THE ECONOMIC TIMES ON SUNDAY

MUMBAI 21 FEBRUARY 2010 10

M O N E Y MANTRA Wishlist In Hand T A L K I N G STOCK

Bogged down by market turmoil and don’t
have a clue how to manage your investments?
SundayET offers you an expert take to help
take care of all your worries. Just write in to us
with your name and city at
WAITING FOR OI L & GAS

THE B-DAY
moneyandu@indiatimes.com

FUTURES TRADING
I am a retired executive engineer from state
government service. Please guide me on pro-
cedure to trade in futures. Also, I had pur-
chased shares of a few companies just be-
fore the beginning of recession period. How
long should I hold on to these shares?
Syed Sultan Mohiyuddin, Indore
You can trade in futures by opening a demat ac-
count with any bank/ stock broker that pro-
vides the facility for online trading. Consult
your bank/stock broker for further details.
Please note that investment decisions are a per-
sonal choice and depend upon number of fac-
tors, including inherent market risks associated
with a particular investment instrument.
TAX ON PF
I have worked with a company for 2.5 years
and had a PF account with RPF Bangalore. I
took a eight-month break and joined anoth-
er company in which my PF is not being
deducted. Would my PF balance be taxed if I
withdraw it now? If yes, would withdrawal
of PF after five years make any difference in
my tax liability?
Giya, Bangalore
If the amount contributed towards Recognised
Provident Fund is withdrawn by an individual
before rendering continuous service with his
employer (including former employer) for less
than five years, the same is taxable in his
hands, subject to conditions specified under
the Income-Tax Act, 1961.
Budding Businessman Anish Anand
Give policy push to
green businesses
I AM concerned about the rising food inflation, because
high food prices hit you where it really hurts. I stay
alone in Mumbai, where things are already overpriced,
so running the house has become a bit harder now. And
since I am also planning to start my venture soon, it
would be good if special ‘entrepreneur’ assistance pro-
grammes are started for funding and mentoring people
like me. Unsecured bank loans are available but are not
sufficient to start a company. Like in China, we need a
concerted policy ‘push’ for promoting small businesses,
especially in the high-tech and green sectors. Secondly,
I would like to see service tax uniformity. Mobile
phones and music concerts, for example, are overtaxed
in Maharashtra. This needs to be rationalised. Incen-
tives should also be given to people who buy two-
wheelers or cleaner modes of transport. There should be
an emphasis on infrastructure spend, as our cities are
crumbling gradually from urban decay.
Ankit Khanna
Entrepreneur
With four days to go for the Budget 2010,
SundayET asks people from different
walks of life on its significance in their
personal lives and what they expect
from the government this time.
MBA Student
Time to create
demand for talent
FOR ME, the Budget is nothing but just another
set of figures published by the finance ministry to
have a broad idea of where to spend more and
where less. But most of the time, the government
fails to stick to the upper limit of expenditure, giv-
ing rise to ‘fiscal deficit’. My expectations from
the Budget are quite basic ones. Firstly, as the fees
for higher education is touching the skies, there
should be some regulation so that an aspiring
youth doesn’t lose out due to paucity of funds.
Then, the interest rates on education loans
should be reduced so that it doesn’t become a
hurdle. Apart from making higher education
free flowing, more employment opportuni-
ties should be created. Initiatives such as
more foreign players coming for investment,
more SEZs, etc would create demand for talent traf-
fic. Also, some general expectations which are quite sim-
ilar to that of the masses but play a crucial role in a student's
life—reduction in entertainment tax, lowering of VAT on
food and beverages tax, more subsidy on petroleum—
should come in the Budget. There should also be more
money allocated towards R&D of conventional sources
of energy and projects concerning greener cities.
Salaried
LARGE CAP
Macquarie Securities
Ashish Narang
GAIL INDIA
CMP: Rs 404
GAIL reported a recurring PAT of Rs 860 crore (+239%
YoY), which was 26% higher than estimates. The key
reason for the outperformance was better-than-
expected petrochemical margin. The cyclical high in
the operationally leveraged petrochem business, cou-
pled with a 29% YoY increase in gas transmission vol-
umes, boosted profits. GAIL presents a better risk-
return profile than its regional comparable Perusa-
haan Gas of Indonesia, which is facing political risks.
HPCL
CMP: Rs 354
It reported a PAT of Rs 31.4 crore in Q3FY10, against a
loss of Rs 420 crore in Q3FY09. The PAT may seem
below expectations. But, as HPCL has factored only 75%
of cash subsidies given by the government, earnings
were in line. HPCL has provided for only Rs 1900 crore
out of a total Rs 2500 crore budgetary support. The sub-
sidy sharing for nine months of FY10 has been done on
an ad hoc basis. Lower oil prices and final policy on
petroleum product pricing may result in big gains.
MID CAP
Angel Broking
SHIV VANI OIL & GAS
CMP: Rs 355
It reported a good set of numbers for Q3FY10 on the
Sarika Singh back of deployment of additional rigs. During the
quarter, the company registered topline growth of

MF INVESTMENT Incubation cells in Reintroduce the concept

59.3% yoy, while bottomline grew by 51.6%. Growth in
earnings are expected to continue on account of
deployment of remaining three rigs with ONGC. Its
I am a 45-year-old salaried person. I am
targeting to accumulate Rs 50 lakh over 10
years. I am already investing in some mutual
colleges need of hour of standard deduction
growth prospects look positive on account of a strong
order book and investment commitments under NELP.

fund schemes: Religare PSU Equity (Rs
1,000), HDFC Equity (Rs 2,000), HDFC Top
200 (Rs 2,000), HDFC Prudence (Rs 1,000),
Fidility Equity (Rs 1,500) and HSBC Equity
(Rs 1,000). Please suggest which other
schemes should I invest in on SIP basis.
Sanjay Agrawal, Ahmedabad
There are a number of mutual fund schemes
offered by various fund houses. You should
study the investment strategy (whether equi-
ty based, debt oriented or hybrid etc.), track
record of the scheme, focus area (sector/in-
dustry specific) and future prospects as per
your understanding, etc. and afterwards take
your decisions. Please note that mutual funds
are subject to market risks.
CAPITAL GAINS TAX
I have sold a residential property. To avoid
tax on capital gains, I have bought land with
part of the amount. I would like to construct
a house in three years, so I have kept the
amount as FD for one year with a non-
nationalised bank. Is it necessary this
money be kept in a nationalised bank. If yes,
can I wait for its maturity till July 2010?
Ancy Anto, Mumbai
The capital gains proceeds to the extent not
utilised before the due date of filing the return
of income (for the year in which the capital as-
IF INDIA has to gain every inch from the huge young pop-
ulation, then our government has to create enough oppor- BEING a salaried employee in the typical GUJARAT GAS
tunities by nurturing entrepreneurship at different levels. middle class grouping, Budget is one
In the ensuing Budget, I would expect the government to event I keenly look forward to. In the last CMP: Rs 242
allocate funds for start-ups through incubation cells in col- few years, escalating inflation has re- Gujarat Gas had been impacted by stagnant gas sup-
leges/universities and more liberal funding stricted our life and lifestyles in more plies in the recent past. However, subdued LNG
schemes for small and medium enterprises. ways than one. Net result is nil savings prices and commencement of gas sup-plies from KG-
The government should also exempt on- and mounting expenses. I eagerly wait D6 is expected to not only meet the company’s gas
line services from service and sales tax for the FM to raise the tax exemption lim- requirements, but also diversify its sourcing basket.
for some period so that their services can it for the salaried class by at least Rs An improving volumes mix and appreciating rupee
become more affordable. There is also a 50,000 and reintroduce the concept of will also propel the company’s growth as it will
need to invest heavily in creating infra- standard deduction; so as to trim down improve its gross gas spread.
structure for growth in Internet usage the gap between the rich and the poor.
by cutting down on duties/taxes on Professionally, I hope that the Budget ad-
computers and making higher Inter- dresses the issue of reducing import du-
net bandwidth more affordable. The ties and barriers on food items so that SMALL CAP
most important among all, is to apply common man sees more internationally
single tax structure on good and available, quality foodstuffs on his dining Prabhudas Lilladher
services as soon as possible to avoid table. Reduction or omission of VAT is a
double taxation. This would also blessing, the Budget can hopefully show-
INDRAPRASTHA GAS
help in reduction of prices for er (I hope the FM is listening!) CMP: Rs 208
the end consumer. The writer is GM, sales & marketing, CNG continues to grow at a healthy rate: CNG volumes
The writer is founder, itasveer.com Dhampure Speciality Sugars jumped by 5.2% YoY to 136.1mn kg (Q3FY09–118.1mn
kg, Q2FY10 134.4 mn kg) owing to healthy car conver-
sion rate of about 4,000 cars per month in the capital.
The company has also been reporting healthy sequen-
Home-maker Nandita Bedi
Spiralling food prices need tial volume growth on the back of addition of new CNG
stations and rollout of PNG network. The company is
expected to sustain such a healthy volume growth over
to be tackled urgently the next couple of years.

set was sold) can be deposited in the prescribed

capital gains account scheme. This amount so AS A home maker and a mother of two, I expect the Budget to introduce some
GUJARAT STATE PETRONET
deposited should be utilised for the purchase/ concrete measures to control the spiralling prices of essential commodities like CMP: Rs 87
construction of new property within the period pulses, edible oil, sugar, vegetables which make up a large component of the With incremental output from RIL KG-D6, GSPL’s vol-
specified under the Income-Tax Act, 1961. The household budget. The increase in prices of fuel should also be contained to keep umes continued the uptrend and surged by 13.1%
capital gains account can be opened with the prices in check and the price of cooking gas should not be raised. It would be wel- sequentially from 31.1mmscmd to 35.1mmscmd. How-
designated banks only, therefore, while open- come if the Budget makes enhanced provisions in allocation for basic infrastruc- ever, disappointment came in from transmission tar-
ing this account, please confirm with your ture—water, roads, power, public transportation, education—to ease the prob- iffs which declined by 6.8% sequentially from
bankers on this matter. lems of daily city living. I am hopeful of a much-needed impetus to the agricultur- Rs891/’000scm to Rs831/’000scm, affecting overall
al sector so as to increase production and farm incomes which can have an performance. GSPL is likely to be a beneficiary of the
expansionary role in the economy. I expect the government to increase the limit expected rise in KG basin gas production.
Vikas Vasal, partner, KPMG India for income-tax exemption for working women to encourage them. Though I do
(These comments are based on the limited information realise that the government has many compulsions to be considered in the Budget
provided by the investors. The advice may vary subject to making exercise, the issue of price rise needs to be tackled on an urgent basis. DISCLAIMER: SundayET takes no responsibility for any
actual facts and circumstances of the case) investment decisions based on these recommendations

guest COLUMN RISING INFLATION A CAUSE FOR CONCERN; GOVERNMENT NEEDS TO GIVE GREATER DEDUCTIONS

Common man expects progress-led Budget

HOMI MISTRY
Partner, Deloitte Haskins & Sells
THE UNITED Progressive Alliance (UPA)
is just a few days away from presenting its
second Budget in less than a year since the
general elections of 2009. Though the
gloom of global recession is behind us, infla-
tion continues to be a worry. Expectations
are high that the government will step in
with a progressive and reform-led Budget
for the masses. What could be the potential
measures that the government may take?
Let us discuss some changes the common
man hopes to see in this Budget.
Increase in minimum tax exemption
limit: The minimum tax exemption limit
should be increased by Rs 1 lakh across the
board to provide relief, especially to retired
senior citizens and the relatively lower in-
come groups.
Standard deduction for salaried class:
Unlike in cases of income from business,
against which various deductions are avail-
able, there is no such relief available for the
salaried class. The standard deduction avail-
able in the past was withdrawn from April
1, 2006, in light of introduction of Fringe
Benefit Tax (FBT). With the abolishment of
FBT and re-introduction of perquisite valu-
ation regime, efforts should be made to put
more cash in the hands of salaried employ-
ees by re-introducing standard deduction
which should be 30% of salary, subject to a
maximum standard deduction of Rs 1 lakh.
Increase in deduction for interest on
housing loan: The limit of Rs 1.5 lakh for
deducting interest on housing loan was in-
troduced in the FY99-00. Since more than a
decade has passed, the limit should be in-
creased to at least Rs 2.5 lakh. This would
have a two-fold impact of not only reducing
the taxable income of an individual but also
boosting demand for the housing sector.
Increase in limit of deduction under
Section 80C: Deduction under 80C in-
cludes investment for provident fund,
PPF, LIC, housing loan repayment, expen-
diture on children education tuition fees,
etc. and the existing limit is Rs 1 lakh. The
same has been in existence for several
years and considering the time period
which has lapsed and the inflationary
trends in the economy, it should be in-
creased to Rs 3 lakh. The list of eligible tax
unnecessary hardship to individuals along
MORE THE MERRIER with related complications like payment of
Exemption Limit (Rs) advance tax. The tax benefit should be re-
Category of Individuals Existing Suggested introduced and the maximum limit for de-
duction be kept at Rs 25,000.
Senior Citizens 240,000 340,000
Changes in capital gains: Currently,
(65 years and above)
while computing capital gains, cost of any
Resident Women 190,000 290,000 capital asset acquired before April 1,
below 65 years 1981, can be replaced by the fair market
value (FMV) as on April 1, 1981. Consid-
Other individuals 160,000 260,000 ering inflation and the passage of nearly
three decades, the reference to FMV as on
April 1, 1981, should be substituted with
April 1, 2000. The rate for short-term cap-
ital gains tax was increased from 10% to
15% last year. However, the lowest in-
come tax slab is at 10%. This increase in
the tax rate has resulted in an inconsis-
saving investments should be extended to tency in the said tax structure. For exam-
include investment in IPOs. This will give ple, if an individual has no other income
a further boost to the capital markets. and only short-term capital gains of Rs 3
Deduction for interest income on spec- lakh, he will have to pay tax on Rs
ified deposits: In the past, interest income 140,000 (Rs 3 lakh less Rs 1.6 lakh) @
on various types of deposits was not subject 15% and not at the lowest slab rate of
to tax to the extent of Rs 12,000. This bene- 10%. This anomaly needs to be corrected.
fit was withdrawn in 2005 and has created Abolishment of certain redundant
laws and levies: The total education cess of
3% has outlived its utility and should be
scrapped. Similarly wealth tax on certain
specified assets in excess of Rs 30 lakh is
levied at 1%. The cost of collection of wealth
tax far exceeds the revenue generated by
way of wealth tax and hence should be
abolished.
Reduction in age for senior citizens for
tax benefits: To bring uniformity in the cri-
teria for recognising senior citizens, the age
limit should be reduced to 60 years from the
current age limit of 65 years for income-tax
purposes.
Reduction in service tax rate from
10.3% to 8%: Currently, service tax is
levied on various services at 10.3%. If the
rate is reduced to 8%, this will reduce the
cost of services which will automatically
benefit the common man.
Fuel prices: As per the current news, the
fuel price is expected to rise in the near fu-
ture. Since this will have an impact on the
economy, the prices of petrol/diesel should
not be increased further.
(The views expressed are personal)