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Mar 17, 2012, 03.56 PM IST | Source: Moneycontrol.com

Budget 2012-13: 2% hike in indirect tax balances base impact, Way2Wealth

Way2Wealth has come out with its report on Indian Union Budget 2012-13. As per the research firm levy of Diesel taxes is positive for Maruti Suzuki India, Mahindra & Mahindra and Tata Motors. This would encourage further investments into the sector, which was held up earlier on account of lack of clarity.

Way2Wealth has come out with its report on Indian Union Budget 2012-13. As per the research firm levy of Diesel taxes is positive for Maruti Suzuki India , Mahindra & Mahindra and Tata Motors . This would encourage further investments into the sector, which was held up earlier on account of lack of clarity.

Small Moves towards:-
Fiscal Consolidation
• Widening service tax net
• Increase in service tax and excise duty by 2%

Individual Income Tax Slabs Limit Raised
• Tax Exemption limit increased from Rs 1.80 Lakh to Rs 2.00 lakh
• Increase in tax slab limit for 20% from Rs 8 Lakh to Rs 10 Lakh

This will balance the base impact of 2% increase in indirect tax on household spending

Fiscal Consolidation
• Assumed fiscal deficit at 5.1% of GDP in FY13 is a challenge in the current global economic scenario. Net market borrowings targeted at Rs 4.79 lakh crs

• Disinvestment target of Rs 30,000 crs in FY13 appears to be stretched looking at ONGC divestment and current market conditions

• Gross tax revenue increase of 19.5% assumed in FY13 at Rs 10,77,612 crs appears optimistic

• Increase in service tax and excise duty by 2% would bring additional Rs 45,000 crs in indirect tax collections

• Increase in UID budget allocation can help towards reduction of subsidies in the future Inflation

• No concrete steps toward inflation management

• Economy still not insulated from shock of global price increase in commodities and crude oil.

Exemption limit increased by Rs 20,000 are some very welcome steps which will leave more disposable income in the hands of investors. But a 2% hike in service tax and higher excise and customs duty on a host of other items will setoff all savings from tax. In our View, this is negative for the auto sector as we expect sales to be impacted with OE’s passing on the same to the consumers. Also, further hike in fuel prices can be expected, which would be inflationary in nature. Non levy of Diesel taxes is positive for Maruti Suzuki India, Mahindra & Mahindra and Tata Motors. This would encourage further investments into the sector, which was held up earlier on account of lack of clarity.

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To read the full report click here

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