Budget 2006: What Is In It For You...

As A Consumer

• Small cars to be cheaper, as excise duty cut from 24% to 16%
• Coke & Pepsi promise to get more enticing this summer
• Calories back in fashion as FM exempts host of food items from excise
• Fridge, AC, Desktop computer & Laptop prices expected to go up
• All cooking oils set to become more expensive
• Prices of clothing items expected to drop

As An Investor

• Hike in STT rate to make market transactions costlier
• FDs kept with banks for 5 years get tax breaks
• Close-Ended MFs attractive now as dividend distribution tax goes

As A Taxpayer

• No changes in direct-tax rates
• One-by-six scheme scrapped
• Tax sleuths keep close watch on spending

As A Corporate

• MAT (minimum alternate tax - on book profit) rate hike from 7.5% to
  10% to hit bottomlines
• Long-term capital gains now part of book-profit & thus taxable
• FBT tax rates reduced selectively but hassels remain

Keep visiting this space to get more insight on Budget 2006...

Highlights of Budget 2006

Big Picture

• Finance minister says economic prospects for 2005/06 just as good as last year
• GDP growth likely to be 8.1 percent in 05/06
• Government aims to raise GDP growth to 10 percent
• Gross budgetary support for 2006/07 at 1.73 trillion rupees
• FDI inflows up to November 2005 at $4 billion

Rural Investment

• Farm sector output likely to grow 2.3 per cent in 2005-06
• Government to spend Rs 117 billion ($2.60 billion) on rural jobs guarantee scheme in 05/06
• Government to allocate 186.96 billion rupees for rural infrastructure projects in 2007-07
• Banks to raise farm credit to Rs 1.75 trillion in 06-07 from 1.42 trillion
• Farmers to receive short-term credit at 7 per cent

Health and Education

• Education spending to be increased by 31.5 per cent, and health spending by 22 per cent
• Allocation for primary education increased to Rs 100.41 billion from 71.56 billion
• Allocates more funds for education of minorities, schemes for lower caste people

Industries

• Government to promote textiles, automobiles, leather, food processing and tourism for job creation
• Food processing sector to be treated as a priority sector for bank lending
• Petroleum, chemicals and petro-chemicals investment zones to be set up
• India to be promoted as a semiconductor manufacturing hub

Infrastructure

• Government aims to raise power generation capacity by 15,000 megawatts by March 2007
• Comprehensive review of coal policy needed
• Government expects investment of 220 billion rupees in oil refining over next few years. The government will encourage investment in refineries, pipelines and green fuel.
• Highways development programme to receive Rs 99.45 billion in 2006-07. The government has identified three new road projects to be built under a new special purpose vehicle.

Highlights of Budget 2006: Reforms Cues Go Missing...

MODEST taxes and modest spending increases marked a Modest budget from a normally immodest finance minister. This don't-rock-the-boat Budget was tailored for the upcoming state elections. Finance Minister P Chidambaram, on Tuesday, steered clear of controversial reforms - some of which had been confidently predicted - that might have raised electorial heat. He didnot utter a word about labour reforms or raising oil prices in line with the Rangarajan committee's suggestions.

The Finance Minister didnot liberalize foreign investment, announce any new disinvestment, tax withdrawals of long-term savings, or impose any new tax. He increased allocations for every conceivable vote bank, but modestly enough to avoid an explosion of pre-election spending that might swell the fiscal deficit. Releived by this prudent populism, sensex shot up by 88 points!

What is cheaper & what is costlier

Cheaper

• Small cars
• Soft drinks
• Shoes
• Ice cream
• PVC
• Alloy Steel
• Aluminium
• Tin Sheets
• Anti-HIV drugs
• Anti-Cancer drugs
• Pasta
• Instant food products
• LPG stoves
• Fluorescent lamps
• DVD drives
• Flash drives

Costlier

• Packaged software
• Umbrella
• Walking Sticks
• Kitchenware
• Tableware
• ATM services
• Honey
• Vanaspati
• Credit/debit card services
• Share transfers
• Internet Telephony
• International Air Travel
• Travel by cruise ships
• Glassware
• Computer
• Soaps
• Cigarettes
• Biscuits
• Goggles
• Henna powder
• Ceramic items
• Bricks and tiles
• Marble slabs
• Roofing tiles