sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Budget Extravaganza »
 How Union Budget 2018 impacts individual taxpayers
  How Budget 2018 will be different due to GST
 This is how Budget 2018 announcements may help you save tax
 Here's why the government advanced the Budget date
 Will Budget 2018 Reduce Your Income Tax? 10 Expectations
 How Budget 2018 will be different due to GST
 Will Budget 2018 cut tax on switch from dividend to growth option in mutual funds?
 Startup eco-system looks forward to the budget for addressing tax dilemma
 High time to prioritise non-tax revenue in the Budget
 Govt may abolish dividend distribution tax in budget
 Budget making in the GST era: paradigm shift

Institutional report on Union Budget 2010
March, 02nd 2010

Overall, we view the governments FY11 Budget proposals in positive light. Key positives are: i) the distinct message on policies and reforms; ii) a clear roadmap towards fiscal consolidation; iii) the continued move towards a simplified tax structure and removal of exemptions; iv) treatment of the earlier stimuli offered, in terms of lower excise duties, was calibrated and just about right (excise duties were raised 2%). Market expectations were low in the run-up to the Budget and fears on issues such as capital gain tax increases or a complete rollback of stimulus did not materialise. Global market volatility will likely impact India; except this, the Budget boosts our comfort with broader markets for 10 and we continue not to expect any significant downside from current levels. We believe that the banking sector, which has been one of our preferred investment ideas, has emerged even more attractive post the Budget announcement.

A distinct message on policies and reforms...We view the Budget as high on policy, with the finance minister sounding confident on implementation of the Direct Tax Code and the Good & Services Tax by April 11, and having taken steps to simplify the corporate tax structure and reduce exemptions (Minimum Alternate Tax-MAT was increased to 18% from 15%; exemptions for software export units were not extended; and surcharge was reduced to 7.5% from 10%); also, there were statements on the direction on petroleum product pricing. Personal tax was reduced somewhat, with the broadening of tax slabs. Earlier excise duty reductions were rolled back 2% (to 10% from 8%), exactly in line with market expectations.

and a clear roadmap towards fiscal consolidation. The government targets fiscal deficit of 5.5%, 4.8% and 4.1% for FY11, FY12 and FY13 respectively (this includes off-balance sheet items such as oil subsidies). We believe that the 5.5% target for FY11 was in-line or better-than market expectations. If the aforementioned targets are met, the fiscal deficit (as a percentage of GDP) would have effectively halved in four years (from 7.8% in FY09). Revised FY10 deficit estimate is 6.9% versus the budgeted estimate of 6.8%.

Key surprises. Overall, the fiscal deficit expectations soothed the markets, in our view. The increase in MAT was a negative surprise, though the impact on corporate earnings is not very large and was fairly offset by a reduction of surcharge. A steep increase in excise rates on cigarettes was a negative surprise. The fine-print on items included within the ambit of service tax has also negatively surprised real estate and rail freight are examples. We think that the Budget is positive for the financials as the expected government borrowing has not been a negative surprise and concerns of an impact on credit growth were belied. ITC will be hurt by our estimated 17% effective excise hike. Real estate, particularly commercial, will be hit by the inclusion of lease rentals, construction activity and land rent under service tax. MAT and increase in MS & HSD excise duty will hurt RIL.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions