Desk of Suresh Bohra
CREST COMTRADE P LTD Web: www.crestcomtrade.com
Union Budget 2009-10 Highlights Direct Tax
• Corporate NO change in corporate tax Fringe Benefit Tax abolished. - Major Relief Minimum Alternate Tax (MAT) to be increased to 15 per cent of book profits from 10 per cent. The period allowed carrying forward the tax credit under MAT to be extended from seven years to ten years. – Problem GST to come into effect from April 01, 2010 New tax code to be set up in 45 days Political funding/Donation to get 100% tax reduction The Authorities for Advance Rulings on Direct and Indirect taxes to be merged by amending the relevant Acts. Scope of presumptive taxation to be extended to all small businesses with a turnover up to Rs. 40 lakh. All such taxpayers to have option to declare their income from business at the rate of 8 percent of their turnover and simultaneously enjoy exemption from the compliance burden of maintaining books of accounts.
• Individual Exemption limit in personal income tax raised by Rs. 15,000 from Rs. 2.25 lakh to Rs. 2.40 lakh for senior citizens; by Rs. 10,000 from Rs. 1.80 lakh to Rs. 1.90 lakh for women tax payers; and by Rs. 10,000 from Rs. 1.50 lakh to Rs. 1.60 lakh for all other categories of individual taxpayers. Under section 80-DD in respect of maintenance, including medical treatment, of a dependent who is a person with severe disability being raised from the present limit of Rs. 75,000 to Rs. 1 lakh. No surcharge of 10% on personal income tax. Income Tax forms to be made user-friendly. Saral-II forms to simplify
Desk of Suresh Bohra
CREST COMTRADE P LTD Web: www.crestcomtrade.com
Indirect Tax
• Customs / Excise Duty Customs duty on bio-diesel reduced. Silver to cost more. Textile units to receive tax holiday. LCD TVs to cost less. Custom duty on LCD TVs cut from 10% to 5%. Set-Top Boxes to cost more. Customs duty of 5% on set-top boxes. Full exemption for branded gold, silver jewellery from excise duty 4% excise duty on Cotton textiles restored 8% excise duty on man made fibers restored Excise duty on petrol cars reduced Exemption of duty on goods made at construction sites restored
• Service Tax No Change in Tax Rate Service Tax to be imposed on the following services: 1. 2. 3. 4. Service provided in relation to transport of goods by rail Service provided in relation to transport of coastal cargo and goods through inland water including National Waterways Advice, consultancy or technical assistance provided in the field of law (this tax would not be applicable in case the service provider or service receiver is an individual). Cosmetic and plastic surgery service
Exemption from service tax being provided to inter-State or intra-State transportation of passengers in a vehicle bearing ‘contract Carriage Permit’ with specified conations. Exemption from service tax (leviable under Banking and other financial services or under Foreign exchange broking service) being provided to itner-bank purchase and sale of foreign currency between scheduled banks.
Desk of Suresh Bohra
CREST COMTRADE P LTD Web: www.crestcomtrade.com
OTHER BUDGET DETAILS
No new tax on edible oil imports Excise duty on petrol driven trucks cut No change in corporate tax 4% excise duty on cotton products restored – negative for textile companies positive for man made fiber companies like JBF Industries Custom duty on silver, excluding jewellery, hiked by Rs 500/ kg to Rs 1,000/ kg Life saving devices on heart condition exempted from custom duty - positive for Opto Circuit Life saving drugs, including breast cancer, custom duty reduced to 5% from 10% Custom duty reduced on LCD panels from 10% to 5% 5% Custom duty on Set top boxes Anonymous donations - grant relief 5% of total income or Rs 1, 00,000 whichever is higher Finance Act 2008 introduced CTT has been abolished Construction - restore full exemption on goods such as pre-fabricated slabs -Positive for Sintex Industries Branded jewellery exempted from excise duty Tax holiday on commercial production of mineral oil and natural gas on NELP VIII MAT hiked to 15% of book profit from 10% - Negative for IT companies, EOU, Ess Dee Aluminium FBT is scrapped – Positive for IT companies but marginally. To release new direct tax code in 45 days To introduce GST by April 1, 2010 - Positive for logistic sector company like Arshiya International Federal Tax/ GDP ratio is 11.5% Increasing automation in direct tax collection To eliminate tax distortion Fiscal deficit seen at 6.8% in FY10 – Negative for overall market Non tax revenue receipts are likely to be better Enhance budgetary support by Rs 40,000 cr. Budget estimates: Interest payment expected at Rs 2, 25,511 cr. Interest payment is a third of expenditure plan To spend Rs 1.42 lakh cr.. on Defence, same as last year Plan expenditure up 34% to Rs 3.75 lakh cr. Aila hurricane relief at Rs 1,000 cr. Budget estimates: Rs 10, 20,830 cr. Rs 6, 95,600 cr. non-planned and planned Rs 3, 29,100 cr. Proposes Rs 500 cr. for rehabilitation of displaced persons of northern and eastern areas of Sri Lanka Allocation for new Aligarh Muslim Unit campuses in Bengal, Kerala at Rs 25 cr. each Plan outlay increased by 74% Allocation Commonwealth Games raised by more than 50% to Rs 3,472 crore – marginally positive for Infrastructure companies like Sintex Industries 50% of all rural women to be brought into self-help group programmes National Mission for Female Literacy to be launched Govt. to build 100,000 homes for paramilitary forces National Mission for Female Literacy to be launched Allocation of Rs 2,113 cr. for IIT Govt. to spend Rs 120 cr. in FY10 in unique ID Rashtriya Mahila Kosh corpus to be raised to Rs 500 crore
Desk of Suresh Bohra
CREST COMTRADE P LTD Web: www.crestcomtrade.com
Allocation for flagship Bharat Nirman programe raised by 45% Paramilitary housing project to cost Rs. 1,000 cr. Certain Pension related benefits extended to war hounded Paramilitary housing cost estimated at Rs 1,000 cr. Govt. proposes to launch housing for 1 lakh Para military forces Unique ID cards in 12-18 months 46 lakh BPL families to come under new health insurance plan NREGA has been and outstanding success Right to Information Act been successful To add handloom clusters in West Bengal and Tamil Nadu More than 46 lakh people received biometrics card National Web Portal for employer and employee to be launched Govt. aims to have social security for informal sector Plan to cut flame illiteracy by half in three yrs Unorganised Social Security Bill passed by both houses of the Parliament To launch national mission on female literacy PM's Adarsh Gram Yojana starts with Rs 100 cr. funding NHB refinance to rural housing sector to be raised Indira Awaas Yojana outlay increased by 63% Bharat Nirman outlay raised by 59% Food security to provide rice, wheat at Rs 3 a kg to poor Allocation for Indira Awaas Yojana to be increased by 63% 59% increase in allocation for Pradhanmantri Gram Sadak Yojana Govt. to move food security bill very soon NREGA outlay increased by 144% NREGA min wages set at Rs 100/day Income-tax return forms to be made more user-friendly PSU companies to remain under government control 8.5% growth in recent past fueled by Pvt Sector investment Govt. wants public shareholding in PSUs to go up PSUs to remain under Govt. Control Rs 1 lakh crore projects for Infrastructure revival – Positive for Infrastructure companies but already priced in Govt. to set-up expert committee to advise on petro pricing products PSU Banks, insurance firms outside disinvestment plan Turbulence in world markets left Indian financial sector unaffected Proposes people's participation in disinvestment programe IT Saral 2 form to be introduced Fiscal deficit up to 6.2% from 2.7% of GDP Institutional reforms to cover subsidies, expenditure To return to FRBM target at the earliest To increase fertiliser usage – Govt. proposes to move from product pricing basis Return to FRBM target as soon as possible Special fund of Rs 4,000 cr. from Rural Infra Dev fund to provide cheap loans to MSME Budget makes subvention of 1% to benefit farmers 30% rise in Rashtriya Krishi Vikash Yojana allocation over 2008-09 The market development assistance scheme allocation hiked by 148% to Rs 124 cr. Exporters borne the brunt of eco crisis, will provide adj assistance till March 2010 Proposes to extend deadline to farmers to pay off 75% of loans by six months to December 31, 2009 – negative for market Govt. announces rebate for farmers paying loan on time, and lower rate of 6% proposed Loan for farmers Rs 3, 00,000 at 7% per annum
Desk of Suresh Bohra
CREST COMTRADE P LTD Web: www.crestcomtrade.com
Agriculture records growth of 4% per annum in recent past The Assam gas cracker project estimated at Rs 5,160 cr. JNNURM support raised by 87% - Strong positive for Pratibha Industries, Simplex, Patel, IVRCL IIFCL and banks in position to support Rs 1, 00,000 cr. in infrastructure – Positive for Infrastructure companies but already priced in Highway and railways - allocation hiked by 23% - Positive for IRB Infra Stepped up allocation of funds from Rs 10,800 cr. to Rs 15,800 cr. for railways Govt. needs to provide further stimulus for the economy Govt. have some success in attracting investments in certain sectors through PPP FIIs are back in the market, the worst two quarters are behind us For 1st time I held a meeting with state finance ministers to work together Infra investment to be over 9% of GDP by 2014 Gross capital flow rose to over 9% over GDP GDP dips from over 9% average in past three years to 6.7% in 2008-09
Two taxable services, namely, ‘Transport of goods through road’ and ‘Commission paid to foreign agents’ to be exempted from the levy of service tax, if the exporter is liable to pay service tax on reverse charge basis. However, present cap of 10% on commission agency charges is retained. Thus there would be no need for the exporter to first pay the tax and later claim refund in respect of these services. For other services received by exporters, service tax exemption to be operated through the existing refund mechanism based on self-certification of the documents where such refund is below 0.25 per cent of FOB value, and certification of documents by a Chartered Accountant for value of refund exceeding the above limit.