No tax-break props for pension funds
Parent update plan for Bata
Exports dip 7.4% in Oct
Fortune favours the brave

New Delhi, Dec. 1: 
The Insurance Regulatory and Development Authority’s proposal to peg the tax breaks to be given to pension funds at the same level as the existing tax savings system has drawn criticism from tax experts and industry professionals who feel that more incentives are needed for the pension sector to grow in the initial stages.

IRDA has recommended that contributions towards pension be made from taxable income but should be subject to a tax rebate of 20 per cent up to Rs 80,000 per annum of initial contributions. This will replace the infrastructure limit with that of pensions, IRDA has stated.

As of now, investments up to Rs 60,000 in various avenues like Public Provident Fund (PPF), life insurance policies, mutual funds, insurance and pension plans can avail a tax rebate of Rs 12,000 from the total tax payable. Recognising the need to mobilise funds for the infrastructure sector, an additional investment of Rs 20,000 in notified infrastructure bonds allows an individual an incremental rebate of Rs 20 per cent, thereby increasing the total tax rebate under section 88 to Rs 16,000.

What the IRDA has instead suggested is that investments in pension schemes up to Rs 80,000 get a tax rebate of 20 per cent which comes to the same figure of Rs 16,000.

In fact, IRDA has suggested that income earned by pension funds and annuity funds should be exempt from income tax to provide a level-playing with pension funds of life insurance companies.

IRDA has also suggested that the commuted value of pensions should continue to be exempt and amount received as annuities should also be totally tax exempt.

Pavan Kumar Vijay, a practising company secretary and a member of the Northern India Council of the Institute of Company Secretaries of India, feels that the individual has been neglected at the expense of the funds.

“The government should realise that it is the individuals, mainly the honest taxpayers, who will end up saving in the pension funds. A better deal in the form of total tax exemption or hiking the tax incentive rate is what is needed,” he says.

According to Association of Mutual Funds of India chairman A.P. Kurian, the pension sector reforms would be good for the industry as it would now be able to access the full Rs 80,000 as against Rs 60,000 which was given to PPF. However, the tax incentives remain the same for the individuals. “The government would not like to forgo any tax revenue and thus the tax incentives have been maintained at the same levels. Although we would have liked to have more exemptions coming the way for individuals, I think we have to strike some balance,” he said.

According to a practising chartered accountant with a leading firm, the tax incentives have been planned keeping in mind the fact that we barely have 2.5 crore taxpayers in the country. “The pension reforms are broadly targeted at the unorganised sector who have no cover at present. This category in fact does not normally pay any taxes and thus the decision to continue with the same level of tax incentives is probably influenced by them,” he says.

In fact, some like Vinod Chandiok, a practising chartered accountant with Grant Thornton, feel that a sense of balance has to be maintained between the pension companies and individual regarding the tax rates.

“If the income earned by pension and annuity funds are tax-free, then why discriminate against the individuals? I feel that the sector should not survive on the subsidy regime which anyway was to certain extent justified in the days of high inflation rates,” he said.

“We should end the tax-free regime right from the beginning for the companies and instead tell them to provide competitive returns. The same then should stand true for individuals,” he said.


Calcutta, Dec. 1: 
Bata Shoe Organisation will provide better technology and products to Bata India Ltd to improve the company’s bottomline and make it more competitive.

With a new chairman —Thomas G. Bata, son of Thomas J. Bata—taking over the reins of BSO a fortnight back, the company is going all out to woo the customer.

To begin, with Bata India will outsource its Weinbrenner brand of shoes from America and Europe and market them in India from January. The shoes will be targeted at the middle class segment. BSO is also exploring the possibility of transforming some of the retail outlets of Bata India into life-style stores, as it has done in USA and Europe.

Thomas J. Bata, honorary chairman of BSO said, “Companies the world over are resorting to outsourcing to remain competitive. We had to outsource several products since the performance of our Batanagar factory was not up to the mark and we may have to do so as and when required.”

Following his meeting with Bata Mazdoor Union (BMU), Bata was optimistic that the levels of outsourcing will not be high.


New Delhi, Dec. 1: 
The aftermath of September 11 terrorist attacks in the US coupled with the global economic slowdown had a cascading effect on exports which dropped 7.39 per cent to $ 3.444 billion in October this year.

Impact of depressed international market conditions was equally reflected in the provisional export data for the period April-October which showed a dip of 2.88 per cent at $ 24.382 billion, against a level of $ 25.104 billion during the same period last year.

As per the official data released today, imports, however, went up during the first seven months of the fiscal.


Mumbai, Dec. 1: 
Sunil Mittal started out making bicycle parts in Ludhiana, with a target of achieving an annual sales turnover of Rs 1 crore. Later, he ventured into portable gensets prior to the government ban on their imports, before setting his sights on the telecom world. Today, Bharti Enterprises’ footprint is set to cover 600 million people, with an annual turnover of more than $ 1 billion.

Uday Kotak began on a modest scale, dabbling in bill discounting. Kotak Mahindra now straddles car finance, personal finance, investment banking and insurance. What’s more, it has tieups with global majors like Ford, Goldman Sachs and Old Mutual and plans to set up a bank.

Sulajja Firodia Motwani’s entry into Kinetic Honda coincided with the Indian partner buying out the majority stake and control of Kinetic Honda, a first in the annals of Indian corporate history. She embarked on a trip to accelerate the turnover of Kinetic Engineering, that entailed convincing dealers to hang on, as doubts on Kinetic’s survival without Honda was doing the rounds. Now, Kinetic Engineering’s tieup with Hyosung of South Korea gives it the much needed boost to compete against rivals like Bajaj Auto and Hero Honda. Her ambition is make it a Rs 2000-crore company by 2003.

Sanjay Reddy, the scion of the GVK Reddy group, which has interests in construction, financial services and power generation, charted the group’s foray into hotels and has now embarked into the unexplored world of biotech.

Speaking at a function at Business Today’s ‘Managing Tomorrow’ series, the four held forth on qualities that make an entrepreneur. All hail from diverse backgrounds but have a common thread—all took risks, and, as Sulajja Motwani put it, “We have to go the whole hog.”

A recent Accenture study on entrepreneurs reveals that in line with their counterparts abroad, Indians see entrepreneurship as a positive force for society and 93 per cent think it creates jobs. Only 40 per cent felt it led to job insecurity, but 50 per cent felt India had a negative attitude towards entrepreneurship.


Maintained by Web Development Company