The Tribune, Chandigarh, India

Budget parleys in full swing
The session, which would be summoned by the President on the recommendation of the Cabinet, is expected to begin on June 29
R Sedhuraman
Tribune News Service

New Delhi, June 14
Budget exercise will gather pace tomorrow with Finance Minister Pranab Mukherjee slated to meet top Congress leaders and the Cabinet set to finalise the dates for the Parliament session.

Mukherjee's meeting with AICC office bearers is part of the series of pre-Budget consultations the FM holds with representatives from various walks of life, including captains of industry and farmers, every year, official and party sources said today.

The Cabinet meeting is being held at short notice to finalise the dates for the Budget session as Prime Minister Manmohan Singh will leave for Russia today.

The date for the commencement of the session has to be announced in time to provide adequate time for the MPs to submit questions that are taken up in the first hour of Parliamentary business every day.

The session, which would be summoned by the President on the recommendation of the Cabinet, is expected to begin by the end of this month, quite likely on June 29.

The FM has gone on record stating that he would try to boost economic growth without compromising on fiscal deficit.

Mukherjee has also indicated that he would offer sops for the sectors hit worst by the global financial crisis. “Whatever the economy needs will be done,” he has clarified, without going into further details.

His remarks had assumed significance in the light of various projections according to which the GDP would slump from 9 per cent to about 6 per cent in 2009-10.

The Congress, on its part, is expected to hand over its wish list to the FM, largely urging him to fulfil the promises made in the party manifesto.

The party has promised to further build on its anti-poverty programme, the National Rural Employment Guarantee scheme, by enacting a National Food Security Act that would ensure access to food for all.

The Budget might also fulfil another promise to launch an extensive skill development programme for enhancing the employability of youth.

The Congress has not made any pre-poll commitment on personal income and corporate taxes. Speculation is rife over the possibility of removal of the fringe benefit tax and that the securities transaction tax would stay for the time being.

Bailout package for AI soon: Patel

New Delhi, June 14
With the national carrier Air India hit by losses, the government would roll out a financial bailout package for it, Civil Aviation Minister Praful Patel said tonight.

Asked about a possible bailout package, he said, “Well, I think it will happen because as the owner of the airline Air India, the government has its responsibility to put in equity, like private airlines where their promoters put in money.”

Asked if the government was looking at a Rs 15,000-crore bailout, Patel told NDTV that “no, no, 15,000 crore is not the number. The number is far less than that”.

“I can’t give a number.....but I can certainly tell you that it has been looked at very actively,” he said.

For the first time since losses hit Air India, the carrier announced that the payment of salaries of about 30,000 employees for June will be delayed by a fortnight. — PTI

Satyam’s outgo on legal spats may not
exceed Rs 580 cr

New Delhi, June 14
In what could be good news for the shareholders of Satyam Computer, outgo on legal disputes may not exceed Rs 580 crore against the reported Rs 10,000 crore and perhaps this is the reason the new owner Tech Mahindra is not unduly perturbed about this.

Tech Mahindra is also hoping to settle some of disputes within six months while a few may take another couple of years, highly placed sources said.

“We don’t expect the expenses related to the legal disputes to run as high as reported in certain sections in the media. We expect some of the cases such as the Upaid case to get over by November. The US class action suits will get over in another two years,” a senior official said.

However, the company does not expect the related legal cases to run into over $100-125 million.

Satyam is trying to settle amicably some of these claims, while it intends to vigorously defend the class action law suits filed against the firm in the US and also the case filed by British mobile service firm Upaid in a Texas court. — PTI

Focus on productive sectors: Pak official
Afzal Khan writes from Islamabad

Advisor to Pakistan Prime Minister on finance Shaukat Tarin said on Sunday that after achieving successful completion of the stabilisation agenda by reducing current and fiscal account deficits by 3.3 percentage points and 3.2 percentage points the GDP in one year, nation’s economy needs to transit from stabilisation to sustainable, equitable and job creating growth with human face.

The current budget will focus on productive sectors of the economy - agriculture and manufacturing - enhancing productivity level through improvements to human capital base and physical infrastructure and ensure availability of cost effective energy in the country.

He was flanked by Minister of State for Finance Hina Rabbani Khar and other senior official of the Ministry of Finance and other officials.

Shaukat Tarin said during 2008-9, response of the government was phasing out of the subsidies and staining budgetary the resources.

He said the expenditures were rationalised through a process of prioritisation of government development schemes to reduce budget deficit.

Tarin said in this regard development expenditures were reduced and went down by Rs 120 billion and the SBP followed a tight monetary policy to reduce the aggregate demand and bring down inflation.

There were adjustments in the petroleum prices and electricity prices to reduce burden on the budget, he remarked.

However, he said the economy had displayed visible signs of stabilisation as the government’s first target was stabilsation of economy.

Reforms can wait: Kamath

New Delhi, June 14
Lauding the government and the RBI for saving the day for India with conservative banking norms, ICICI Bank chairman KV Kamath today said any further reforms in the sector should wait as global banks are in “disarray”.

“Indeed it has prevailed. Indeed the conservatism of Indian banking system and regulatory framework has prevailed,” Kamath said when asked if the policymakers' conservative approach on banking sector reforms has saved the day for India in the wake of global financial crisis.

Asked if he was suggesting that the prevailing banking policies should not be altered, Kamath said: “At this point in time, we should not tinker with it”.

He said even the NPA (non-performing asset) levels for Indian banks were at a comfortable level, when compared to their global peers.

“I would not be worried (by the NPA levels). This would mean that growth would continue at pace which the nation needs,” he noted. — PTI

India among top emerging markets for Yahoo

New Delhi, June 14
Internet search giant Yahoo today said India was one of the “top emerging markets” and it would release a slew of products over the next few months for further consolidating its position in the country.

“India is one of the top two countries in the segment of emerging markets and it
holds a lot of promise for us,” head of audience (emerging markets) at Yahoo Gopal
Krishna said.

“Products developed in the Indian lab and centres abroad are part of the pipeline of innovative products that will help us in the Indian market,” he added. He, however, declined to comment on the details of the products. — PTI

Tax Advice
No deduction on insurance policy for son-in-law
by S.C. Vasudeva

Q: I have taken a policy on the life of my daughter as well as her husband. Am I entitled to deduction under Section 80C for the premium paid in respect of my daughter and her husband?
— Gopi Krishan

A: Section 80C provides for the deduction of any amount paid to effect or keep in force the insurance on the life of individual himself, his wife or husband or/and any child or such individual subject, however, to certain limits.

The payment made for taking an insurance policy in the name of your daughter would be allowed as deduction under Section 80C. However, no such deduction is permissible if the policy is taken in the name of daughter’s husband or son’s wife.

Taxable income

Q: Is it essential for an assessee to contribute to the saving scheme specified under Section 80C out of his taxable income? If it is not required, please give the relevant provisions of the Act that do not necessitate that the contribution should be made out of taxable income.
— Mata Din

A: Section 80C of the Income-tax Act, 1961, provides that in computing the total income of an assessee, being an individual or an Hindu undivided family (HUF), there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year, being the aggregate of various sums specified in the section as does not exceed Rs 1 lakh.

As is evident the section as aforesaid does not require that the amount should compulsorily be paid or deposited out of taxable income of the assessee.

PPF account

Q: I am an advocate by profession. I have PPF account, which was opened in the year 1988 and matured in 2003. I have neither extended nor withdrawn my amount. Can I continue to get the tax-free interest to the withdrawn or will the interest be discontinued after March 31, 2008. Is it possible to get another extension?
— SR Sachdeva

A: A PPF account can be continued for a block of five years at its maturity. Thereafter it can be extended for any number of blocks on expiry of the extended term. The continuation can be with or without any contribution.

Once an account is continued without contributions for one year, the subscriber cannot change over to with contributions extension (Notification F.3(6)-PD/86 dated August 20, 1986). The amount lying will continue to earn interest till the amount is completely withdrawn.

Tax liability

Q: I seek your advice on the following:
(i) My wife is 62-years-old and not an income tax payee. My son has gifted Rs 4
lakh out of his income during the current financial year. She has made an FD of the
said amount.
(ii) Form 15G is given by her to the bank for non-deduction of tax at source
(iii) Her total income during this financial year is not likely to exceed Rs 50,000
(iv) She is having a bank RDT of Rs 1,000 per month and it may mature in 4 years.
What is her tax liability for 2008-09?
— Kamal

A: In accordance with the provisions of the Finance Act, 2008, the maximum amount on which tax is not payable by a woman resident and below the age of 65 years is Rs 1,85,000.

On the basis of facts given in the query, it seems your wife is not having an income above the said figure of Rs 1,85,000. In case my presumption is correct, she is not liable to pay tax and need not file return.

I hope she has complete evidence with regard to the gift of Rs 4 lakh received from her son so as to produce the same in case of any inquiry from the IT department.