The Hindu Business Line : Success in the bourses has tangential benefits for the company

IT IS ironical that the company itself does not benefit from the spoils of its shares' success in the secondary market. Shouldn't there be a regime which begets the company a share, howsoever small, of the profits one makes from his secondary market operations?

TAP Krishnan, Coimbatore

What you say is right. But the way the company should partake of the secondary market spoils consists in coming out with a primary issue on attractive terms which would swell its coffers. This, however, is easier said than done. Any issue of additional shares would dilute the earnings per share unless the company can plough back the primary issue proceeds immediately to make proportionately more profits that would at the end of the day leave the EPS undiluted.

Success in the bourses of course has other tangential benefits for the company. For example, should Reliance Infocomm go public as it is slated to in the near future, the enormous goodwill built by its promoter, RIL, would ensure that the response to its IPO would be resounding.

Rebate query

THE Budget says that there is no cap on savings umbrella (Section 80c — now deduction up to Rs 1,00,000). Please clarify whether we can utilise this entire amount for tuition fees? What about hostel allowance? Any deduction available? Is marginal relief given up to Rs 1,11,240 available for March 31, 2006, too. What is the position of HRA? Can we claim rebate as before under Rule 2A?

K. Susheela Tilak, Guntur

Yes, you can use your quota of Rs 1 lakh towards paying the tuition fee of two of your children. Hostel allowance for educating one's child is exempt from tax as before. The marginal relief under Section 88D is not on because that section itself has been deleted consequent upon upping of the tax-free limit to Rs 1 lakh. HRA continues to be exempt from tax to the extent specified in Rule 2A as before.

Worried manager

THE age-old saying `innovate or perish' has come to apply to India as well. As a manager, how do I ensure that my organisation innovates?

Venkata Jagadish Sakaru, email

It is very difficult to answer a query of this nature in a column like this. Suffice it to say that everything would depend on the organisational philosophy. If the top management encourages lateral and out-of-the-box thinking down the line and does not hammer in the nail that sticks out, the organisation will naturally innovate. The reward-punishment scheme in vogue in the organisation should also factor in the aspect of innovation.

Filing required

I WAS holding a bank job till January 2001 when I opted for VRS. While in service, I had taxable income. Therefore, I used to file my income-tax return every year quoting my PAN number. Now, my pension and other income put together is nowhere near the taxable level. Do I still have to file returns because I am allotted a PAN number by the I-T Department?

Veena M, Udipi

You still have to file your return if your gross total income is more than Rs 1 lakh for the assessment years 2006-07 onwards and if the total income is more than Rs 50,000 till the AY 2005-06. Otherwise you are not required to file a return despite having been allotted a PAN number unless you are obliged to file one under the six by one economic criteria scheme.

Communication blocks

MANY of the problems plaguing an organisation arise due to ineffective communication. List out some of the instances.

Venkata Jagadesh Sakaru, email

Due to space constraints, it would not be possible to give a very large list. But one can enumerate instances of ineffective communication impinging on finance with which this column is concerned. The finance manager should lay his cards on the table so that the marketing and purchase manager do not go on an overdrive to save their own skins. Similarly, it behoves the marketing and purchase managers to acquaint the finance manager of the market position from time to time so that advantage may be taken of it which is possible often only when the finance is rejigged.

Rent to mom

AN UNMARRIED daughter staying with her mother and doing a small business is an income-tax assessee. Can the daughter claim HRA exemption if she pays rent to her mother? The daughter has no house of her own. Please clarify.

K. P. Rajagopal, Coonoor

The daughter is in business. Exemption for HRA is on subject to conditions only if one is in employment. She may, however, claim rent as a business expense if it is reasonable and uninfluenced by the relationship of mother-daughter.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

S. Murlidharan

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