Budget Impact
General
Dividend distribution tax raised to 15% from 12.5%: negative for all dividend paying companies.
Dividends distributed by money market mutual funds and liquid mutual funds will now be paying dividend distribution tax at 25%.
Levy of additional 1% cess for funding of secondary and higher education.
Cement - Negative
Increasing excise duty from Rs400 to Rs600 for price above Rs190 per bag and reducing from Rs400 to Rs350 is a negative as cement price per bag in most of the places is above Rs190 at present. With demand strong we believe the increase in the duty would be largely passed on, but continuous efforts by the Government to curb the price increase and reduce the profitability of the industry is visible.
Increase in allocation for Bharat Nirman, Rural housing and roads is positive for the industry from demand side.
IT – Negative
Higher education allocation by 34.2% to Rs32,352cr to be positive for IT education companies like NIIT, Aptech, Educomp Solutions, etc.
Almost doubling of e-Governance outlay both at centre and state level to benefit companies like Vakrangee to major extent and TCS and other Government focused companies to some extent
MAT to be applied to IT companies to 11.2% on book profits
Inclusion of ESOPs under the FBT net negative for the sector
Non-extension of STP benefits beyond 2009 negative especially for medium & smaller sized IT companies.