SPECIAL COVERAGE
CHANDIGARH

LUDHIANA

DELHI



THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

India safe for foreign investors: Kamath
New Delhi, June 7
Describing India as a “safe harbour” for foreign investors, ICICI Bank chairman KV Kamath today said the country’s infrastructure space alone would need $750 billion over the next three years, one-third of which would come from foreign and domestic institutions.

Interest rates set to fall further
New Delhi, June 7
A continuing downtrend in inflation and ample liquidity in the banking system is likely to bring down the interest rates further.

Big hike for TCS top brass
New Delhi, June 7
The country’s top IT firm, TCS, has enhanced total pay packages of its top management personnel and board members by over Rs 1 crore - in the process giving a better hike to its incoming CEO than his predecessor.

Enhances security post 26/11

EARLIER STORIES



The photo shows a factory worker checking an assembled Prius hybrid vehicle at Toyota Motors' Tsutsumi factory in Toyota, Aichi prefecture.
The photo shows a factory worker checking an assembled Prius hybrid vehicle at Toyota Motors' Tsutsumi factory in Toyota, Aichi prefecture. Japan's Toyota Motor aims to cut the cost of producing its compact cars by $1 billion a year as their demand is likely to grow amid the global recession, a report said on Sunday. The automaker plans to use common platforms and parts for the bulk of its compact cars by 2012, saving 100 billion yen annually, the Nikkei economic daily said. — AFP photo

Investor wealth surges to Rs
51 lakh cr

New Delhi, June 7
The ongoing surge in the stock market has pushed the shareholders' wealth past Rs 50,00,000 crore mark — in the process bringing in over one lakh new investors on-board in just one month.

Market Update
13th straight week of gains
Indices surged to multi-month highs, extending
gains for the 13th straight week its longest
weekly winning streak since August 2005 in
anticipation of a strong push for economic
reforms by newly elected United Progressive
Alliance (UPA) government.

Tax Advice
Both parents can claim relief
on tuition fees

Q: My wife and me are government employees. Our son is doing MBBS. The yearly fee is considerable and amount is paid sometimes from my account and at times from my wife’s account.

 





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India safe for foreign investors: Kamath

KV Kamath New Delhi, June 7
Describing India as a “safe harbour” for foreign investors, ICICI Bank chairman KV Kamath today said the country’s infrastructure space alone would need $750 billion over the next three years, one-third of which would come from foreign and domestic institutions.

India has emerged as one of the few safe harbours globally after the recent global turmoil and overseas investors have started looking favourably at the country, Kamath told PTI in a telephonic interview from Kyoto, Japan.

“There is an admiration for the country that has grown respectably despite the global crisis ... there is a huge increase in confidence level ... global fund houses are seeing India as a safe harbour, a favoured destination,” he said.

Kamath noted that it was no mean feat as there were very few safe harbours across the world. “Brazil could be another and China may become the third ... there are no other major such economies,” he added.

“Top of it, it is across-the-board growth here and the investors are seeing India as a growth story — from financial services to infrastructure to manufacturing to knowledge industry to services space,” he said.

Kamath said infrastructure alone would need $750 billion (about Rs 3,75,000 crore) over the next three years, one-third of which would come from corporate India and the remaining from the local and overseas institutions through equity or debt.

When pointed out that much progress could not be seen due to the global economic crisis on his earlier projection of an estimated investment of $750 billion in infrastructure, Kamath said the scenario has changed again.

“I would say the last number we had before the global situation, we were talking about an investment of $750 billion over the next three years. Our assessment now shows that number coming back on the table,” he said.

When asked about the source of funds for such a massive investment, Kamath said: "I would say, corporate India would generate two-thirds of this and one-third will have to come from either domestic equity or global equity or debt. It's confidence that matters ... Corporate India has now found that India is on a good footing and they have found that global investors are willing to support. I think that gives the confidence to move ahead.”

Asked if it could be another bubble in the confidence level that was seen a few years ago, Kamath said: “There are broadly two differences from the scenario seen two years or five years ago ... today, India is growing, but value and price is also right and Indian economy has delivered and then fears have been removed.” — PTI

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Interest rates set to fall further
Tribune News Service

New Delhi, June 7
A continuing downtrend in inflation and ample liquidity in the banking system is likely to bring down the interest rates further.

According to the bankers, there is still scope to reduce interest rates by nearly 2 or
3 per cent.

The reduction in interest rates will start once the bankers have held a meeting with the Finance Minister on June 11.

The FM is likely to ask the bankers to reduce interest rates depending on their liquidity and debt and deposit position.

He will also ask the banks to lower interest rates to borrowers engaged in building infrastructure and related programs in tune with the UPA government’s common minimum program, they say.

Though there is a dip in the growth of bank loans, bankers say once the government starts borrowing, credit offtake will increase and loan growth will start showing.

But the good news is that the interest rates on homes and vehicles will also come
down further.

The bankers have also indicated that the deposit rates will also come down from the present rate of 8-8.5 per cent range.

This will have to be done if lending rates have to be brought down. However, there is troubling data of deceleration in credit growth.

The data released by the RBI shows the bank credit has steadily been falling for the past one-and-a-half month.

Bankers say loan growth will start picking up once the government borrowing starts after the Budget is in place.

Loan disbursal to corporates will also start, as there will be demand from industries looking at a definitive roadmap from the government in the coming Budget.

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Big hike for TCS top brass

Enhances security post 26/11

MUMBAI: Identifying that terrorist attacks in the city last year has increased the security risks for its business, TCS has put in place additional security measures for such matters.

TCS in its annual report said: “To mitigate these risks surrounding security, TCS has a comprehensive security plan in place which is preventive in nature and aims at protecting its facilities from the various risks observed from time to time.”

New Delhi, June 7
The country’s top IT firm, TCS, has enhanced total pay packages of its top management personnel and board members by over Rs 1 crore - in the process giving a better hike to its incoming CEO than his predecessor.

The Tata group entity paid a total remuneration of Rs 12.8 crore to its key management personnel and board members during 2008-09, up from Rs 11.08 crore in the previous fiscal.

In terms of total package, CEO S Ramadorai was the highest paid executive with remuneration of Rs 4.1 crore in the fiscal, according to TCS’ annual report.

Ramadorai's pay package grew by about 22 per cent from Rs 3.37 crore in 2007-08, but was lower than hike of 36 per cent for chief operating officer N Chandrasekaran.

Chandrasekaran, who would replace Ramadorai as TCS CEO later this year, saw his remuneration rise from Rs 1.41 crore to Rs 1.92 crore.

Executive director Phiroz Vandrevala got the highest pay hike of 41 per cent among company's board members as his remuneration rose from Rs 1 crore to Rs 1.41 crore.

At the same time, Ratan Tata, TCS's non-executive chairman, saw his remuneration unchanged at Rs 55.6 lakh. — PTI

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Investor wealth surges to Rs 51 lakh cr

New Delhi, June 7
The ongoing surge in the stock market has pushed the shareholders' wealth past Rs 50,00,000 crore mark — in the process bringing in over one lakh new investors on-board in just one month.

A total of about 1.2 lakh new stock market investors opened their demat accounts, which is necessary to trade in equities, during the month of May, according to data available with the two depositories, National Securities Depository Ltd and Central Depository Services Ltd. This has increased the total number of demat accounts in the country to over 1.5 crore.

The market experts believe that the inflow of a large number of new investors into the market could be attributed the sharp surge in the recent months as well as expectations for revival of the IPO market with some fundamentally-sound public issues by the government-run companies.

The total investor wealth, measured in terms of cumulative market capitalisation of all the listed companies, has soared to about Rs 51,00,000 crore.

This represents a gain of about Rs 23,00,000 crore from the level seen in later October last year, although it is still about Rs 20,00,000 crore below the peak seen in January 2008. — PTI

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Market Update
13th straight week of gains
by Lalit Batra

Indices surged to multi-month highs, extending gains for the 13th straight week its longest weekly winning streak since August 2005 in anticipation of a strong push for economic reforms by newly elected United Progressive Alliance (UPA) government.

Foreign money pumping in through out the last week propelled the Sensex to close above the 15,100 levels.

On the other hand, even the domestic fund rolled in the moola further aiding the current upsurge.

The Sensex advanced by 478 points to 15,103.55 and the Nifty gained over 3 per cent to close the last week at 4,586.

The Sensex is closed just below the 15,200 mark, which is a very important level on the technical charts.

As per chartists, in an event of a failure of the Sensex to close decisively above this level, a correction may set in which may take it to 13,800 levels.

However, broad sentiment on the stock market is likely to remain firm following upgrade in earnings of India Inc as thumping victory of the Congress-led UPA in the 15th Lok Sabha elections means political stability for the next five years.

Markets may even see a pre-budget rally on hopes of accelerated economic reforms and pro-reforms announcements.

Finance Minister, Pranab Mukherjee will present the Union Budget on July 3, while Railways Minister Mamata Banerjee will present the Rail Budget on July 1.

The economic survey will be held on July 2. The Budget attains significant importance in the wake of the global financial crisis.

Despite the country being relatively unharmed compared to the West, the government will have many tasks on its to-do list that includes boosting growth and demand, continuing to maintain liquidity, balancing inflation and also containing the country’s worrying fiscal situation.

Investors may, meanwhile, continue to book profits in view of the recent run up in the market and the fact that the expectations from the Budget, monsoon and the first quarter numbers is currently running high and any expectation not being met may dent the markets sentiment adversely.

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Tax Advice
Both parents can claim relief on tuition fees
by S.C. Vasudeva

Q: My wife and me are government employees. Our son is doing MBBS. The yearly fee is considerable and amount is paid sometimes from my account and at times from my wife’s account.

Can both of us claim deduction under Section 80C of the IT Act in respect of fee so paid? — AK Handa

A: On the basis of the facts given in the query it should be possible for you and your wife to claim the deduction to the extent of amount paid towards the tuition fee of your son by each one of you.

It may be added that the deduction is limited to the extent of Rs 1 lakh per year for each of the individual claiming such deduction. However, said deduction is allowable only if the child is being educated in India.

Hindu undivided family

Q: A Hindu undivided family (HUF) has rental income of Rs 20 lakh per year and interest income of Rs 10,000. House tax and rebate of 30% has been taken under Section 24. No loan has been taken so no interest is paid.

My question is whether the HUF can give salary/remuneration to member/karta of the family and whether rebate from the total income of the HUF can be taken?

In a book written by Dr Paras Dewan it is mentioned there that the HUF can give salary to the member/karta and take rebate from the total income of HUF.

On the other page, it is mentioned that there is no prohibition in the Income Tax Act to give remuneration interest and commission to the members of the HUF for the services rendered to the family.

In a ruling (1967) 63 ITR 238 8C, it is stated that the salary to karta is deductible from income. — Aakanksha Jain

A: The facts of the query indicate that the HUF has rental and interest income. The income of a person is taxable under various heads specified by the IT Act, 1961, and deductions against such income can be claimed on the basis of the provisions contained in the Act.

The income from house property (i.e. rental income) is chargeable to tax under Section 22-27 of the Act.

The deductions in respect of such income are provided in Section 24 and include a sum equal to the 30% of the annual value and the amount of interest payable on the capital borrowed for the purposes of acquisition, construction, repair, renewal or re-construction of the house.

There is no other deduction permissible under the above head. Similarly, the interest income is chargeable to tax under Section 56 of the Act.

Section 57 of the Act provides for the deduction of amount laid down or expanded wholly and exclusively for the purposes of making or earning such income.

It may, thus, be difficult to claim deduction of salary/remuneration to a member/karta of HUF until and unless it can be proved that such salary has been paid wholly and exclusively for the purposes of earning such income.

The case law quoted by you is in respect of salary paid to a Karta where the HUF was carrying on a business.

The facts in the query do not indicate that HUF was carrying on a business and as such the case law cited by you is not applicable to the facts stated in the query.

Legal heir

Q: In your column in April or May, it was published that husband is the first legal heir of the dues of her deceased wife. I have lost the date of that publication. Kindly repeat your advice if possible. — Inderjit Singh

A: The Hindu Succession Act, 1956, contains the general rules of succession. In the case of a female Hindu dying intestate such rules are contained in Section 15 of the said Act. Section 16 of the Act provides for the order of succession and manner of distribution among heirs of a female Hindu.

Sub section 1(a) of Section 15 of the said Act provides that the property of a female Hindu dying intestate shall devolve according to the rules set out in Section 16 firstly upon the sons and daughters (including children of any pre-deceased son or daughter) and the husband.

Recurring account

Q: I want to open a monthly recurring account in a bank in the name of my adult unmarried daughter. I am employed but she has no source of income.

I file IT return regularly. Whether the interest earned on recurring deposit would be taxable in my hands or in the hands of my daughter? — Prem Chand

A: It would be advisable to treat the amount contributed towards recurring deposit as a gift to your unmarried adult daughter.

In such a case the income on the recurring deposit would be treated as her income and she will be liable to pay tax, if any thereon.

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