AUTO
• Increase in excise duties by 150-200 basis points
• Increase in duties/cess on diesel vehicles
BANKS & FINANCIALS
• Increase in deduction from income for the amount set aside for covering bad and doubtful debts to 50 pct from 7.5 pct
• Banks to be allowed to issue tax- rebated infra bonds
• Raise FDI limit in insurance sector to 49 pct from 26 pct
• Increase in limit of refinancing from India Infrastructure Finance Company (IIFCL) to commercial bank loans for PPP projects in critical sectors
• Tax break on long tenor deposits
INFORMATION TECHNOLOGY
• Extension of Software Technology Parks of India
• Act (STPI) by at least one year
OIL & GAS
• Reduction in customs duty on crude oil, petrol and diesel
• Reduction in excise duties on petrol/diesel
• Clarity on 7-year tax holiday for natural gas under Sec 80 IB
• Flexibility on claiming the 7-year tax holiday
• Declared goods status to natural gas
• Abolish 5 percent customs duty on LNG
• Exemption from service tax for exploration and production
CONSUMER GOODS/FMCG
• Increase in cigarette excise duty
• Increase in ad-valorem excise duty to 10 pct from 8 pct
• Increase in minimum alternate tax (MAT) rate
• Increase in central value added tax (CENVAT) rate and service tax to 12 pct from 10 pct
POWER
• Extension of benefits under Section 80IA
• More funds allocation on Accelerated Power Development and Reform Programme (APDRP) and incentives to states to reform power distribution system
• Increase in coal cess
• Clarity on bidding criteria and royalty amount for allocation of coal blocks.
PHARMA & HEALTHCARE
• Increase weighted deduction on outsourced R&D to 200 pct from 150 pct
• Extension of weighted deduction on R&D by 5 years
• Exemption of physician samples from central excise duty
• Exemption of customs duty for additional medical devices and life-saving drugs
• Reduction in duty on APIs in line with formulations to 4 pct from 10 pct
• Extension of tax incentives for hospitals with 100 plus beds to 10 years
• infrastructure status for healthcare sector
MEDIA & ENTERTAINMENT
• Concessions in customs duty on set-top boxes
• Concessions in customs duty on imported plates/ink
• Cut in DTH license fee by 4 pct to 6 pct
• Waiver of service tax on transportation of newspapers by rail and road
• Relaxation in FDI norms
HOTELS
• Infrastructure status for hotels under Section 80IA
CAPITAL GOODS
• New import duty on power equipment
CEMENT
• Increase in excise rates to 12 pct from 10 pct
• Elimination of import duty on thermal coal, pet coke, gypsum
REAL ESTATE
• Extension of deadline for notifying special economic zone (SEZ) space to avail tax rebates
• Increase in tax exemption limit for home buyers
• Continuation of 1 pct interest subvention scheme for home buyers
• Setting up of a real estate regulator
• Clarity on external commercial borrowings (ECB) for sector
Expectations from the Union Budget 2011-12
Government likely to increase food subsidies
The Union Budget for the year 2011-12 is going to presented by finance minister on Monday 28 Feb 2011 and the government is likely to increase subsidies on food, a populist move that hurts public finances but promises political dividends for a ruling coalition trying to cool disquiet over high inflation. Though the govt is moving away from its partly socialised economy, removing subsidies has always been a tough call as they protect millions of poor voters who determine who governs. Its policies have led to big stockpiles of rice and wheat, but the government has often wrestled with the question of how to distribute -- free handouts defer long-term solutions and erratic monsoons and global supplies raise risk in cutting stocks.
Auto parts manufacturers eye tech boost
India's auto parts makers want the government's help to upgrade technology and spur investments to boost capacity, but analysts do not see the budget for 2011-12 to be tabled in parliament on Feb 28 taking many steps in this direction. On the contrary, the expectation is that of a modest increase in excise duty on vehicles that may push up prices. In 2010-11 thus far, component makers have witnessed an increase in sales, but going ahead rising input costs are seen weighing on margins.
Banks hope for nod to sell infra bonds in budget
Indian banks are hoping they get the government's nod to issue tax-free infrastructure bonds and some a tax concession for 2011-12. Public sector banks are also looking for the finer details of the government's capital infusion plans, which will boost capital adequacy and raise the government's stake to 58 percent in many. Currently only Industrial Finance Corp, Life Insurance Corp, Infrastructure Development Finance and some other non-banking infrastructure finance firms are allowed to issue tax-free bonds.
IT firms hope for STPI extension
Indian information technology firms are looking for increased spending on education, e-governance and defence sectors, and an extension by at least one year of tax benefits under the Software Technology Parks of India (STPI) scheme, but many think it is unlikely. STPI was a society set up by the Ministry of Information Technology in 1991 to boost software exports. Among other benefits, the STPI scheme provides a 10-year income tax exemption for units situated in software technology parks.
Government may tweak fuel taxes
India, struggling to balance between cutting its costly fuel subsidies and curbing inflation, may tweak fuel taxes in the Feb. 28 budget to cushion the blow of rising global crude prices on state-run oil retailers. Tackling the current informal structure of fuel subsidies would help investors put a better valuation on proposed share sales for Indian Oil Corp (IOC) and Oil and Natural Gas Corp, aimed at bringing in more revenues for New Delhi. Any decision on cutting subsidies would be a highly charged politically in a country where half a billion people live on little more than the cost of a litre of diesel a day.
FMCG firms want inflation tackled
India's fast moving consumer goods industry is hoping the upcoming budget will bring in concrete measures to tame spiraling inflation and viable tax structure to ensure continued growth. The 130-billion-rupee industry, which is the fourth largest sector in the Indian economy, has been reeling under the pressure of surging input costs and subsequent impact on profit margins. Prices of agri-commodities are on the rise. Prices have risen by 30-35 percent in the past two year and there is also simultaneous rise in freight rates and packaging costs which is squeezing the operating margins of the FMCG companies.
Power firms want extension of tax sops
Indian power sector expects the government to continue its thrust on infrastructure and pins its hopes on incentives for the renewable energy sector and extension of sunset clause under Income Tax Act in the budget for 2011-12 to be tabled in parliament on Feb 28. Under section 80-I(A) of the Income Tax Act mega power generation projects, with over 1,000 megawatts (MW) in case of thermal and over 500 MW in hydro, are exempted from income tax for 10 years, if they are commissioned before March 2011.
Pharma firms want tax cuts, R&D sops boost
Drugmakers want tax exemption deadline for export oriented unit (EOUs) to be extended and want infrastructure or priority sector status in the budget on Feb 28. The deadline for full exemption of tax on net profit for exports oriented units, or EOUs, ends in March, though drug-making facilities in special economic zones would not be affected. The exemption beyond March 2011 will provide relief to companies like Dishman Pharmaceuticals and Chemicals, Divi's Laboratoriess, Cipla and Torrent Pharmaceuticals, which run EOUs.
Media firms seek higher FDI, lower taxes to aid growth
Media firms are expecting the government, in its budget for 2011-12 on Feb. 28, to provide them with some tax relief and are hopeful of getting a growth boost by way of an increase in foreign direct investment limit. In June 2010, Telecom Regulatory Authority of India, which also regulates broadcasters, had recommended higher foreign direct investment in the broadcasting sector, particularly in direct-to-home (DTH) and cable network operators and FM radio.
TELECOM
Inclusion of 3G investments under section 80IA tax benefits
Import duty on mobile handsets
CHEMICALS and FERTILISERS
Increase in fertilizer subsidy
Inclusion of urea in nutrient-based subsidy (NBS) scheme and price decontrol
Increase in excise duty on chemicals to 12 pct from 10 pct
METALS
Remove import duty on steel
Levy duty on hot rolled or HR coil exports
Increase import duty on HR coils to 10 pct from 5 pct
Increase in export duty on iron ore and fines
Reforms on iron ore and coal blocks allocation and speedier approval process for land acquisitions
CONSTRUCTION AND INFRASTRUCTURE
MAT break for infra projects for the initial period of income tax holiday
Single window clearance system for road and power projects
Easing ECB norms for infrastructure projects
Infrastructure status to integrated townships and group housing development
Increase in allocation for Jawaharlal Nehru National Urban Renewal Mission
Read more about Budget 2011-12
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