Friday, July 3, 2009

Brokerage expectations from 2009/10 budget

Following are the main sectoral expectations of brokerages from the budget 2009.


* Retention of excise duty cuts that were part of the stimulus package.

* Duty differential between small cars (which attract 8 percent duty) and large cars (which attract 21 percent plus duty) to be brought down substantially.

* Extension of depreciation benefits for commercial vehicles and trucks until end of FY10.

* Reintroduction of investment allowance under income tax considering the capex plans across the sector.

* Measures for better financing through finance ompanies.


* Tax relief on interest earned on infrastructure lending in order to facilitate more lending to the sector.

* Removal of 10 percent voting right cap on Foreign Institutional Investors (FII) in banks and hike in FII holding limits in PSU banks.

* Limit of deduction for interest on housing loans may be raised from 0.15 million rupees to 0.25 million rupees in order to augment demand for housing loans.

* Tax exemption for deposits for maturity between 3-5 years. Currently only 5-year deposits are eligible for exemption.

* To allow power financing companies to float tax free bonds.

* Directed lending to be provided to small scale industries and export oriented units with guarantee on behalf of government.


* Abatement of 55 percent on excise duty levied on the maximum retail price

* Uniform rate of excise duty on cement

* Reimposition of counter vailing duty on imports

* Reduction in royalty on limestone.


* Rationalisation in excise duty structure which currently varies from 8 percent to 16 percent.

* Introduction of tax breaks and incentives to attract public-private partnership in infrastructure projects and also attract independent private developers.

* Raising import barriers in capital equipment to encourage local sourcing and support domestic players.


* Boosting rural economy by increasing allocation for various employment generating, rural and agriculture-centric schemes.

* Reduction in fringe benefit tax and complete exemption from Central Sales Tax.

* Rationalisation of Value Added Tax (VAT) across all states. * Reduction in VAT from 12 percent to 4 percent for biscuit makers.

* A hike in excise duty on cigarettes from 6 percent to 8 percent.


* Infrastructure status for hotel industry


* Increased allocation for infrastructure-related projects.

* Availability of long-term financing for infrastructure projects


* Extension of tax holiday granted to Software Technology Parks of India by another 3 years for those units that have not yet completed 10 years of operations.

* Extension of tax benefits to be extended further by 3-5 years.

* Reduction in excise duties on electronic and IT goods from 10 percent to 8 percent.


* Increase in Foreign Direct Investment limit in media companies.

* Reduction in import duty on set top boxes used in DTH and digital cable.

* 10 year tax holiday for the gaming, animation and the visual effects industry.

* Reduction in Fringe Benefit Tax for media companies from 20 percent to 5percent.


* Ten year extension of tax benefits for standalone Research & Development entities.

* Raising rate of weighted deduction from 150 percent to 200 percent and to be extended up to March 2017.

* Extension in 100 percent deduction in profits for operating and maintaining hospitals in rural areas from 31st March 2008 to 31st March 2012.

* Reduction in custom duty rate on advanced medical equipments to 5 percent.

* Total excise exemption on 354 drugs specified in the national list of essential medicines.

* Healthcare sector to be granted infrastructure status.

* Extension in tax benefit for Export Oriented Unit beyond fiscal 2010.


* Excise duty exemptions available to power developers for Ultra Mega Power Projects, should be made available for transmission companies.

* Tax holiday benefit for the generation and distribution of power to be extended beyond March 2010.

* Extension of excise and customs benefits to captive power plants.

* Power financing companies may be allowed to issue infrastructure bonds.

* Expanding infrastructure status related income tax sops to entire power sector, by broadening the beneficiaries beyond developers to equipment suppliers, contractors.

* Relaxation on sectoral caps and group caps on financing to facilitate the financing of the projects


* Reintroduction of tax holiday scheme for housing projects.

* Extension in external commercial borrowing scheme to entire real estate sector.

* Reduction in customs and excise duty for capital and construction requirement of the real estate companies

* Increase of limit exemption on interest payment for home loans from 150,000 rupees to 250,000 rupees.


* Allowing FDI in multi brand outlets.

* Increasing FDI limit from current 51 percent to 74 percent in single brand retailing.


* Increase in import duty or introduction of safeguard duty on steel imports.

* Infrastructure status for steel industry.

* Imposition of export tax on iron ore and reduction in import duty on raw materials.


* Implementation of a uniform license fee regime.

* Early completion of 3G auction.

* Reduction in license fees to 6 percent across services.

* Tax holiday in case of merger or amalgamation and for new service launches between Jan 2005 to Jan 2010. * Rationalization of multi levy structure to a single levy structure

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