Banking & Finance
Govt may infuse capital into PSU banks. But overall Budget is expected to be negative due to concerns of fiscal deficit.
Cement
Continued spending on infrastructure would be beneficial for cement companies; any increase in tax incentives for residential properties would also be beneficial.
Infrastructure
Allocation may be increased for areas like irrigation and roads; steps likely to ease the process of accessing capital for the sector.
Information Technology
Expected extension of fiscal benefits under the STPI (10A/10B) scheme by 3-5 years to boost investment in the Tier-II and Tier-III cities, which are unable to avail the benefits of SEZs.
Oil and Gas
More clarity on the tax break from the natural gas produced under NELP I-VII . Measures could be taken on the recommendations of the Kirit Parikh committee, which has advised deregulation of fuel prices.
Power
Exemption under section 80-IA , currently available only till FY2011, may be extended.
Steel
Export duty on iron ore may be hiked, benefiting steel firms purchasing ore from the open market; but such a move will hit mining companies. Excise duty on metal products is likely to go up from 8% to 10%.
Telecom
A uniform tax structure that would help lowering the tariffs is expected; move crucial for the next leg of growth in rural India.
Pharma
Allocation for healthcare spending may be hiked. The government may increase the weighted deduction on R&D expenditure from the current 150% to 200%, and extend the tenure of deduction for the next 10 years.
Fertilizer
Last year’s promise of revamping the complex subsidy regime to the nutrient-based one won’t be met.
Oil Subsidy
Recasting subsidies on petroleum products, particularly kerosene and cooking gas, may be postponed as any increase in prices would add to inflationary fire.
Food
The finance ministry is looking to replace the public distribution system with food coupons, which can be used to buy food items from the open market.
Mutual Funds
SEBI has proposed scrapping tax benefits for corporates investing in mutual funds. If implemented, it would increase the corporate tax outgo, closing the arbitrage. It would be a major negative for the equity market and the mutual fund industry.
Income Tax
Income tax exemption limit can be raised a little to give relief to the middle class.
Service Tax
May be restored to 12% while excise duty could be increased marginally.
Corporate Tax
Govt may not tinker with corporate tax rates despite pressure from the industry.
Indirect Taxes
The rollback of excise duty is likely to be mildest and selective, with focus on sectors that have seen strong demand growth. Custom tariff rollbacks may be more broad-based.
Temporary Taxes/Cess
New temporary tax/cess may be introduced to fund government’s large and persisting social sector spending.
Divestment
Expect disinvestments of Rs 300-400 billion in FY11 — Coal India, Hindustan Copper, SAIL and BSNL are some of the candidates.
Excise Duty
May be increased by 2% to 10% and brought in line with service tax rate to help smoothen transition to GST.
Insurance
FDI limit may be hiked to 49% from 26%.
Housing
Housing loans up to Rs 30 lakh likely to get priority sector status.
Source : The Economic Times