UNION BUDGET 2010
M.today
The 2010-11 general budget on Friday provided considerable relief to income tax payers by raising the slabs at two levels but hiked the central excise duty on non-petroleum products across the board from 8 to 10 per cent and the basic duty on crude and petroleum products besides effecting a one-rupee increase per litre on petrol and diesel. Prices of petrol and diesel will be hiked by Friday midnight.
The entire opposition walked out of the Lok Sabha during the presentation of budget by Finance Minister Pranab Mukherjee, dubbing it "highly inflationary" as he partially rolled back the stimulus by hiking the ad velorum component of excise duty on large cars and multi-utility vehicles by two per cent to 22 per cent.
Budget Simplified
• Auto Cos pass on excise hike to consumers
• Excise on large cars, MUVs and SUV hiked by 2% to 22%
• General excise rate rolled back to 10% vs 8%
• Diesel price hike by Rs 2.55/litre
• Petrol prises to rise by Rs 2.71/litre
• Partial rollback of excise on petrol products to 10%
• Excise duty on petrol and diesel hiked by Rs 1/litre
• Duty on petrol and diesel hiked to 7.5%
• Customs duty on crude restored to 5%
• April-Dec GDP growth at 6.7% vs 7.1% (YoY)
• Q3 GDP growth at 6% vs 6.2% (YoY)
• Diesel by Rs 2.58/lt
• Q3 GDP growth at 6% vs 7.9% (QoQ)
• GDP growth slowed in Q3 due to decline in farm output
• Cut in surcharge would be made up by rise in MAT
• Bottom line of Cos like RIL, RCom, TCS to be impacted
• MAT increasse to impact the Road & Power sectors
• MAT had been increased from 10% to 15% last year
• Minimum Alternative Tax hiked from 15% to 18%
• Certain news agencies exempted from service tax payment
• Customs duty on key inputs for microwaves cut to 5%
• 5% Customs Duty cut on setting up of solar power plant
• Excise duty on CFL products reduced to 4%
• Excise duty on photovoltaic & solar panels waived
• For wind power making rotors
• 5% service tax exemption for cold storage units
• To grant project import status for Monorails
• Road transportation of pulses & cereals
• Govt keeps service tax levies unchanged at 10%
• Custom duty hike to raise rev loss by Rs 1800 Cr
• Revenue losses on auto fuels seen at Rs 20,000 c/yr
• Price hike triggered by duty on petrol & diesel
• Petrol price to be raised by Rs 2.67/lt: Srcs
• Govt to raise retail price of petrol and diesel
• Govt to spend Rs 1.16 lakh cr on subsidies
• Revenue from corporate tax seen at Rs 3.01 lakh cr
• Revenue from income tax seen at Rs 1.21 lakh cr
• Minimum Alternative Tax raised to 18% vs 15% earlier
• Partial stimulus rollback, excise duty upped by 2%
• Central excise duty of Rs 1/ltr on retail petrol & diesel
• GST and Direct Tax Code rollout from April 1, 2011
• Disinvestment target of Rs 40,000cr for 2010-11
• 2009-10 budget deficit estimated 6.9% of GDP
• Fiscal deficit target of 5.5% for 2011-12
• IT Dept to notify with Saral 2 for individuals
• Interest subsidy up to Rs 10 lk on housing loans by 1-yr
• Deduction of Rs 20,000 for invst in infra bonds
• 30% tax on income above Rs 8 lakh
• 20% tax on income between Rs 5 lakh and 8 lakh
• 10% tax on income between Rs 1.6 lkh to Rs 5 lkh
• No income tax up to an income of Rs 1.6 lakh
• Duty on large cars,SUV & MUV raised to 22%
• Hike in excise duty to 10% vs 8% earlier
• Petrol price hike by Rs 2.67/litre:NW
• Diesel price hike by Rs 2.58/Litre: NW
• Govt’s push for infra development to boost GDP growth
• NMDC, SJVN stake sale to fetch Rs 25000 cr in FY’10
• Expect govt to push for disinvestment
• FM has kept the impetus on disinvestment
• Fiscal expansion was not sustainable for long
• Limit for tax credit increased from Rs. 40 to Rs. 60 lks
• Reduction in surcharge on domestic cos from 10% to 7.5%
• Commitment to rollout DTC
• Lower tax burdens on individuals
• To give Rs.16500 cr to PSU banks in FY’11
• Govt to keep service tax unchanged at 10%
• To raise duty on gold imports to Rs 300/10 grams
• To raise duty on gold and silver imports
• To grant project import status for HITS
• To grant project import status for monorails
• Excise duty on CFL halved to 4%
• Imposed 4% excise duty on electric cars
• To waive excise duty on photovoltaic panels
• To restore 7.5% duty on petrol and diesel
• To restore 5% duty on crude petroleum
• Rollback in excise duty to 10%
• Govt announces partial rollback in excise duty
• Investment linked deduction benefit for 2-star hotels
• Weighted deduction on R&D raised to 200%
• To reduce current surcharge on companies to 7.5%
• MAT to be raised to 18% vs 15%
• 10% tax on income between Rs 1.6 - 5 lakh
• 20% tax on income between Rs 5-8 lakh
• No tax on income up to Rs 1.6 lakh
• Rollout of GST needs consensus among Centre & States
• To broaden current tax slabs
• Borrowing plan to be decided in consultation with RBI
• To bring subsidy related liability into fiscal accounting
• Economy can absorb hike in excise and customs duty
• Net market borrowing pegged at Rs 3.45 lakh cr
• FY’12 Fiscal Deficit seen at 4.8%
• Fiscal Deficit for 2010-11 at 5.5%
• FM has tried to balance prices and growth
• Rs 60000 cr as capex for defence sector
• Allocation of Rs 1900 cr for UID project
• UIDA to roll out 1st set of IDs by end of this year
• Resource mobilisation not to trigger inflation
• National Social Security Fund for unorganised sec
• Govt to contribute Rs 1000/month for Pension Security
• Rs 5400 cr allocated for urban development
• FM has exercised moderation in rollback of stimulus
• Rs 48000 cr allocated for Bharat Nirman
• Rs 66100 cr allocated for rural development
• Allocation to NREGA raised to Rs 41000 cr
• To allocate Rs 22300 cr to Health Ministry
• Social sector spending in FY’11 seen at Rs1.38 lakh cr
• 25% of plan allocation for rural infra
• Govt ready with Draft Food Security Bill
• To provide 1 time grant for Tirupur exports
• To establish National Clean Energy Fund
• Plan outlay for renewable energy raised to Rs 1000 cr
• IIFCL disbursements at Rs 9000 cr by March 2010
• Allocation to road infra raised to Rs 19894 cr
• Govt to extend interest subvention of 2%
• RBI considering additional banking license to pvt players
• Tax saving of Rs.51,500 for income of Rs.10 lakhs
• RBI considering additional banking license to pvt players
• To raise Rs.25,000 cr in FY’10 from PSU disinvestment
• Hope to rollout GST by April 1, 2011
• To implement Direct Tax Code from April 1, 2011
• Hope to reach 10% GDP in near future
• Review of stimulus for fiscal consolidation
• Budget has to signal policies for the future
• Budget not a mere statement of accounts
• India faces challenges of reviving double digit growth
• Challenges not any less than 9 months ago
• Need to provide food security, healthcare for all
• Economy has weathered the recent economic crisis
• Indian economy faced grave uncertainty in 2009
• Need to move to high GDP target of 9%
• Budget to reflect govt’s vision for development
• Weakness in govt system still a challenge
• Need to make development more inclusive
• Expect roadmap for reduction in subsidy for oil sector
• Issues of subsidy need to be addressed
• Expect a partial withdrawal of stimulus in the budget
• More clarity on growth in H2 CY’10
• Indian markets to trade sideways to negative
• Real GDP growth of 8-9% next fiscal
• Govt needs to address deficit concerns
• Monetary tightening likely to continue
• Rising inflation a challenge for budget
• No hike expected in IT exemption limits
• Likely roll-back in tax cuts on excise duties
• Depreciation rate to be aligned for accounting
• Expect fiscal deficit at 5.3% in FY’11 vs 6.3% of GDP
• Overall deficit may come down from 10% of GDP to 8.5%
• Expect govt to begin unwinding of softer fiscal stance
• Infrastructure push to continue
• Hike in Excise duty likely
• Announcement of divestments unlikely
• Govt must look at reducing corporate tax rates
• Expect fiscal deficit to be cut to 5.5% of GDP in FY’11
• Expect budget to withdraw certain stimulus measures
• Expect budget to start process of fiscal consolidation
• Need for policy intervention for initiating infra projs
• Expect to see relief for SPV structure
• European sales up 2% (YoY) to $80mn
• Guidance based on product exclusivity in U.S
• 2010 PAT seen at Rs.460cr vs Rs.310cr (YoY)
• Expect 2010 sales at Rs.7800cr vs Rs.7340cr (YoY)
• Inflation remains a concern
• Outline a stable disinvestment plan for few years
• Must look for clearer tax reforms in 2011
• Expect govt to take back some stimulus measures
• Excise rollback not to affect industrial growth
• Expect some support for export oriented sector
• Govt should focus on reviving investment demand
• Key triggers: Borrowing program and monetary stance
• South-based players may go slow on price hike
• May pass on hike in excise duty to customers
• No impact on Marico since products are tax exempt
• Marginal impact on Nestle and Britannia
• Difficult for HUL to pass on hikes due to shrinking share
• HUL: Major chunk of production attracts excise
• Competition will make it difficult to hike prices
• CV makers M&M, Tata Motors less sensitive to hikes
• Maruti, Hero Honda unlikely to pass on entire excise hike
• Prices may be increased if excise duty is hiked
• Auto, FMCG, cement likely to take a hit on margins
• Hike will impact cement, auto and FMCG
• Excise duty is expected to increase by 2-4%
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• Expect to see R&D reforms for education sector
• Strong case for impetuos measures to be reduced
• Hope to see partial rollback of the stimulus
• Nifty March Put-Call ratio at 1.26
• Lower than average rollover shows nervousness ahead
• Nifty starts the March series at 2.15 cr shares
• Nifty rollovers at 68.1% vs 76.5%
• Feb 23: Rs 634.2 cr Feb 22: - Rs 56.8 cr
• Feb 25: - Rs 594.78 cr Feb 24: Rs 566.4 cr
• FIIs Net Buy at Rs.645.02 cr in F&O
• FIIs Net Buy at Rs 321.48 cr in Stock Futures
• FIIs Net Sell at Rs.242.72 cr in Index Futures
• DIIs Net Buy at Rs 325.92 cr
• Reverting to path of fiscal responsibility
• FY’10 fiscal deficit is seen at 6.8% of GDP
• Total deficit, including states’ is 10.2% of GDP
• Widening of Tax net to include base not taxed earlier
• To ensure tax evasion gets more difficult & expensive
• Simplifying tax procedures that lead to tax evasion
• Need for a simple tax system with reasonable rates
• Short-term revenue loss must not hold up tax reforms
• Speedy implementation of GST desirable
• Disinvestment proceeds of Rs1120cr insufficient
• Govt should aim at raising Rs4000cr through disinvestment
• Funds collected can be invested in public sector
• Funds to be used for financing long term investments
• Shift from cash account to accrual budgeting beneficial
• Accrual budgeting will ensure resource utilisation
• Accountability with delivery time key to efficiency
• Third party monitoring for each project
• FIIs Net Sell at Rs 594.78 cr
• Third party monitoring will ensure resource utilisation
• Monitoring cell to include Govt, and industry experts
• Reforms needed in property, tax and import procedures
• Sustaining domestic level of prices not viable
• Administrative reforms can help cut transaction costs
• Govt should provide flexibility in labour laws
• Labour laws must enable industry to compete with China
• Risk of food inflation cascading to other sectors
• Long pending labour reforms have hindered investments
• A sound regulatory framework needed
• Sharp increase in food prices cause for concern
• Transparency in bidding process for PPP projects
• Issues delaying roll-out of PPP need to be addressed
• Recommends bringing down deficit to 5.7%
• Govt intervention needed to expedite PPP process
• Conducive eco-system for SMEs needed
• Recommends calibrated exit move from current stand
• Systems should provide supply of man power, branding
• Simplify process of land acquisition
• Tax benefits for companies which source from SMEs
• SME stock exchange will help raise equity capital easily
• Continue with concessional excise duty of 8%
• Reduce excise duty gap between large and small cars
• Large cars attract 20% + Rs 20,000 excise, small cars 8%
• Recommends fiscal consolidation by eliminating deficit
• Reduce excise duty on MUVs from 20% to 8%
• Remove anomalies in input and output duty structures
• Tyres can be imported at 10% duty, natural rubber at 20%
• Reduce excise duty on carbon black from 14% to 8%
• GDP growth expected to breach 9% in 2011-12
• Classify ATF as a ’declared good’ attracting 4% VAT
• States presently tax ATF at varying rates, going up to 16%
• Scrap 10% service tax on intl travel in first class
• Increase the FDI limit in aviation to 49% from 26%
• Extend repayment period on farm debt waiver
• Increase FDI cap in insurance from 26% to 49%
• GDP seen at 8.5% ( +/- 0.25%)
• Allow power finance companies to float tax free bonds
• GDP growth expected to be 1% higher in FY’11
• Recapitalise PSU banks or permit raising stake dilution
• Increase cap on FII stake in PSU banks from 20%
• Correct input and output duty anomalies
• Cement attracts no import duty, but pet coke attracts 5%
• Simplify MRP based excise duty structure for cement
• Excise duty is Rs 230/tn for MRP below Rs 190/50kg bag
• Allow abatement for manufacturing expense for MRP excise
• Continue with the concessional excise duty of 8% now
• Increase the income tax slab to drive consumption
• Increase allocation to NREGS and other welfare schemes
• Yen declines, export stocks trade positive
• Japan industrial production rises 2.5% (MoM)
• Japanese stocks trade marginally higher
• Mixed trade across Asian markets
• Bernanke: Fed to investigate trader betting against Greece
• Orders for durable goods rose 0.6% in January
• Increase depreciation rate for hotels to 20%
• Jobless claims hit 22,000 for the latest week
• Increase tax holiday period from 5 years to 10 years
• Early sell off triggers by concerns on Greece, eco data
• Make LTC tax free every year vs for 2 years in block
• Make VAT rate for hotels uniform across the country
• Exempt cakes made in hotels from 8% excise
• Bring STPIs on par with SEZs on tax benefits
• Increase outlay for higher education
• Allocate 2-3% of GDP for e-governance projects
• GDP growth expected to be 1% higher in FY’11
• Formulate the PPP process for roads and infra projects
• Exempt infra cos from 15% dividend distribution tax
• Exempt all infra cos from payment of MAT @ 15%
• Govt should ensure free flow of credit to infra sector
• De-regulate oil sector,adopt Parikh Committee’s suggestion
• Increase subsidies from Rs 0.83/lt for kerosene
• Provide infrastructure status to E&P and refining
• Extend 80 IB benefit to pre-NELP & NELP I-VII gas blocks
• Give a tax holiday to city gas distribution networks
• Exempt power companies from 15% distribution tax
• Exempt power companies from MAT @ 15%
• Allow power companies to isssue tax-free bonds
• Increase subsidy for solar energy to Rs 16/unit
• Exempt carbon credit income earned from renewable energy
• Increase deduction on housing loan interest to Rs 2.5 lk
• Extend tax benefits for affordable housing beyond Mar ’12
• Allow fund raising via ECBs through the automatic route
• Allow separate deduction for housing loan repayment
• Cut long term capital gains period to 1 year for realty
• Increase duty on iron ore exports to 20% from 15%
• Continue with excise duty rate of 8%
• Accord infrastructure status to the steel sector
• Extend the 10 (B) benefit to export from SEZs from Mar ’10
• Extend 2% interest rate subvention to March 2011
• Biggest challenge in removing impediments
• Targets in infrastructure sector achievable
• Capacity addition in power and roads behind target
• Inflation primarily driven by food products
• Slowdown in agriculture affecting some segments
• Industrial outlook bright in the medium term
• Growth in credit to industry fell from 37% to 14.2%
• Automobiles, rubber manufacturing recover strong
• Inflows were down 2% at $19.38 bn (YoY)
• Recovery in industrial sector is evident
• Inflows at Rs 93,354 cr, a growth of 9% (YoY)
• Growth in consumer durables drove industry revival
• Reversal in downward trend in IIP growth
• Food coupons must replace existing PDS system
• Capital inflow creating a supply demand imbalance
• Portfolio investment rush fuel rise in markets
• Portfolio investment not backed by strong fundamentals
• Capital inflows into economy to have negative impact
• Oil, food bonds need inclusion in fiscal accounting
• Consumption more impacted by slowdown
• Tax receipts down due to excise rate cut
• Expenditure restraint to keep deficit at 6.8%
• Receipts down due to indirect tax shortfall
• Likely shortfall in revenue receipts
• Cut Cap goods tariffs to 3%, abolish EPCG scheme
• Lower peak duties from 10% to 7.5% merchandise sector
• Large inflows crucial for countries with deficit
• Policy changes needed to promote exports
• Legislation enabling states to levy service tax proposed
• Centre to reduce share in gross tax revenue
• Centre to review levy of cess and surcharge
• Fiscal consolidation by reducing revenue deficit
• Rs 30000 cr compensation if GST introduced in 2014
• Rs 40000 cr compensation if GST introduced in 2013
• Rs 50000 cr compensation for states’ revenue loss
• Binding agreement of GST rates between Center-States
• GST to contribute significantly to tax revenues
• Proposes to reduce debt, GDP ratio to 68%
• GST seen as a game changer in tax reform process
• Increasing fuel prices may increase inflation
• Sustaining domestic fuel prices not viable
• Food inflation entails risk of transmitted
• Sharp increase in food price cause for worry
• Fundamentals of economy improving
• GDP growth expected to breach 9% in 2011-12
• GDP seen at 8.5% (+/-0.25%)
• GDP growth expected higher by 1% over 2009-10