SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

ONGC clears Cairn’s $350 m investment
New Delhi, June 6
The board of Oil and Natural Gas Copr (ONGC) today approved the revised cost estimates for developing the nation's most prolific on-land oilfield in Rajasthan and agreed to invest around $350 million more in the fields operated by Cairn India.

Investor Guidance
Tax forms 15G, 15H not available to NRIs
Q: 1) Is the taxable limit on maximum interest earned Rs 1,00,000 per year applicable to domestic FD/RD as well or is it different than NRO deposits?

Aviation Notes
Taking them for a ride
The aviation in the country continues to be more uncivil than civil. All no-frill airlines and some scheduled private carriers either club together or cancel their flights without any prior notice more because of meager passenger-load on domestic sectors than for any technical snag.


EARLIER STORIES



Tata Steel sales up 18 pc in May
New Delhi, June 6
Tata Steel today said its sales volume surged by 18 per cent to 4.69 lakh tonnes in May on the back of robust demand from auto and construction sectors. In the corresponding month last year, the company's sales stood at 3.97 lakh tonnes, the steel major said in a statement.

Luxury cars beat recession in Ludhiana
Ludhiana, June 6
Recession has taken its toll globally but as far as the luxurious lifestyle of the people of Ludhiana is considered, there is absolutely no compromise. In 2008, more than 275 Mercedes have been purchased in the city. And 2009 is no different. Hundreds of enquiries have already been made for the E-Class model, expected to be launched by end of the year.

Suzlon hikes stake in REpower
Mumbai, June 6
Wind turbine maker Suzlon Energy today said its stake in Germany based REpower Systems AG has increased to 90.72 per cent, with the acquisition of Martifer Group's 14.4 per cent stake in the company.

Appointed
Chandigarh, June 6
Rohtash Kumar, circle head and deputy general manager of Punjab National Bank (Chandigarh circle) has been promoted as the general manager of the bank.





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ONGC clears Cairn’s $350 m investment

New Delhi, June 6
The board of Oil and Natural Gas Copr (ONGC) today approved the revised cost estimates for developing the nation's most prolific on-land oilfield in Rajasthan and agreed to invest around $350 million more in the fields operated by Cairn India.

The approval ends the uncertainty surrounding the development and fields will now be put to production any time now.

ONGC, which holds 30 per cent interest in the fields, had previously withheld approval to Cairn's revised field development plan as the state-run firm's liability to pay royalty on the entire crude oil production had turned the project economically unviable for it.

The board also approved the rise in cost of developing Mangala field in the Rajasthan block to $2.396 billion from $1.241 billion. Besides, the cost of smaller adjoining fields would also rise from $261 million to $275 million, a top company official said.

The official, however, said ONGC would continue to pursue with the government the reimbursement of royalty it would pay on behalf of Cairn.

ONGC had previously approved its 30 per cent share of investment at the original capital expenditure of $1.5 billion and operating expenditure of $1.43 billion for Mangala and adjoining smaller fields.

But Cairn revised the capital cost to $2.67 billion and operating expenditure to $1.52 billion. The Bhagyam field cost would be $471 million, $941 million being the cost of a pipeline to transport crude oil.

“ONGC's net present value (the value today of anticipated future incomes and expenditures) with revised field investment plan works out to negative $1.435 billion and negative $1.471 billion at a crude price of $60 and $70 per barrel, respectively," the official said.

Negative NPV has been a result of ONGC being made liable to pay 20 per cent royalty on the entire crude oil production while Cairn being exempt from payment of any levy.

“(The) Petroleum Ministry today says we signed the contract for the Rajasthan block fully knowing about the royalty liability. But the royalty at the time of signing of the production sharing contract was Rs 539.20 per tonne while it today comes to Rs 3,780 per tonne, considering a crude price of $60 per barrel," he said.

Besides change in royalty rates, the oil development cess has also been increased to Rs 2,500 per tonne from Rs 900 per tonne at the time of signing the PSC for the Rajasthan block.

“Keeping in view ONGC's liability of payment of royalty on 100 per cent production against its participating interest of 30 per cent in RJ-ON-90/1 block, ONGC's liability towards royalty works out to $36 per barrel at crude price of $60 per barrel,” the official said.

ONGC would be left with $6.5 per barrel after payment of royalty, cess and profit petroleum to the government. On the other hand, operator Cairn would be left with $42.5 per barrel since it does not have to pay royalty. — PTI

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Investor Guidance
Tax forms 15G, 15H not available to NRIs
by A.N. Shanbhag

Q: 1) Is the taxable limit on maximum interest earned Rs 1,00,000 per year applicable to domestic FD/RD as well or is it different than NRO deposits?

2) Under Form G submitted for an FD, will the tax at source be calculated on the additional interest amount than Rs 1,00,000 or the whole interest amount will be taxed?

3) If a minor is having FD u/g of a parent and the parent also has FD in the same branch, will tax liabilities (under Form G submitted in both cases) be calculated individually or separately?

4) What will the maximum limit of tax-free interest earned per annum for both individually or combined?

— Rugved

A: 1. For residents (an RNOR is a resident), TDS is applicable only when the annual interest from a branch of a bank is over Rs 10,000. When this limit is exceeded, the TDS is applicable on the whole of the interest income. The rate of TDS is 10% plus education cess at the rate of 3%. In case the interest payable is over Rs 10 lakh, there is a surcharge of 10%.

As far as the basic tax threshold is concerned (the maximum income on which no tax is payable), the same is Rs 1.10 lakh for FY 07-08 and Rs 1.50 lakh for the current year.

2. Only a resident can submit Form 15G (or 15H for senior citizens), if his total income (inclusive of clubbable income from gifts to minor children or spouse or daughter-in-law, is under the tax threshold.) These forms are not available to NRIs as per the law.

3. Bank interest is fully taxable. No interest income is tax-free. However, the TDS limit of Rs 10,000 will be applicable for individuals since the bank has no means of knowing whether there was a gift or not.

In the case of NRIs: There is no income threshold under which TDS is not chargeable. Form-15G or15-H is not available to the NRIs. TDS is applicable at the rate of 30.9% (plus surcharge, if any) on the entire NRO interest (without any threshold).

The TDS is applicable on accrual basis on cumulative deposits. If your tax liability is less than the TDS, the only practical way to get the refund is to file the returns.

The TDS is not the same as your tax liability. This liability will be computed on the basis of the IT rates, which again depend upon your income and the exemptions, deductions and rebates you can claim. The TDS can be set off against your actual tax payable and pay only the difference. In case the TDS is higher than the tax liability, you will get a refund.

Home loan

Q: I am having two housing loans of Rs 5 lakh each for a house, which is self occupied. One loan has been taken from my employer, Punjab National Bank, under staff scheme at a simple rate of interest. Principle is to be repaid first and then the accrued interest portion is payable. My last payment was of Rs 30,000 during FY 2008-2009 and the accrued interest is Rs 20,000.

The second loan has been taken under the public scheme payable at a compounded rate of interest. I have repaid Rs 50,000 and interest in debit Rs 35,000 during FY 2008-2009.

How much amount is eligible for a loss on the house on account of interest paid and payable. Also, how much amount will qualify under Section 80C or Section 24, whichever is applicable?

— Shashank Aggarwal

A: You are entitled to the benefits of tax concessions on housing loans even if there are multiple loans taken for purchase of a single house, as long as the total interest and part payments of the principal amount claimed for concessions are within their respective limits.

The phrase used for availability of deduction is interest payable and not interest paid. Therefore, if the company collects the principal amount first and interest later, the borrower will be able to claim the deduction u/s 80C on a larger amount and also claim deduction of interest u/s 24 on accrual basis.

The actual interest payment can wait until the principal amount is collected. Some employers, especially PSUs and banks, follow this practice. Needless to observe that the deduction for interest obtained on the basis of accrual cannot be again claimed on the basis of actual payment.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Aviation Notes
Taking them for a ride
by K.R. Wadhwaney

The aviation in the country continues to be more uncivil than civil. All no-frill airlines and some scheduled private carriers either club together or cancel their flights without any prior notice more because of meager passenger-load on domestic sectors than for any technical snag.

By doing so, they indeed save their overhead expenses but cause insurmountable harassment to passengers. This is not all. Many-a-times the baggage is also often mishandled. They are not graciously given compensation but have to run from pillar to post for collecting their baggage and negligible compensation. It is about time that the authorities take stern action against defaulting airlines that, for the sake of their financial bellies, are playing foul with paying passengers.

Why the number of no-miss incidents in India is more than that of other countries? Four major reasons for it are: (1) utter lack of discipline, (2) lack of transparency, (3) discrimination in punishing erring commanders and pilots, and (4) lop-sided growth. All other causes, like obsolete gadgets and paucity of trained and competent air traffic controls, are merely subsidiary.

What is shocking is that probes are made but findings are not made public. In March this year, VVIPs helicopters and a national carrier were involved in a near-miss incident. The probe was duly made, but till date the report is collecting dust in the office of the directorate-general of civil aviation.

The in-depth study reveals in near-miss incidents often national carrier crew is involved. In the recent Mumbai near miss, the private carrier’s pilots have been exonerated while Air India pilots have been suspended. As soon as the report came in, officials started defending by saying gadgets in the tower were faulty and there was a paucity of the ATCs.

The initial findings say the Air India team of pilots did not pay heed to the instructions and started taxing without clearance. The fact is that there is no coordination among users. The mishaps have not occurred not because of men but because of providence.

The aviation needs meticulous handling and not political interference. If this kind of the situation continues, near misses will become tragedies.

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Tata Steel sales up 18 pc in May

New Delhi, June 6
Tata Steel today said its sales volume surged by 18 per cent to 4.69 lakh tonnes in May on the back of robust demand from auto and construction sectors. In the corresponding month last year, the company's sales stood at 3.97 lakh tonnes, the steel major said in a statement.

During the month under review, Tata Steel saw its saleable steel production surging by 23 per cent to 5.01 lakh tonnes as against 4.08 lakh tonnes.

The sale of long products, mainly used in construction industry, increased by 34 per cent while that of flat items, used by auto and consumer durable sectors, increased by 9 per cent, over the year-ago period.

Tata Steel’s crude steel output for the month went up by 17 per cent to 4.86 lakh tonnes from 4.16 lakh tonnes, while hot metal production rose by 19 per cent to 5.28 lakh tonnes from 4.43 lakh tonnes.

The company claimed that one of its steel melting shops in Jamshedpur achieved best-ever May production at 2.18 lakh tonnes. Also, a merchant mill recorded best-ever May production of 30,710 tonnes over 28,505 tonnes the same period last year. The output of its hot strip mill and new bar mill also registered an impressive growth over May 2008, it said.

In addition to increasing the capacity of its existing unit, the steel major is in the process of setting up greenfield projects in Jharkhand, Orissa and Chhattisgarh.

For all the proposed greenfield projects, the company is in the process of acquiring land and mineral linkages. — PTI

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Luxury cars beat recession in Ludhiana
Shivani Bhakoo
Tribune News Service

Ludhiana, June 6
Recession has taken its toll globally but as far as the luxurious lifestyle of the people of Ludhiana is considered, there is absolutely no compromise. In 2008, more than 275 Mercedes have been purchased in the city. And 2009 is no different. Hundreds of enquiries have already been made for the E-Class model, expected to be launched by end of the year.

According to Manjit Singh Bala, authorised dealer of Mercedes in Punjab and Chandigarh, sale-volume of the luxury cars had not seen any slow-down despite there being recession. “The clientele for this segment is very different. They believe both in style and safety. Money is not a problem to them as they keep the high-end cars for not more than four years,” said Bala.

He further stated that about 40-50 per cent of the Mercedes in Punjab and Chandigarh are in Ludhiana only. The sales had been improved to about 48 per cent. “The only difference I see is that earlier, people used to come to us but now, our sales-team visits the interested customers. In fact, I have been the distributor in the region for long, but buyers in the city are easily convinced,” he said.

More than 98 per cent of buyers get cars on loans as the finance companies provide with very lucrative packages. “In the past 11 years, I have not seen a single defaulter from Ludhiana. The luxurious cars are owned by the elite for whom the reputation in market is everything,” said Bala.

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Suzlon hikes stake in REpower

Mumbai, June 6
Wind turbine maker Suzlon Energy today said its stake in Germany based REpower Systems AG has increased to 90.72 per cent, with the acquisition of Martifer Group's 14.4 per cent stake in the company.

Suzlon has completed “the acquisition of Martifer Group's stake in REpower Systems, with a final payment of 87.6 million euro (Rs 574.48 crore),” Suzlon Energy said. — PTI

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Appointed
Tribune News Service

Rohtash Kumar
Rohtash Kumar

Chandigarh, June 6
Rohtash Kumar, circle head and deputy general manager of Punjab National Bank (Chandigarh circle) has been promoted as the general manager of the bank.

Rohtash Kumar joined Punjab National Bank in 1972. He has represented the bank in various programmes on business management in the US besides heading the bank’s Parliament Street Branch, Regional Office Meerut, North Delhi and Ahmedabad Zone. He was associated with top managing bodies like the IIM Ahmedabad, Punjab Financial Corporation, Haryana Financial Corporation, NITCON and Indian Acrylics Ltd.

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