Budget Takeaways

Takeaways on Budget 2007-08



Ambit Capital



· Agri investment to go up by +2% of GDP

· Irrigation focus to benefit Kirloskar Bros

· Education thrust to benefit paper & stationery cos; +ve for BILT, Navneet , Camlin

· Rural thrust to benefit Infra, Irri, Power;+ve for IVRCL, Jain Irrigation

· Education sector focus to benefit NIIT, Aptech, Educomp & Prithvi Info

· Rural focus will benefit SBI, PNB, BOI for agri advances

· Immunisation prog +ve for Wockhardt, Panacea Biotech

· Farm sector focus +ve for tractor cos - M&M, Punjab tractors, Escorts

· Agri focus +ve for Monsanto, Rallis, Bayer Crop, JK Agritech

· Irrigation thrust to benefit Jain Irri, Finolex pipes

· APDRP +ve for Jyoti, KEC Int'l, Kalptaru

· Ultra Mega Power Projects +ve for BHEL, Alstom, Siemens, ABB

· UMPP also +ve for PFC

· Increased outlay to NHDP +ve for L&T, Gammon, HCC

· CBM projs benefits Shiv Vani, ONGC

· TUF extension to benefit textile sector

· Higher tourism allocation to benefit Hotels, Pvt. Airports

· More branches for RRBs Positive for PSU Banks

· Short selling allowed for inst will improve liquidity in the mkts

· Higher defence exp to benefit BEL, BEML, L&T, Dynamatic Tech, AstraMicro

· Increased focus on PPP to benefit construction cos

· E-governance thrust benefits Vakrangee, 3i Infotech, TCS

· Rural telephony to benefit Rel Com, Bharti Airtel

· Fiscal deficit of 3.3% to ease pressure on interest rates

· Reduction of peak import duties to benefit Capital goods cos

· Customs on man-made fibre reduced from 16 to 8%

· TUF continuation to benefit textiles, +ve for SRF

· RSM: concession rate of 5% to all research units

· CVD on aircrafts incl helicops negative for Global Vectra, Air Deccan, SpiceJet

· RSM: no change in service tax rate

· Excise duty on petrol & diesel reduced, +ve for Oil Mktg Cos & economy in general

· Excise duty on footwear reduced, +ve for Bata, Liberty, Mirza Tanners

· RSM: Excise on cigarettes increased by 5%

· RSM: service tax exemption increased to 8,00,000

· ITC to marginally impacted by excise hike

· Service tax net widened, includes individual PMS services

· RSM Infrastructure status for Gas Pipeline & Storage Facilities & Navigation schemes

· Section 80 IA benefit extended to ppeline cos, very +ve for PSL, JSAW, Man Industries, GAIL, GSPL, IGL

· Diamond Mfg & trd deemed income taxation introduced

· RSM: Benign assessment procedure for gems industry

· Hotel & Conventions centres to get tax benefit

· Tax holiday for new hotels, +ve for Parsvnath, Anant Raj

· MAT introduction negative for software cos

· MAT levy on exempt Dividend & Cap Gain income for corporates

· Cap Gains Exemption for NHAI & REC bonds to continue

· Increase in dividend distribution tax -ve for corporates/MFs

· FBT exemption for Free Samples; to benefit corporates

· ESOP SUBJECT TO FBT

· Corporate Headline Tax Rate 33.99%

· Additional education cess of 1% to hit corporate earnings

· ATF exemption on smaller aircrafts to benefit Air Deccan

· Budget -ve for IT & Cement cos

· RSM: Tax deduction for housing projects not extended

· Housing Companies Exemption lapses

· Budget +ve for pipeline cos, cap goods, oil mktg cos, infra, FMCG & textiles

· Service tax exemption on clinical trials, +ve for DRL, Ranbaxy

· RSM: service tax on commercial rentals

· SEZ benefit restricted to new units; trf of exst bus not eligible





Ambit RSM



· Higher Defence Allocation; + ve Ashok Leyland, Tata Motors

· Dredgers exempt from import duty- Dredging Corp to gain

· Custom reduced on medical equipment to 7.5%

· Ad valorem on petrol down from 8% to 6%

· Excise duty exemption for water purified devices; +ve for Ion Exchange

· Increase in specific rate of excise duty on tobacco by 5%

· Asset Management service under service tax net

· New services - commercial renting of immovable property, asset management services

· Clinical trial of new drugs exempt from service tax

· Mediclaim deduction increased to Rs 15000

· Surcharge reduced for SME with less than 1 crore income

· Corporate Tax Rate Unchanged

· Surcharge removed on all cos with taxable income less than Rs 1 crore

· Senior citizen threshold limit increased to Rs 195000

· Venture Cap Funds benefit limited to Bio, IT Nano technology, select pharma, Dairy and poultry, Tourism sectors

· Art covered under capital gains

· FBT on free samples exempt

· Service Tax on Commercial Rental -ve for Retailers / Malls







CNBC-TV18





· Healthcare allocation increased; +ve Max India, Apollo Hospitals

· More focus on HIV eradication; +ve MNC Pharma, Cipla, Wockhardt

· Education allocation increased; +ve Educomp, NIIT, APTECH

· Healthcare allocation increased; +ve Max India, Apollo Hospitals

· Focus on HIV eradication; +ve for MNC Pharma cos like Novartis

· More allocation to self house groups; +ve ICICI Bank

· Higher Allocation for roads; +ve IVRCL, HCC, Gammon, Nagarjuna

· More agri focus spending; +ve ITC

· Higher Agri Focus; +ve Ruchi Soya, Agro Dutch, Agro Tech

· Higher farm lending; +ve for all PSU banks

· Higher agri focus; + Ve fertiliser & pesticide co

· More Irrigation projects; +ve pipe for cos esp PSL

· IT spending on Food corporation on India; Focus - TCS, CMC

· Seven more UMPP under process; focus: NTPC, Lanco, GMR, REL Ener, Tata Power

· Seven more UMPP under process; Focus - PFC

· Higher outlay under NHDP; +ve IVRCL, HCC, Gammon, Nagarjuna

· Higher Outlay for road infrastructure; + ve cement and CV players

· Seven more UMPP's to be awarded; +ve Electric Eq suppliers

· Higher outlay for TUF; + ve Lakshmi Machine Works

· Higher outlay for TUF; + ve Gokaldas, Arvind Mills

· Higher outlay for TUF; + ve textile cos

· Higher tourism allocation; + ve TFCI

· New mortgage guarantees/instruments to be introduced; + ve HDFC, HDFC Bank, Dewan Housing, LIC

· New mechanism for unlocking value thru exchangeable bonds against subsidiaries by group cos; Focus - Tata Motors, M&M, Bharat Forge, CESC, Bajaj Auto

· Allocation to defence increased; + ve BEL, Nelco, Astra, Avantel, CMC, Zen Technologies

· Higher e-Governance Spend; Focus CMC, ICSA, Wipro, 3i Infotech, TCS, Vakrangee Software

· PHASE OUT OF CST; PREPARE ROADMAP FOR INTRODUCTION OF GST BY 2010; + ve INDIA INC

· ON COURSE TO ACHIEVE FRBM TARGETS, + VE INDIA INC, MKTS

· PEAK CUSTOMS DUTY CUT ( Non Agri); + ve INDIA INC

· Customs duty on PTA, MEG Cut; + ve RIL, IPCL, INDO RAMA

· Cut in customs duty on Gem stones; + ve Vaibhav Gems, Gitanjali Gems

· Custom reduced on medical equipment to 7.5%; + ve Apollo Hospitals, Max India

· Customs duty cut on man-made fibre; + ve RIL, Indo Rama

· NO INCREASE IN SERVICE TAX; + ve INDIA INC, Indian Consumer

· Excise duty cut in Diesel & Petrol from 8% to 6%; + ve HP, BP, IOC

· Duty cut on water carriage pipes; + ve PSL, Ratnamani, Finolex Pipes

· Increase in excise duty for cement prices above Rs.190 per bag; -ve ACC, Guj Amb, Shree Cements

· NO CHANGE IN CORP TAX; - ve India Inc

· Infrastructure status for Gas Pipeline; Positive GAIL, CAIRN, RIL, GSPL

· Cut in service tax on Clinical trials; + ve Biocon

· MAT definition tweaked

· Tax Benefits extended for 5 more years; + ve Pharma & Auto co's

· IT/ITES sector to come under MAT: to pay 11.22% of adjusted Book profits; - ve IT industry - Infosys, TCS, Wipro

· 150% weighted deduction extention ;+ve for pharma sector Sun Pharma, Ranbaxy, Dr reddys

· Dividend Distribution Tax hiked; - ve for high dividend payers - ONGC, NTPC, IOC, RIL

· Esops to be brought under FBT; - ve Tech, Media cos

· Dividend Distribution Tax increased; - ve Mf's

· Rent on Commercial properties; - ve Unitech, Mah Gesco

· EFFECTIVE TAX RATE UP FROM 33.66% to 33.99%; Tax rates of 30.90% for SMEs (total income < 10mn)

· Service tax exemption on clinical trials; + Ve Dr Reddy, Ranbaxy, Biocon

· Service tax on commercial property rent; - ve Pantaloon, Shoppers Stop, Trent

· Service tax on commercial property rent; - ve Multiplexes

· MAT not levied on 10 AA - SEZ's spared; marginally positive for SEZ players

· Proposal for Single tax levy on Telecom; directional + ve for telecom's

· Export Duty of Rs 300/tonne on iron ore; Negative for Sesa Goa

· Customs duty cut on coking coal; + ve for steel, power co's

· Measures to contain cement prices; +ve for construction co's





E&Y



· Immunisation programme to promote Pharma industry

· Higher outlay for seed procurement to benefit agri-based companies

· Coffee, rubber to get similar fund benefits as tea industry

· Rs 1800 cr allocated to NABARD +ve for banks

· Rural bonds worth 5000 cr to be issued will be eligible for tax exemption

· Higher outlay for seed procurement to benefit agri-based cos- monsanto,syngenta

· Agri focus with a view to increase production is a measure to curb inflation

· Focus on road construction to benefit cement cos

· Technology upgradation scheme to continue - handlooms to be covered

· Increased Allocation for textile parks to boost Garment and textile cos

· Retail sector in sports may get a boost on account of commonwealth games

· Tourism and Hotel sector to also benefit from Commonwealth games

· Higher VAT growth will reduce subsidy burden on Central Govt

· Interstate purchase to become less costly due to reduction in CST

· Reduction in rate step towards phasing out of CST

· Peak rates reduced from 12.5% to 10% for non-agri products

· Textile raw materials import duty cut

· Gem & jewellery sector to benefit from reduction in duties

· General rate on medical equipments reduced to 7.5%

· Medical equipment duty cut to benefit the Hospital sector

· No change in CENVAT & service tax rates

· Excise duty on petrol & deisel reduced from 8% to 6%

· Reduction in duty on petro products - Measure to curb inflation

· All types of food mixes exempted from excise

· Reduction in excise duty on biscuits/packed foods to benefit SSI:E&Y

· SSI excise exemption increased to Rs 1.5 crores

· Service tax minimum taxable slab increased from Rs 4 to 8 lakh

· Clinical Trial Industry to get boost - Cost of providing services lower by 12.24%

· Export of services rules undergo changes. May simplify the export definition

· Individual tax payers to pay less tax by Rs 1000

· Exemption from 4% CVD for crude & refined edible oil

· Food processing industry to benefit from import & excise duty cuts

· Corporate having turnover less than 100 lakhs not to pay surcharge: effective rate is 30.6%

· Corporates having turnover less than 100 lakhs gain by 2.68% from abolishment of surcharge

· IT/ITES sector to come under MAT: to pay 11.22% of adjusted Book profits

· 5 year tax holiday for hotels/convention centres will promote tourism/hotel sector

· Private sector R & D institutions to gain by import duty cut to 5%

· Dividend Distribution Tax increased to 15% - effective rate is 16.83%

· Private import of aircraft & helicopters now liable to duty

· Education cess increased from 2 to 3 percent

· Effective Corporate tax rate, Turnover > Rs 1 cr - 33.99%, DDT: 16.99%, MAT: 11.33%

· Effective customs duty at peak rates reduced from 36.74% TO 34.13%

· Effective CENVAT rate becomes 16.48%

· Effective service tax rates proposed to increase to 12.36%

· Rent on commercial property covered under service tax

· Taxation of ESOPs under FBT to adversely impact remuneration policies of companies

· Exchangeable bonds to facilitate borrowings against promoters holdings

· Retrospective amendment to section 10AA made pari passu with section 10A for SEZ Units - anti abuse provisions introduced

· TDS on professional payments increased from 5% to 10% from June 1, 2007

· TDS on rented plant & machinery reduced to 10% from June 1, 2007

· Supreme Court ruling on taxability of royalty/ FTS overruled - Explanation to Section 9 provides for no requirement to establish territorial nexus with India

· Definition of "India" under Income Tax Act, 1961 made pari passu to definition under Article 1 of Consititution - to include territorial waters and air space

· MAT impact for tax holiday companies would depend on tax credit available

· Effective tax rate (including DDT) of domestic companies increased by 1.76% now being 43.58%