said Hari Bhartia, vice-president, CII.

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Samsung to set up IT brand shops
Ruchika M. Khanna
Tribune News Service

Chandigarh, May 16
Exponential growth in high-end netbook segment has prompted digital technology leader, Samsung India, to set up Samsung IT brand shops in all major cities across the country.

The company proposes to set up eight franchisee-based shops in Chandigarh, Delhi, NCR, Mumbai, Pune, Bangalore, Chennai, Hyderabad and Kolkata during this year. Three of these shops would be opened in June, said Gurpreet Brar, general manager, IT Volume sales, Samsung India, during an interview with The Tribune here today.

Brar said last year, over one lakh units of netbooks (extremely small and portable computer) had been sold in the country. “This year, too, we are targeting a 100 per cent growth. Thus, we have decided to open our brand shops so that the customers can get a first-hand experience of all IT products,” he said.

Highly portable, netbooks are becoming increasingly popular as they allow users to hook onto the Internet anytime from anywhere using CDMA and mobile connectivity, along with wireless connectivity, and their sub 12-inch size and light weight makes them ideal mobility companions. "The rationale behind our entry in netbook space is to get prepared for growing bandwidth and Wi-Max opportunities in India,” said Brar.

He said as of now Samsung netbooks as well as notebooks were being imported, as were the other IT products like monitors and printers. “We have launched our range of mobile computers only in December and hope to sell 60,000 units during this year. 

Though the economies of scale do not permit us to start manufacturing netbooks and notebooks here, we have recently started manufacturing monitors at our plant in Chennai. As the market size for the other products scale up, we will begin manufacturing these products in India,” he said.

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Aviation Notes
‘Desi’ crew more consistent
by K.R. Wadhwaney

Desi cabin crew and ‘desi’ cockpit crew are much more advantageous in every sphere of airline functioning than recruiting foreign crews. Both crews in respect of technical knowhow, command on language, loyalty, and also in etiquette are far more consistent than foreign crews.

In addition to this, experienced Indian hostesses and proficient commanders can be employed at half the salary payable to the pampered foreigners, who, according to the in-depth study, cares little for the Indian rules and regulations.

Aviation analysts are unanimous in saying that the performance of both crews will further improve if 'political interference' in day-to-day functioning is reduced and the Directorate-General of Civil Aviation (DGCA) deals with 'offenders' with impartiality instead of adhering to two sets of rules.

Keeping all aspects in mind, Jet Airways' chief Naresh Goyal needs to be complimented for sacking all foreign air hostesses from the airline. This move will help his company effect huge savings. Similar should be the yardstick for the commanders, who, according to a study, get far fatter purse than Indian commanders. This is not all. Foreign crews cause immense problems to the managements in respect of the duty and time limit regulations.

Many airline officials, connected with industry for decades, are also of the firm view that there is absolutely no need to appoint foreign CEOs, who, because of their whims and fancies, indulge in indiscrimination and cause more problems to the managements than improve the functioning of the airlines.

But, as in the case of the crews, the Indian CEOs should be granted freedom to function freely and fairly. If the 'system' becomes free of 'political injections', the functioning of, say, Air India (National Aviation Company), will improve enormously.

According to analysts, the aviation sector is likely to have a new political team at the helm.

Recently, more than 50 Indian passengers had to encounter 'racial discrimination' at Paris at the hands of Air France. The airline did deny the allegation but the fact is that this particular carrier has a notorious history.

Decades ago, at the IGIA, the French airport manager was involved in ‘racial’ utterances. The Parliament, in session, took up the matter and the airline was torn into tatters for the misbehaviour of the airport manager.

These kinds of ‘racial’ undertones keep surfacing in different walks of life because, sadly, the powers that-be are 'soft and tolerant'. It is time the government deals with racial violations with firm hand.

The half-a-century old domestic, departure terminal 1-B has bowed out and most of the operations will be from new 1-D terminal. Only four airlines — Air India, Go Air, MDLR and Jagson will operate departure from 1-A.

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Investor Guidance
HUF can’t extend PPF account
by A.N. Shanbhag

Q: I have PPF a/c in the name of my HUF opened on 25-3-1994. This PPF a/c has completed 15 years on 31-3-2009 and I am being informed by my friends that HUF PPF a/c once having completed 15 years cannot be renewed and has to be closed. In other words, HUFs are not allowed to open new PPF accounts although the HUF may be taxable. I am not getting proper guidance even from bank where I have HUF PPF a/c. At present contribution made to HUF PPF a/c is claimed for tax deduction in HUF return.

Is above true that HUF cannot continue PPF a/c beyond 15 years or I can continue my HUF PPF a/c for next five years by submitting necessary letter to bank? — S Kapadia

A: 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 the respective date of notification 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.

Since your HUF account has already matured, you will have to close the account.

If you desire to continue to enjoy the benefit of PPF for your HUF, you can legally play a trick. You may open a fresh PPF account in the name of any member of your HUF (including yourself) and make the payment through the HUF account. It may be noted that Sec. 80C(4) continues to allow the deduction for LIC premiums, PPF, ULIP of UTI and Dhanaraksha of LICMF in respect of subscriptions made by any member of HUF.

Take care to ensure that such a person in whose name the fresh PPF account is to be opened does not have an existing account in his own name for claiming the deduction against his individual income. Again note that the ladies belonging to the HUF are members of HUF.

Long-term capital loss

Q: Whether long-term capital loss (LTCL) from sale of equity mutual fund can be set off against gains from sale of real estate property. — Sanket

A: The long-term capital gains arising from redemption of units of equity-based MF schemes is exempt and so is the loss. In other words, you cannot set it off against any gains or any income. The same is the case for long-term capital loss arising from sale of shares on a recognised stock exchange in India.

Rebate on home loan

Q: I had availed of a housing loan in Oct 2005 and the possession of the house was received in March 2008. The interest of pre construction period on the loan from Oct 05 to March 08 was about Rs. 1,40,000 which should have been claimed by me as a deduction in 5 years starting from the year in which I got possession of the property (current year). However I forgot about such claim and have till date not claimed the interest of pre-construction period.

My question is - Can I claim the till date unclaimed amount of Rs. 1.40 lakh entirely in this year. If not what other alternatives are available so that my claim is not lost. — Avinash Choudhari

A: There is no provision in the law that allows claiming the entire interest of the pre-construction period in any one year. It should have been claimed, as mentioned in your query in five installments beginning in the year possession was obtained.

Gifted assets exempted

Q: My mother-in-law was the sole owner of the accommodation and ours is a joint family. This property was purchased by her approximately 30 years ago.

My husband passed away a few years ago and this is my marital home. She (my mother-in-law) has decided to sell these premises and provide me with funds to purchase a house for myself and my children.

In order to save on the resultant capital gains tax applicable on sale of the premises, she has gifted the premises as: she retains 34% ; 33% to my brother-in-law; 14% to me (daughter-in-law); 14% to my son; 5% to HUF Account of my late husband.

The gift deed has been registered and tax paid as well as copy given to the society office for notations on the share certificate

Since I am not a blood relative, what are the gift tax implications, if any?

Is there any gift tax payable by me / them on the sale proceeds proportionate to my share? My sons' and my individual share is more that Rs 50,000. Please advise. — Rashmi

A: 1. At the outset, please note that your mother-in-law is your relative since you are the spouse of her son who is her lineal descendant

“Relative” means

Spouse, brother or sister, brother or sister of spouse, brother or sister of either parents, any lineal ascendant or descendant, any lineal ascendant or descendant of the spouse.

2. The phrase any sum of money suggests that the new provisions are applicable to cash gifts only and not other assets such as immovable property or jewellery, etc. In other words, such other assets gifted even by a stranger will be free from tax.

3. Notwithstanding what is stated above, if your share of the capital gains (not the sale value), including your other taxable income if any, is over Rs. 1.80 lakh, then and only then you are liable to pay tax.

4. Same is the case of your son, provided he is a major (his limit is Rs. 1.50 lakh). Otherwise, his income is clubbable in your hands.

OCI card holder

Q: I am an OCI card holder residing in USA. I contribute to Roth IRA on which any distribution is tax-free in USA. In time, I plan to retire in India and consequently will become a tax resident of India. In this scenario, when in India -

1. Will I have to pay tax on income from Roth IRA?

2. If I have to pay tax on income from Roth IRA, do I have to pay it every year or only when I take distribution? — Gujral

A: We are afraid this topic is not free from doubt. As a background, when you return to India, depending upon your stay abroad, you may qualify to be an RNOR for a period of two-three years. The foreign income of an RNOR is not taxable in India. After that you will become a full fledged Resident or what is known as R&OR. For an R&OR, global income is taxable.

One view is that any distribution / realizations from the IRA during the R&OR period are fully taxable.

Another view is that only that portion of the distribution / withdrawals that pertain to the R&OR period are taxable. In other words, any increase in the value during the NRI / RNOR period is not taxable.

Since the Indian income tax law doesn’t contain any specific treatment regarding this income, it depends upon the view / stance taken by the income tax officer. In any case, income tax will be due only when you take distribution and not on accruals.

The authors may be contacted at wonderlandconsultants@yahoo.com

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