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India can sustain 8-9% growth: Manmohan
On Board PM's Aircraft, July 11
Notwithstanding the uncertainty surrounding the global economic recovery, Prime Minister Manmohan Singh today said India should be able to sustain a growth rate of 8-9 per cent GDP growth. He said he was confident that India would come out of this crisis stronger but the road ahead was also going to be difficult to traverse.

FM allays fear of high govt borrowings
New Delhi: The government today allayed apprehensions that its high borrowings, pegged at about Rs 4 lakh crore to fund its widening fiscal deficit, will dry up resources for the private sector — a fear that sent stock markets to a tailspin after presentation of the Budget.


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THE TRIBUNE SPECIALS
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Kingfisher to fly on 8 international routes
New Delhi, July 11
Expanding its global network, Kingfisher Airlines today announced the launch of flights on eight international routes before the year end.

Aviation Notes
Praful passes the buck

Civil Aviation Minister Praful Patel’s subtle move to restructure Air India through international advisory board is a clever move to shift responsibility from the political corridor to the powerless management cadre.

Investor Guidance
NPS contributions to get tax benefits u/s 80CCD

Q What are the tax benefits extended by the Budget in respect of the new pension system (NPS)?





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India can sustain 8-9% growth: Manmohan

On Board PM's Aircraft, July 11
Notwithstanding the uncertainty surrounding the global economic recovery, Prime Minister Manmohan Singh today said India should be able to sustain a growth rate of 8-9 per cent GDP growth.

He said he was confident that India would come out of this crisis stronger but the road ahead was also going to be difficult to traverse.

“It is not not going to be easy but I am convinced that India's savings rate, which is as high as 35 per cent with a normal capital output ratio of 4:1, we should be able to sustain, with a little bit effort, a growth rate of about 8-9 per cent notwithstanding the difficulties on the international front," Singh told reporters accompanying him on his way back home from a four-day visit to Italy.

Against the backdrop of the world attempting a recovery from the recession caused by the financial crisis in the heart of the developed world, he said he had discussions with the leaders of G-8 and G-5, Egypt and African countries.

“After our discussions, it is my sense that while there are some signs of recovery, the world economy is still a long way from recovering the earlier growth momentum and there must be questions whether that will soon be possible for the global economy," he said.

The Prime Minister said he was returning home convinced that India must continue to strengthen steps at home to regain the 8-10 per cent growth path.

The Prime Minister said international environment would not not be as supportive as before for some time to come. “I am, however, confident that our domestic economic strengths will enable us to return to our earlier path of rapid and inclusive growth.” He said in his statement in the G-8,G-5 summit he did mention that all available indicators for 2009 point to a deceleration in the US economy in the European Union economies and, therefore, one can say global environment for the development of the countries of the third world has undergone a sharp deterioration.

Singh noted that India's exports have suffered, capital flows from abroad have declined and international bank lending to the developing countries has declined.

“Therefore, the challenge before us is to sustain and revive the growth momentum, which we have built up in the last five years notwithstanding the deterioration in the international environment for development," he said. — PTI 

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FM allays fear of high govt borrowings

New Delhi: The government today allayed apprehensions that its high borrowings, pegged at about Rs 4 lakh crore to fund its widening fiscal deficit, will dry up resources for the private sector — a fear that sent stock markets to a tailspin after presentation of the Budget.

“The government borrowing will be managed in such a manner that there is no disruption in the market in favour of the government borrowings and starving of the private sector,” Finance Minister Pranab Mukherjee told reporters after his post-Budget customary interactions with the RBI board here.

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Kingfisher to fly on 8 international routes

New Delhi, July 11
Expanding its global network, Kingfisher Airlines today announced the launch of flights on eight international routes before the year end.

It also announced suspension of its services on Bangalore-London and Bangalore-Colombo routes from September 15, while launching two new flights on Mumbai-Singapore and Mumbai-Hong Kong sectors from the next day.

Both these new flights would be daily direct return services and operated by new Airbus A330-200 aircraft, an airline spokesperson said, adding that the bookings for travel on these two sectors would be opened shortly. — PTI

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Aviation Notes
by K.R. Wadhwaney
Praful passes the buck

Civil Aviation Minister Praful Patel’s subtle move to restructure Air India through international advisory board is a clever move to shift responsibility from the political corridor to the powerless management cadre.

Findings and recommendations of the new high board, comprising eminent personalities from different walks of life, will not bear fruits at this juncture.

The expenses of salaries, perks, travelling, and TA/DA will be enormous on the members. Analysts say expenses will run into crores. This will increase over-head expenses and losses will mount causing further problems to the already beleaguered national airline.

According to aviation experts, this will be yet another bid to hasten national carrier’s demise.

Aviation analysts firmly believe that the turn-around of the national carrier even at this late stage is possible if the management is left alone to run the affairs. There are many proficient and competent officials who are capable of translating crises into happy days if the politicians remove their strangle-hold on them.

Six directors, all proficients in their respective fields of operations, have been spared from their duties to prepare the re-structure plan. They are capable of achieving their targets, if given the freedom of decision and action.

Invoicing settlement system

Time is money. This is the theme-song of five global distribution systems from Europe, the US, China and Singapore . Based on this, Hyderabad ’s C Venketshwara Prasad has initiated the first integrated reservation invoicing settlement system (IRISS).

With progress in technology, paper work in air tickets, reservations, fares and route operations has virtually been eliminated. Travelling on international sectors has become easy because the pre-requisite is only passport and the rest can be achieved at the speed of ‘thought’.

IRISS is a low cost multi-dimensional GDS-time interface travel service provider to all operators , including travel agents and airlines. 

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Investor Guidance
by A.N. Shanbhag
NPS contributions to get tax benefits u/s 80CCD

Q What are the tax benefits extended by the Budget in respect of the new pension system (NPS)?

— Thosar

A: Investment in NPS (now open to all citizens) attracts tax benefits under Section 80CCD. This deduction was hitherto available to employees only. However, the Budget has amended Section 80CCD so as to extend the tax benefit thereunder also to self-employed individuals.

A significant point of note here is that there is a limit of 10% of salary on the amount of Section 80CCD deduction for employees. Since there is no mention of any similar limit for non-employees, it may be inferred that for this category the overall limit of Rs 1 lakh will be applicable.

That being said, there remain two issues with NPS that yet remain unresolved. The first issue is with the amount of deduction. The combined limit of Section 80C, 80CCC and 80CCD is Rs 1 lakh. Now most taxpayers exhaust the Rs 1 lakh limit with Section 80C itself. In such a case, any investment in NPS will be left with no tax deduction. If the objective of the government were to encourage NPS, there is a pressing need to provide additional deduction to the same.

The other issue is to do with withdrawals from NPS. The way NPS functions is at the age of 60, at least 40% of the accumulated funds are to be used to buy an annuity while the balance 60% of the funds may be withdrawn as a lump sum.

Now the Budget specifies that if an annuity plan is purchased in the same year of withdrawal, the amount used to purchase the annuity will not be taxable - which means 60% of the maturity proceeds will be fully taxable. The only way that one can get 100% deduction on the maturity amount from NPS is if the entire maturity proceeds are use to purchase the annuity and that too in the same financial year.

Tax deduction at source

Q There has been some amendment ushered in by the Budget with regards to disclosing PAN in respect of tax deduction at source (TDS). Can you provide some details on the same?

— R Subramanian

A The memorandum to the Budget states that the government finds that non-quoting of PANs by deductees is creating problems in the processing of returns as also for granting credit for TDS. In order to strengthen the PAN mechanism, it has now been proposed that any person whose receipts are subject to TDS i.e. the deductee, shall have to furnish his PAN to the deductor failing which the deductor shall deduct tax at source at the rate applicable or 20%, whichever is higher.

This would also be applicable for those who file forms 15G or 15H. Forms 15G and 15H are filed by investors requesting the institution concerned not to deduct tax at source. What this means is that if these forms are filed without quoting PAN, TDS will be deducted and that too at the rate of at least 20%.

PPF account

Q 1 My NRI son had a PPF account before going abroad. Out of his income in India, he is depositing Rs 70,000 every year in his PPF account. He has no intention to withdraw from PPF. Is it okay?

2 Out of his deposits in his NRO account, banks are deducting TDS (withholding tax). Can he make deposit in tax saver bonds of commercial banks or invest in tax saving mutual funds? He also wants to file his return for refund. Can I file as a representative?

— Kumar

A As long as the PPF account had been opened by your son before becoming an NRI, he is perfectly within his rights to continue the same. Also, it is not necessary that he invests in PPF out of his Indian income. He may if he so wishes, transfer his foreign income to India and invest through his NRE or NRO account. However, once the PPF account reaches its maturity (in 15 years time from opening), it has to be necessarily closed. He cannot extend his existing PPF nor can be open a fresh PPF account.

Yes, he may also invest in tax saver bonds or tax saving mutual funds. Incidentally, tax saver bonds are currently not available in the Indian financial market. For the purposes of return filing, you may file a return on his behalf by being a representative assessee.

The authors may be contacted at wonderlandconsultants@yahoo.com

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