Union budget 2015 expectations - Business & Economy - General Economy - TIK Share

Union budget 2015 expectations


Rahul Rai

2015-02-26

Union budget 2015 will be tabled on last day of February 2015. Before we move on to discuss our expectations, let me share a whats app round up.

Budget 2015: Likely measures & stocks to watch out!!

  1. Make in India’ to get a boost - The government is expected to roll out incentives to boost manufacturing in an effort to support the government’s ‘Make in India’ campaign.
  2. Differential rates of Minimum Alternate Tax for SEZ and MSMEs may be possible. (MAT was introduced to ensure no profit-making company is exempted from tax liability. The current rate for MAT is 18.5%.).
  3. Government to give clarity on road map for tax reforms (GST and DTC) to boost and sustain growth in taxes
  4. The government may opt for setting up of holding company to improve operational efficiency in management of the state run entities and also allocate funds towards further capitalization of banks – Positive for PSU Banks
  5. Tax-saving fixed deposits currently have a 5-year lock - Expectation is for a 3-year lock - Positive for banks, level playing field with other assets.
  6. Life Insurance, Mutual Funds - Expectation Rs2lakh investment limit (From Rs1.5lakh of section 80C of the Income Tax Act) - Positive for ICICI Bank, HDFC, Max India, Reliance Capital, Aditya Birla Nuvo
  7. Home Loan - Tax deduction available on interest (currently INR2 Lakh) and principal repayment (INR 1.5 Lakh under Section 80C) of home loan - Further increase in limits - Positive for Banks and Housing Finance companies like India Bull Housing, Repco, Dewan, HDFC, LIC Housing
  8. Capital infusion in PSU Banks and Structural reforms - Recapitalizing banks - Positive for PSU Banks
  9. Irrigation - Micro Irrigation equipment/systems to be made eligible for 'priority sector lending to agriculture' - Positive – Jain Irrigation & entire fertilizer
  10. Smart Cities - Budget allocation for Smart City Projects - Positive for the capital goods, Cement and Infra sector: ACC, L&T. More positive for companies having presence in smart electrical products: L&T,Alstom T&D,Siemens,ABB, Schneider electric,Honeywell Automation.
  11. Reform in T&D Segment - Continuation of APDRP and RGGVY schemes Incentive for distribution companies to reduce T&D losses - Positive for Power T&D Companies Alstom T&D, Kalpataru Power, KEC, Crompton Greaves, ABB, Siemens
  12. Railway Infrastructure - Wagon and Coaches procurement program - Railway Signalling, Safetly and other infra project announcement - Positive for : Pennar, Texmaco,Titagarh, Kalpataru, Siemens, ABB
  13. GST Implementation - Positive FOR ECONOMY - Entire FMCG industry
  14. Increase in allocation of funds from National Clean Energy - Positive for Renewable power players-Suzlon, Solar Industries
  15. Increase in allocation of funds for strengthening sub-transmission and distribution systems - Positive for Powergrid, Reliance Infra, Tata power, Torrent power
  16. Improve sanitation facilities - Positive for HSIL, Cera Sanitaryware, Kajaria Ceramics, Sintex
  17. Improving labour laws especially for SMEs will benefit auto ancillary sector
  18. Tax sops for enhancing of “Make in India” programme, Increased allocation for Defense Sector - Positive for Defense related stocks like BEL, L&T, Astra Micro, Centum Electronics, Rolta
  19. Infrastructure spending including projects such as DMIC, roads, metros - ACC, Ultratech, Ambuja Cement, JK Lakshmi Cement etc.
  20. Expect increase tax on Cigarette - Negative for ITC
  21. Expect reduction import duty on Gold from 10% to 6% - Positive for Jewellery stocks like Titan
  22. Incentives for manufacturing of domestic set top boxes, Tax incentive OR exemption for cable operators and DTH players for digitization initiative - Positive for DISH TV, Den Network, Hathway Cable
  23. Cut export duty on iron ore (currently blanket export duty at 30%) - Positive for Sterlite (SSLT) and NMDC
  24. Focus on affordable housing (Pacca Makan) - Easing of taxation norms for REITs to provide parity in taxation regime between various investment platforms - Positive for Real Estate and Housing Finance stocks like India Bull Real, DLF, small housing player - Housing Finance stocks like Dewan Housing, LIC Housing
  25. Allocation of Ganga Action plan - Positive for VA Tech Wabag

I believe most of the expectations are covered in this message. What do you think central government have in basket to excite us!!!

Rakesh Bharadwaj

2015-02-26

Its a nice article. I expect that the basic exemption limit also has to see some major increase for Individuals. For Past four to five years, the increase is not so much when compared to the inflation rate. We may expect basic slab to be in the bracket of 3 to 8 lacks. High tax rates may encourage black money and also make it very difficult to attract investments. Either the deductions limit  under sections in Chapter VIA may increase or the the slab rate may itself change for sure.

I also expect some major changes in Corporate taxation for other than domestic companies . For Domestic companies, the rate may come down to 25%. Similarly for Firms, LLP. Surcharge may be removed for companies.

MAT rate may come down to 15% or less. Mat credit may be available without any time limit for setoff. Threshold limit for AMT may be increased to 50 lakhs.

SEZ may be out of DDT. DDT rate expected to drastically reduce to 10%. Depreciation rates are expected to go up under income tax act. Lot of changes are expected in Sec 44AD liking including profession, increasing the limit from present 1 crore.

Reply

CA Pulkit Sharma

2015-02-27

There is something wrong with Indian Income Tax, that is what I feel being a CA and in field advicing clients on investment matters.

Whether someone buying a house or land, have basic question, how to show the income source. Despite paying taxes people are afraid of investing or buying things.

This need to be sorted out by Income Tax department. I believe government should completely remove individuals from Income Taxes, reasons being that a big amount of money is hold as black (black because it was not taxed), if even for a small period the money is declared tax free believe me lot of money will be infused in economic cycle.

As per me, the taxation on corporates should be continued, but for individuals it should be tax free. Department should also make some plan to relieve the tax payers from fear of getting notices. Infact someone earning below 1 crore should not get any notice.

Reply

CA Pulkit Sharma

2015-02-28

Congerates Mr. Rakesh, your wish of corporate tax is fulfilled.

Reply

Rakesh Bharadwaj

2015-03-03

But my wishes for individuals were never met. Whole india expected a dream budget and this budget went on to become another mindless budget. This budget will neither increase consumption nor increase investment in corporate sector. Lets wait and watch what is in store for Karnataka people in the State budget.

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