Posts Tagged ‘excise duty’

Points Discussed in Budget :)

  • Excise duty on silver rose to 10%
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  • Surcharge on domestic cos reduced to 7.5% from 10%..
  • Excise duty on oil rose to 10%.
  • Fiscal deficit will be at 5.5% in 10-11, at 4.8% in 11-12 and 4.1% in 12-13
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  • Revised income tax slabs 馃檪
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  • Net market borrowing for 2010-11 at Rs 3, 45,010..
  • Extended 1% interest subsidy scheme for affordable housing.
  • Rs 5400 cr of funds allocated for urban development..
  • Defense allocation rose to Rs 147344 cr.
  • Rs 48000 cr allocated for Bharat Nirman.
  • Farmer loans extended for 6 months to June 30th 2011.
  • Allocated Rs1.73 lakh cr for infrastructure..
  • Agriculture credit flow targets at Rs. 375000cr.
  • FDI worth $20.9 bn in April to Dec 2009.
  • Proposed Rs 16500 cr for PSU banks.
  • Challenge for a 9% growth, need to review stimulus.
  • Stay Tuned聽for More updates 馃檪

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    Note : For More Latest Industry, Stock Market and Economy News and Updates, please聽click here

    BUDGET PREVIEW 2011 – Final Part :)

    Continuing The Final Part Of The Budget Preview 馃檪

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    We believe that this year Finance Minister will take a gradual move towards fiscal consolidation by聽increase in Excise duty. Excise duty forms around 40% of Indirect Tax collections. Excise duty collections were聽down by 13% in April to December period to close to Rs. 70,000 crore comprising around 66% of Budgeted聽Estimates of Rs. 1,06,477 crore. The factors that contribute to our belief are; 馃榾

    路Though the growth in corporate sales is not astonishing but profitability has improved to due to various聽cost control efforts which is quite evident by the corporate tax collection that have shown a growth of聽44% in December 2009. Cumulatively Net direct tax collections increased by 8.5 per cent during April-聽December 2009.

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    路India being a consumption story has shown healthy growth in sales of consumer durables. For instance Automobile industry’s sales聽went up by 32 per cent in December over the same month in 2009. It is believed that a gradual hike in duty will get absorbed聽without affecting medium term prospects of the industry.

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    路Partial rollback would also help the finance ministry effect a calibrated integration of excise duty with the services tax by the end聽of the next financial year, when the proposal for a Goods and Services Tax is likely to be implemented.

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    路Finance Minister had indicated that he would like the fiscal deficit for 2010-11 to be around 5.5 per cent of GDP. The proposal to聽raise excise duty by two hundred basis points is being endorsed also to help the finance ministry raise more revenue and stick to聽the projected fiscal deficit target.

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    Disinvestment would be the key focal point in the Budget. We believe that the Finance Minister would place high targets from the PSU sale proceeds. The factors that contribute to our belief are:

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    路In order to bring Fiscal deficit under control that would subsequently ease upward pressure on interest rates.

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    路This will help Investment in social sector projects which promote education, health care and employment & will also help in聽Capital investment.

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    On the Corporate Tax front, we believe that the Finance Minster is unlikely to lower tax to 25% from the current 30% as per Industry demands. The rationale behind our belief is:

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    路The direct tax code that proposes corporate tax to be 25% will be implemented in fiscal 2011 鈥 2012 & Industry have to wait till its聽implementation as it will replace the existing Income Tax act.

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    路Already, government is trying to make up more tax revenue & is unlikely to take step in this direction as it may come as an聽obstacle in order to control fiscal deficit.

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    On deregulation of Petroleum sector, we believe that in order to cut down on subsidies government could provide the road map for partial deregulation of the petroleum sector. The road map may provide OMC’s to review the prices of petrol and diesel on a聽regular basis however, LPG and kerosene could continue to be administered by the government. Factors that complement to our belief:

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    路In view of the commitment of the UPA regime to flagship social security programmes聽that require huge allocations, Mr. Mukherjee has told Mr. Deora that it would not be聽possible to provide huge subsidies to the OMCs in future.

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    On the External Economy side, we expect that the Finance Minister may continue to聽provide certain concessions like interest subsidy and extension of other export oriented聽schemes. The rationale to our belief:

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    路In the recent two months i.e. November & December, merchandise exports registered a聽positive growth of 18.2% & 9.3% respectively. But in the period of April to December聽2009, the exports were still negative to the tune of 20% as compared to the聽corresponding period.

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    路The world economic recovery especially in US & Europe is still questionable & the regions constitute approximately 15% & 21%聽respectively of our merchandise exports, thus directly affecting the trade.

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    路Sectors such as engineering goods, jute, carpets, handicrafts and leather goods are continue to be in bad shape, others such as聽gems & jewelry drugs, plastics and petroleum products are showing improvement.

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    路Concluding, the main point is that it may not be a good time to take back the stimulus so soon that may derail the recovery.

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    Note : For More Latest Industry, Stock Market and Economy News and Updates, please聽click here

    GST Introduction in April to Reduce Indirect Tax Burden

    GST Introduction to Reduce Indirect Tax Burden

    The Finance Ministry maintained that the net burden of indirect taxes on the people would reduce by 25-30% when the proposed Goods and Services Tax (GST) is introduced from April 1, 2010.

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    However, it is said that real estate would also be brought under the GST scanner and deliberations in this regard between the Centre and the States were almost conclusive.

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    The draft legislation on GST had been referred to legal experts and would be finalized in order to facilitate the government to achieve target of implementation of Goods and Services Tax as has been promised by April, 1, 2010.

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    Meanwhile, it is said that there were divergent views expressed by the Empowered Committee of State Finance Ministers and the Thirteenth Finance Commission (TFC) on certain issues relating to GST, but noted that these were on the verge of finding a solution.

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    On the other hand, according to the implementation programme, the government plans to introduce the GST regime from the new fiscal to replace excise duty and service tax at the Central level and the VAT at the State level, apart from others levies like cess, surcharges and local taxes as currently applicable on good and services.

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    GST set to reduce the burden of Indirect Taxes on people.

    GST set to reduce the burden of Indirect Taxes on people

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    The Finance Ministry maintained that the net burden of indirect taxes on the people would reduce by 25-30% when the proposed Goods and Services Tax (GST) is introduced from April 1, 2010.

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    However, it is said that real estate would also be brought under the GST scanner and deliberations in this regard between the Centre and the States were almost conclusive.

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    The draft legislation on GST had been referred to legal experts and would be finalized in order to facilitate the government to achieve target of implementation of Goods and Services Tax as has been promised by April, 1, 2010.


    Meanwhile, it is said that there were divergent views expressed by the Empowered Committee of State Finance Ministers聽聽聽 and the Thirteenth Finance Commission (TFC) on certain issues relating to GST,聽 but noted that these were on the verge of finding a solution.

    On the other hand, according to the implementation programme,

    the government plans to introduce the GST regime from the new fiscal to replace excise duty and service tax at the Central level

    and the VAT at the State level, apart from others levies like cess, surcharges and local taxes as currently applicable on good and services.

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    馃檪

    Centre’s Fiscal Deficit is Rs 2.45 Lakh Crore in First 7 months of 2009-10

    Centre's fiscal deficit exceeded Rs 2.45 lakh crore in the first 7 months of 2009-10.

    The Centre”s fiscal deficit more than doubled to Rs 2.45 lakh crore in the first 7 months of 2009-10.

     

    With this, fiscal deficit during April-October, 2009 reached over 61% of the targeted level of over Rs 4 lakh crore for the current fiscal.

     

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    However, the government projected fiscal deficit of 6.8% of GDP for the current fiscal while with GDP likely to increase with a high growth rate of 7.9% recorded in Q2, there is more room to contain the fiscal deficit within the targeted level.

     

    Meanwhile, the fiscal deficit already crossed over 87% of the targeted amount for entire 2008-09 as the government was expecting fiscal deficit of just 2.5% of GDP at this point of time last time.

     

    Notably, Fiscal Deficit is a economic phenomena when a government’s total expenditures exceed the revenue that it generates (excluding money from borrowings).

     

    Deficit differs from debt, which is an accumulation of yearly deficits.

     

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    Moreover, when excise duty was cut by 6% and service tax by 2% from December onwards and plan expenditure rose as part of stimulus package, the government revised its target to 6% of GDP, which later turned out to be 6.2%.


    The rise in fiscal deficit could be gauged from the fact that tax revenues decreased by around 8% to 2.13 lakh crore till October this fiscal against Rs 2.32 lakh crore a year ago.

     

    The Centre’s revenue deficit, which is a gap between revenue receipts over revenue expenditure like salaries, rose by 138 per cent to stand at Rs 20.76 lakh crore during April-October, 2009.