Mar 19, 2012, 01.51 PM | Source: Moneycontrol.com
KRChoksey has come out with its report on Budget 2012-13. Higher fiscal deficit and government borrowings continues to act major macro headwinds.
, KRChoksey |
In our budget preview note, we had expected that Finance Minister would announce policy prescription towards acceleration in pace of economic reforms as well as layout clear cut road map for reduction in subsidiaries; however FM has disappointed us on both the fronts. Despite the need of hour, the government has not spell out plans regarding timing of implementation of DTC. Moreover, they missed the opportunity to increase investment thrust by further increasing FDI limit in aviation as well as insurance. Further, the government failed to spell out clearly how they are planning to rein in ballooning subsidies especially in case of fuel bill and fertilizer sector in coming financial year. We believe the lack of credit plan by government to control fiscal deficit will adversely impact timing as well as quantum of rate cut by RBI in the coming 12 months. This in turn will adversely impact investment sentiment in the country as well as overall corporate performance in near term.
Corporate tax rates – No change in corporate tax rate.
Individual tax rates – Exemption limit increased from Rs.1.8 lacs to Rs.2.0 lacs and income slab increased from Rs.8 lacs to Rs.10 lacs for 20% tax bracket.
Indirect Taxes – GST will be implemented from Aug 2012. Excise and services tax have increased from 10% to 12%, migrated from positive to negative list in service tax and increase in peak custom duty.
Sectors with Positive Impact: FMCG, Fertilizer, Infrastructure, Power & Capital Goods
Principal Beneficiaries: IDFC, HDFC, L&T, ITC, Adani Power, IRB Infrastructure, Adani Port, Reliance Infrastructure
Inclusive growth is mantra for sustainability of growth:
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