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THE TRIBUNE SPECIALS
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TERCENTENARY CELEBRATIONS
B U S I N E S S

G8: Economy stabilising, recovery uncertain
Lecce (Italy), June 13
The world's rich nations believe their economies are stabilising but recovery from the credit crisis remains shaky, G8 finance ministers said in an end of meeting statement on Saturday.

G8 dignitaries pose for a family photo during the meeting of the Group of Eight (G8) finance ministers in Lecce (Italy)
G8 dignitaries pose for a family photo during the meeting of the Group of Eight (G8) finance ministers in Lecce (Italy) on Saturday.
— AFP



EARLIER STORIES



Time not ripe for bank consolidation, says Chakrabarty
New Delhi, June 13
Punjab National Bank chairman and managing director KC Chakrabarty today said the time was not ripe for consolidation in the banking sector, a view contrary to that expressed by the government.

Modern Auto wins awards for excellence
Chandigarh, June 13
Modern Automobiles, a 25-year-old Maruti Suzuki associate having sales/service outlets at Chandigarh, Ambala, Karnal, Hisar & Panchkula has been receiving Maruti Suzuki awards for Excellence in Service, Sales and MGA sales for 2008-09.

Investor Guidance
No rebate on loan for home repair
Q: I took a loan in November 2006 from a bank for home repair. I claimed deduction in 2007-2008 under Section 80C for principal repayment, but recently I have come to know from my employer that for current financial year I can't claim principal repayment under Section 80C.

Aviation Notes
New decisions cause flutter in airlines staff
What National Aviation Company’s (NAC) former chairman-cum-managing director Raghu Menon declined to do, his successor Arvind Jadhav immediately obliged. He has issued two letters that have spread unrest in the staff of Air India and Indian Airlines, which is unified merely on paper but stands dis-united in spirit and actions.





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G8: Economy stabilising, recovery uncertain

Lecce (Italy), June 13
The world's rich nations believe their economies are stabilising but recovery from the credit crisis remains shaky, G8 finance ministers said in an end of meeting statement on Saturday.

“There are signs of stabilisation in our economies, including a recovery of stock markets, a decline in interest rate spreads, improved business and consumer confidence,” the statement said.

“But the situation remains uncertain and significant risks remain to economic and financial stability,” the ministers said in the communique after the two-day meeting in southern Italy.

The ministers confirmed they had started to consider ways to unwind economic rescue measures once a recovery was certain. The International Monetary Fund was asked to analyse possible “exit strategies” from radical stimulus programmes.

The G8 wants to reassure nervous bond markets, which have been pushing yields up sharply because they fear heavy state spending and ultra-low interest rates could fuel inflation and cripple state finances. But the ministers, noting that unemployment might continue to increase even after production picked up, made clear that countries were unlikely to tighten policies any time soon.

“We must remain vigilant to ensure that consumer and investor confidence is fully restored and that growth is underpinned by stable financial markets and strong fundamentals,” they said, pledging more stimulus if needed.

In one possible sign of divisions among the G8 over how to handle the crisis, the communique made no explicit reference to “stress tests” of banks’ financial health, merely saying nations would take needed actions to ensure the soundness of big banks.

The US and Canada have been pressing Europe to do more to test their banks and to release the results, but some European nations have resisted disclosure.

The US, Japan, Germany, France, Britain, Italy, Canada, Russia and the European Union are trying to set the agenda for a meeting of G-8 national leaders in July in earthquake-stricken L'Aquila in central Italy.

“We think it will be completed in a positive way, working together for a common solution,” Italian finance minister Guilio Tremonti told reporters. — Reuters/AP

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Time not ripe for bank consolidation, says Chakrabarty

KC Chakrabarty New Delhi, June 13
Punjab National Bank chairman and managing director KC Chakrabarty today said the time was not ripe for consolidation in the banking sector, a view contrary to that expressed by the government.

“The time is not ripe enough. It (consolidation) will take 2-3 years more and before that we must make banking services available and accessible to every individual; then we can talk of consolidation,” said Chakrabarty, who will take charge as RBI deputy Governor on Monday.

Earlier this week Finance Minister Pranab Mukherjee had said: “The PSBs should look at consolidation as a serious option in order to reduce risk to financial stability and to face competition.” However, Chakrabarty said consolidation was essential if Indian banks were to reach world-class scale efficiency.

“Financial inclusion is more important than consolidation. First bring the financial inclusion; after 3-4 years we (can) talk of consolidation,” said Chakrabarty, who headed the country's second-largest public sector bank for two years.

There is need, however, to create awareness in society that consolidation is important, he added.

‘No drastic reduction in interest rates in long term’

Punjab National Bank today said there would be no drastic reduction in interest rates in the long term while in short term they will remain benign.

“In the long term I don't see interest rates going down drastically,” PNB outgoing CMD KC Chakrabarty said here. However, he said, in the short-term interest rates look benign. “Irrespective of cost of fund, today public sector banks are making money available to various category of borrowers at the rate which is less than market determined rate,” he said.

Banks can further reduce rates provided cost of funds come down," he added. — PTI

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Modern Auto wins awards for excellence
Tribune News Service

Chandigarh, June 13
Modern Automobiles, a 25-year-old Maruti Suzuki associate having sales/service outlets at Chandigarh, Ambala, Karnal, Hisar & Panchkula has been receiving Maruti Suzuki awards for Excellence in Service, Sales and MGA sales for 2008-09.

Modern Automobiles won gold medal of being a member of Maruti Suzuki achievers club-2009. Modern Automobiles sold a total of 8312 vehicles from its various outlets in the year 2008-09 averaging a sale of 693 units per month.

Modern Automobiles, Chandigarh has bagged the award for achieving highest customer satisfaction index (CSI Score) for 2008-09.

Modern Automobiles, Hisar, has won the award for achieving the highest customer satisfaction index in northern region.

Modern Automobiles was also awarded for highest MGA sale in vehicles sales less than 8999 category.

The awards were received by Madhu Sudan Vij, CEO of Modern Automobiles, from S. Nakanishi, Managing Director of Maruti Suzuki India Ltd. Bangkok, Thailand.

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Investor Guidance
No rebate on loan for home repair
by A.N. Shanbhag

Q: I took a loan in November 2006 from a bank for home repair. I claimed deduction in 2007-2008 under Section 80C for principal repayment, but recently I have come to know from my employer that for current financial year I can't claim principal repayment under Section 80C.

Please clarify the amendment/matter at your earliest.

— Girish

A: There has been no amendment. Section 80C always provided for the deduction against payment by an individual or HUF for purchase or construction (not repair, renewal or reconstruction) of only a residential house (not necessarily self-occupied) the income from which is chargeable under income from house property in respect of repayment of loans taken from some specified sources.

Stamp duty

Q: Can I claim deduction on property stamp duty and registration paid? Will this be under Section 80C?

— Suresh Kumar

A: Yes, expenses on stamp duty and registration are deductible under Section 80C. Such a house is required to be held for at least five years from the end of the financial year during which the possession was taken.

PF account

Q: My employer has given us options to either take out funds lying in our PF account or they will be transferred to the government PF (its a private PF). If I take out this amount, will it be taxable? Or will it be prudent to transfer it to the government PF? My company PF is a recognised provident fund and I have been contributing to it for 15 years.

—Keshavji Dedhia

A: The accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be excluded from the computation of his total income-

(i) if he has rendered continuous service with his employer for a period of five years or more, or

(ii) if, though he has not rendered such continuous service, the service has been terminated by reason of the employee’s ill-health, or by the contraction or discontinuance of the employer’s business or other cause beyond the control of the employee, [or]

(iii) if, on the cessation of his employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognised provident fund maintained by such other employer.

It would be better to transfer your account to the PF commissioner unless you feel that you can earn more than after-tax income from any other source.

Bank interest

Q: My bank is not providing interest as the cheque was deposited on the 2nd and credited on the 6th. Can you provide rules or circular copy that could be shown to these bank officials?

— Satyendra Jain

A: The Ministry of Finance (DEA) letter No. F.3 (9)-PD/72 dated September 4, 1972, states: “When the deposit is made by means of a local cheque or draft by the subscriber, the date of tender of cheque or draft at the accounts office will be treated as the date of deposit provided that the related cheque is honoured on presentation for encashment”.

It is really sad that many of the accounts offices, particularly the SBI, are ignorant of the various rules governing the PPF. Ultimately, the problem does get solved but in the meanwhile a lot of valuable time is wasted and heartburns caused.

Senior citizen

Q: My date of birth is March 15, 1946, and I will be 65 in March 2011. From which year will I be able to avail benefit of c status as per IT? Will it be 2009-10 or 2010-11?

— Brinder Parhar

A: Section 80DDB states that an individual who is 65 years of age or more at any time during the previous year is senior citizen. Consequently, one can claim the higher threshold of Rs 2.25 lakh in the same year even if the birthday was on March 31. Even if your birth date falls in March, you will be a senior citizen for the entire FY 10-11 (assessment year 2011-12).

ITR-2

Q: I am a senior citizen and looking forward to file return on Form ITR-2. I have several FDs in banks and I am taking quarterly/monthly interest payments. However, there is provision of only two columns for Form 16A in ITR-2. I have several Form 16A and each has several quarterly TDS payments. Secondly, there is a column no 8 of unique transaction number (UTN) added in ITR-2 for AY 2009-10. Please tell me about it.

— Mukesh Sharma

A: 1. Wherever the space provided is inadequate, your may supply the overflow information by attaching additional sheet/s.

2. With a view to enabling the matching of information relating to pre-paid taxes furnished by the taxpayers, the IT Department has created a system of UTN and challan identification number. You will find these numbers on the TDS certificates received by you.

The authors may be contacted at wonderlandconsultants@yahoo.com

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Aviation Notes
New decisions cause flutter in airlines staff
by K.R. Wadhwaney

What National Aviation Company’s (NAC) former chairman-cum-managing director Raghu Menon declined to do, his successor Arvind Jadhav immediately obliged. He has issued two letters that have spread unrest in the staff of Air India and Indian Airlines, which is unified merely on paper but stands dis-united in spirit and actions.

The first letter, pertaining to “class of travel”, is an attempt to cut expenses. The second letter, raising age limit, emoluments and perks of one section of air hostesses, will enhance over-head expenses enormously.

The first letter reads:

“The company is passing through a critical financial situation and to improve the passenger revenue in the business class/first class, it has been decided with immediate effect, all categories of employees (serving and retired) and their families/ dependants, including the under-signed, will travel only in economy class, whether on duty, leave or transfer until further orders.”

"If there is a demand for seats in the economy class (including revenue/non-revenue) to that extent only full fare paying revenue passengers will be upgraded to the next higher class.

No staff or their family members (serving or retired) will, however, be upgraded to the high class.

The second letter provides much higher salaries, perks to Air India air hostesses and they will also be given arrears from 1997. The arrears, according to officials, will amount to crores.

Air India can ill-afford this huge expenditure since it already is running in heavy losses and pressing for government equity for survival.

Also, this letter has caused wide-spread unrest in Indian Airlines staff, which has been denied the normal arrears due to them. They have already filed petition in the court.

The commanders, directors and other senior officers are asking what will be the status of politicians? Will they be also travelling by the economy class?

It is learnt that one lady officer travelled in business class of a private airline.

She has been asked to pay the difference in amount. In other words, the amount may be deducted from her salary.

Air India’s Scindia House office (Delhi) has been closed to save rent. Similarly its reservation office in insurance building is also likely to be closed. In all, the authorities are planning to close 15 more offices across the nation.

While these cost-cutting measures are understandable to offset losses, what is causing concern to the NAC is that expenses have increased enormously on officers maintaining two houses — one at Mumbai and another at Delhi. The expenses on TA and DA has also increased.

The analysts maintain that all is not okay with the NAC and the merger move is still standing on the ground instead of assuming a take-off situation.

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