3. “Compared to expectations, FM has delivered a mouse”
Key Takeaways
Surcharge of 10 percent on those with a taxable
income of over Rs 1 crore. Surcharge on
corporates with income over Rs 10 crore raised to
10 percent from 5 percent.
Additional investment allowance of 15 per cent
(over and above depreciation) for corporates
investing over Rs 100 crore in plant and
machinery.
Amnesty scheme for those who have not been
paying service tax. Of the 17 lakh service tax
assesses, only 7 lakh have been paying taxes.
Government to borrow Rs 6.3 lakh crore from the
market, while most players were expecting this
figure to be around Rs 5.2 lakh crore.
TDS of 1 percent on sale of immovable property
valued over Rs 50 lakh.
Rupee denominated bonds introduced for NRIs to
attract investments from this segment.
Fiscal deficit for FY13 at 5.2 percent and FY14
fiscal deficit seen at 4.8 percent.
Commodity transaction tax of 0.01 percent on
non-agricultural commodities.
For full article, Click here
4. How the Sensex moved to major announcements on Budget Day
Sensex at open: 19264.80, up 112.39 points Sensex at 11 am: FM begins Budget
speech. 19286.72, up 134.31 points.
Sensex at 11.46am: Extra investment allowance
of 15% for corporates investing over Rs 100
crore in plant and machinery.
Sensex at 12pm: Entry norms for FIIs to be
eased further.
Sensex at 12.11pm: Additional tax deduction of
Rs 1 lakh for first time buyers of houses valued
up to Rs 25 lakh
Sensex at 12.16pm: Fiscal deficit for FY13
at 5.2 percent and FY14 fiscal deficit seen at
4.8 percent.
Sensex at 12.21pm: Super Rich Tax - Surcharge
of 10 percent on those with a taxable income of
over Rs 1 crore
Sensex at 12.30pm: TDS of 1 percent on
sale of immovable property valued over Rs
50 lakh.
Sensex at 12.43pm: Government to borrow Rs
6.3 lakh crore from the market.
Sensex at 01.18pm: Disappointment from
the Budget led to sell-off.
Sensex at 02.59pm: Fresh bout of selling drifts
Sensex to fresh 3-month low
Sensex at 3.30pm: Highest ever turnover of
Rs 4.39 lakh crore, 18861.54, down 290 pts
Market Commentary: Sensex nosedives 290 pts as Budget 2013 flops
Top Gainers I Top Losers I Most Active I Commodities I Global Indices
5. Sector: Auto Sector: FMCG Sector: Oil & Gas
Expectations
Extension of existing sunset
clause under section 80-IA.
Exemption of applicability of
MAT.
Re-introduction of tax
deduction under section 80-
CCF for purchase of infra
bonds.
Expectations
Increase in excise duty on
cigarettes.
Expect the general excise duty
rate to be maintained at 12%.
Clarity on implementation and
timelines of GST will be
positive.
Expectations
NELP blocks will be cleared.
Shale gas exploration policy to
be formulated.
New oil and gas exploration
policy will be formulated on
revenue sharing.
Proposals
Excise duty on SUVs up from
27% to 30%.
Increase in royalty tax from
10% to 25%.
Higher allocation to JNNURM
leading to additional demand of
10,000 buses augurs well for
all commercial vehicle
manufacturers.
Proposals
Specific Excise Duty on
cigarettes increased by 18%.
Tax on royalty increased from
10% to 25%.
Proposals
Import duty on crude oil might
be re-imposed.
Cess on crude oil production
might be increased from
current levels of Rs 4,500/MT.
Removal of 5% customs duty
on LNG and natural gas.
Impact
Negative for M&M and Tata
Motors. Higher allocation to
JNNURM positive for all
commercial vehicle
manufacturers.
Impact
Cigarette companies will pass
on the increase to the
customers. This could
marginally impact volume
growth.
Impact
Positive for the upstream
companies like Reliance,
ONGC.
6. UDAY KOTAK
Kotak Mahindra Bank
SAMIR ARORA
Helios Capital
MADHU KELA
Reliance Capital
The Finance Minister has lived up
to his promise on fiscal deficit.
The Budget 2013-14 is good for
capital markets and investments.
The Budget 2013-14 turned out to
be unexciting for equity markets.
No direction changing moves
announced to revive markets.
The Budget is encouraging as FM
has not thrown any negative
surprises. Fiscal deficit projection
of 4.8% looks credible.
PAWAN GOENKA
M&M
KOUSHIK CHATTERJEE
Tata Steel
ADI GODREJ
Godrej Industries
Don't agree with excise duty hike
on SUVs. Diesel tax not being
implemented is good news. I
would rate budget as 7.5/10.
The focus would be on how more
efficiently coal can be mined. Our
aim is to increase mining with
available reserves.
FY14 Budget is a growth oriented
one and the emphasis remains on
inclusiveness. Expenditure and
execution is important.
7. ITC Coal India ONGC
Proposal: SED on cigarettes
hiked by 18%. Negative for ITC.
Proposal: To encourage PPP
projects for coal. Positive for
Coal India.
Proposal: To announce policy
on Shale gas based on revenue
sharing, Blocked NELP blocks
will be cleared. Positive for
Reliance Inds, ONGC.
ICICI Bank Tata Motors DLF
Proposal: 4% farm loan scheme
extended to private sector banks.
Negative for private sector
banks.
Proposal: Excise duty on SUV
upped to 30% from 27. Negative
for M&M, Tata Motors.
Proposal: House loans up to Rs
25 lakh will be allowed an
additional deduction of interest of
Rs 1 lakh. Positive for realty.
SBI Sun Pharma Jain
Irrigation
Proposal: To provide Rs 14,000
crore for public sector banks
recapitalisation. All Women’s
Bank to be set up via public
sector. Positive for public sector
banks.
Proposal: To allot Rs 37333
crore for healthcare, family
welfare in FY14: Positive for
pharma stocks.
Proposal: Rs 27,049 crore
allocated to Ministry of
Agriculture, up 22%. Positive for
Jain Irrigation, Monsanto,
fertilisers and pesticides.
8. Educomp
Solutions
NTPC Century
Textiles
Proposal: Rs 65,877 Cr has
been allocated to education, up
17% from FY13. Positive for
education stocks.
Proposal: Extension of sunset
clause for profit-linked incentive
by one year: Positive for the
power sector.
Proposal: Propose technology
upgrade scheme for textile sector
to Rs 2400 crore in FY14.
Positive for Century Textiles,
Alok, Arvind.
Suzlon
Energy
SKS Micro Sadbhav
Engineering
Proposal: Higher allocation for
wind energy. Positive for Suzlon.
Proposal: Bank correspondents
can sell micro finance products.
Positive for SKS Micro.
Proposal: 3000 km of road
projects will be awarded in first 6
months of FY14. Positive for
Sadbhav Engineering,
construction companies.
Triveni
Engineering
Moschip Speciality
Restaurants
Proposal: Allocation of Rs
15,260 crore towards clean
drinking water & sanitation.
Positive for Triveni Engineering,
Va Tech Wabag.
Proposal: No custom duty for
plant, machinery for semi-
conductors. Positive for Moschip,
SPEL.
Proposal: Finance Minister to
impose service tax on all AC
restaurants. Negative for
Speciality Restaurants.
9. Super Rich Tax: 10% Surcharge on income above Rs 1 crore.
Tax credit of Rs 2000 for income between Rs 2-5 lakh.
MALE: No change in tax slabs.
TAX RATE NOW POST BUDGET
Nil 2 lakh 2 lakh
10% 2-5 Lakh 2-5 Lakh
20% 5-10 lakh 5-10 lakh
30% Above 10 lakh Above 10 lakh
FEMALE: No change in tax slabs.
TAX RATE NOW POST BUDGET
Nil 2 lakh 2 lakh
10% 2-5 lakh 2-5 lakh
20% 5-10 lakh 5-10 lakh
30% Above 10 lakh Above 10 lakh
SENIOR CITIZEN: No change in tax slabs.
TAX RATE NOW POST BUDGET
Nil 2.5 lakh 2.5 lakh
10% 2.5-5 lakh 2.5-5 lakh
20% 5-10 lakh 5-10 lakh
30% Above 10 lakh Above 10 lakh
VERY SENIOR CITIZEN: No change in tax slabs.
TAX RATE NOW POST BUDGET
Nil 5 lakh 5 lakh
20% 5-10 lakh 5-10 lakh
30% Above 10 lakh Above 10 lakh
Click here to use our tax calculator to find out your new
tax structure.
10. Cigarettes SUVs
Set Top Boxes Mobile phones (GSM)
Yachts Marble
MP3 Players Passenger cars
Silk MUVS
Diamonds Imported Jewellery
Leather Goods Electrical plants
Readymade Garments Handmade carpets
11. GDP Trend & Forecast
Key Takeaways
The government expects GDP to grow in 6.1-6.7 percent range next year.
Wholesale price inflation is seen between 6.2-6.6 percent by March this year.
Revival of investment in infrastructure is one of the key challenges before the
government.
The Survey based on developments of FY13, draws out a rather cautious picture of the
year gone by, emphasizing the continued need for reforms in the coming months with an
outlook for the next fiscal pointing towards gradual improvements.
9.6%
9.3%
6.7%
8.6%
9.3%
6.2%
5.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
GDP Growth Rate%
12. Fiscal Deficit
Key Takeaways
The Government will be able to achieve its fiscal deficit target of 5.3 percent for the
current year.
Revenue collection target for FY13 is likely to be significantly below target.
The Survey sees oil subsidies as a key fiscal risk, and that the government needs to
raise diesel and LPG prices in line with global rates.
There is limited room to grow exports, given adverse local and global factors
The only way current account deficit can be kept in check is by reducing imports of gold
and oil.
3.3%
2.5%
6.0%
6.5%
4.8%
5.7%
5.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Fiscal Deficit as % of GDP
14. “No hike in passenger fares; freight revenues eyed”
Key Takeaways
No hike in passenger fares. Railways propose no hike in Reservation fee,
tatkal charge.
Freight charges on diesel, LPG, steel, iron ore,
cement, urea up by 5.8%.
Railways to launch 67 new express trains, 26
new passenger trains.
Railways to introduce AC coaches for Mumbai
suburban network in FY14.
New system to enable booking of 7,200 tickets
per minute versus 2,000 now.
FY13 railway losses seen at Rs 24,600 crore
versus Rs 22,500 crore year ago.
Railways to raise Rs 95,000 crore for the next 4
years.
Rail Budget – Full Speech I Analysis I Rail Budget Highlights – Full article
15. Coal India Bhel ACC
Proposal: Rs 4,000 crore has
been allotted for coal mine
connectivity projects.
Proposal: Railways to set up
electromotive unit in Rajasthan
in joint venture with BHEL.
Proposal: Freight rates to go
up by 5.8%, Negative for
cement, steel, iron ore and
urea companies.
Titagarh
Wagons
Texmaco Rail Gammon
Infra
Proposal: To introduce AC
coaches for Mumbai suburban
coaches. Positive for Titagrah
Wagons, Texmaco Rail.
Proposal: Railways to set up
coach manufacturing facility at
Haryana; Positive for
Texmaco, Titagarh, BEML.
Proposal: Rs 9,000 crore has
been allocated for port and
mine connectivity. Positive for
Gammon Infra, L&T, NCC.
Suzlon KEC
International
Siemens
Proposal: Railways to set up
75 MW windmill plants.
Proposal: Railways to set up
equipment signaling plant at
Chandigarh via PPP.
Proposal: Railways to
complete electrification of
1,200 km.
Verdict
Railway Budget turned out to be a non-event. Railway Minister P K Bansal failed to deliver some big
ticket announcements. Major railway stocks like Kalindee Rail, Kernex, Titagarh Wagons, Texmaco Rail
saw a huge sell-off in trade.
16. Investors to face some small changes following Budget
- Arnav Pandya, Financial Planner
Investors will witness some incremental changes as far as their
investment plans are concerned in the coming financial year following
the announcement of the Union Budget 2013-14. These will not
mean a major deviation from their existing plans though they will be
able to make use of some additional options in their investment mix.
One bit of good news is that the investors will have a choice of tax
free infrastructure bonds for one more year as there has been a permission given for the issuance of
these bonds. The individual can choose this as a long term option for parking their funds for 10 to 15
years and this will not have an adverse tax impact because of the fact that the income will be tax free in
their hands.
The Rajiv Gandhi Equity Savings Scheme (RGESS) has also witnessed some small changes wherein the
income limit for being eligible for the scheme has been raised to Rs 12 lakh. At the same time the benefit
can be claimed over a period of three years as compared to the one year time period that exists currently
which means that the investor can actually phase out their investments to suit their requirements. The
choice of instruments in the scheme has also been increased as equity oriented funds have been
included in the eligible list of investments which will help the investor to choose a fund as per their liking.
On the house property front there is an attempt to encourage first time investors through a higher
deduction that will be available for repayment of interest on housing loans. For a first time buyer if the
value of the property is Rs 40 lakh or less and if the housing loan is Rs 25 lakh or lower then an additional
deduction of Rs 1 lakh would be available over and above the existing Rs 1.5 lakh deduction. Once again
this can be easily claimed because of the fact that is can be taken over a two year time period.
However the provision for a tax deducted at source at the time of sale of the house property if the value of
this is Rs 50 lakh or higher would be a negative. This would increase the burden on the individual in terms
of compliance and effort in deducting and depositing the tax with the government.
There will also be a better option available for those who want to protect their real rate of return because
there will be the introduction of inflation linked bonds and inflation linked National Savings Certificates.
Conservative investors as well as senior citizens can make use of this opportunity when it becomes
available. This will ensure that the interest rates earned by the investor moves along with the changes in
the overall interest rates and hence there is protection in times when inflation rises in the economy.
17. Why Chidu's Lo-Cal budget is a flop-show
-R. Jagannathan Editor, Firstpost at Network 18
If Palaniappan Chidambaram’s eighth Budget has not set the
markets on fire, it can be easily explained: his first goal was
to avoid doing damage to investor confidence, which is what
his predecessor managed to do. And unlike his own 2008
budget, which set the stage for the economy’s long-term
slide and made inflation intractable, Budget 2013-14 has
taken the middle path of low ambition and low risk.
There is thus nothing in it to excite anybody, not even his
own party. He has delivered on his promise of providing a “responsible” budget, which the
markets misunderstood to mean something that will send the adrenalin pumping. That was not
on, and the FM restrained himself from any dose of excess populism.
A lo-calorie budget is not meant to energise anybody. It is meant to get the fat down.
If the markets are moping right now, with the Sensex and Nifty heading south, it’s because
Chidambaram has already given them enough room for optimism before the budget. The markets
wanted more of the same, but he could not oblige.
A lo-calorie budget is not meant to energise anybody. It is meant to get the fat down.
Before we rush to condole those left out of accessing the meagre basket of goodies, it is worth
summarising the core proposals made in the budget. Chidambaram has raised Rs 18,000 crore
of additional revenue through direct and indirect taxes, the former mostly by taxing companies
more. Excise and customs remain more or less the same, with no changes in base rates.
The concessions, both to populism and the middle classes, are minor: there is a token Rs 10,000
crore additional provision for Sonia Gandhi’s Food Security Bill, some very small personal income
tax reliefs, and an additional deduction of Rs 1 lakh for interest paid on first home loans (over and
above existing Rs 1.5 lakh). Plus there are promises on new savings instruments sold through
post offices that will be inflation-indexed. But these will not be more than sideshows to the main
avenues currently available for savings.
For full article, Click here
18. Budget: Chidambaram plays safe; market disappointed
-Santosh Nair Editor, Moneycontrol at Network 18
Much was expected of Finance Minister P Chidambaram in Budget
2013 considering that he had marketed it aggressively to foreign
institutional investors in the last few ways. To be fair, he has
delivered on two key parameters: fiscal consolidation and a stable
tax regime. But what the market was hoping from the architect of the
Dream Budget was some kind of a road map on how growth and the
investment cycle could be revived in the near future. Also, on how
subsidies could be meaningfully lowered. And that is where he appears to have fallen short. It was never
easy going to be raise taxes in a slowing economy, and to that extent, the status quo on key tax rates
should come as a relief even if was only to be expected. The only other way out for the Finance Minister
has been to cut back on expenditure, which has been doing aggressively over the past few months. But
investors and the industry are questioning the wisdom of achieving fiscal targets through cost-cutting. At a
time when private investments have dried up, a cutback in government spending could further crimp
growth near term. While he has promised on a fiscal deficit target of 4.8 percent for next year, how he
achieves that will be the key. The current year’s target was achieved by trimming Plan Expenditure by
around Rs 1 lakh crore.
On the positive side, the FM has not slashed Plan Expenditure for FY14 in a big way as many had feared.
The estimate of Rs 5.5 lakh crore is about 29 percent higher than the revised estimate of Rs 4.29 lakh
crore for FY13.
Additional provision for the Food Security Bill at Rs 10,000 crore was much lower than what the market
had feared. The subsidy bill for fuel, fertiliser and food together for FY14 is estimated at Rs 2.31 lakh
crore, lower than the revised subsidy bill of Rs 2.57 lakh crore for FY13. But market may take the subsidy
estimate for FY14 with a pinch of salt, considering that the revised estimate for FY13 was about 35
percent higher than the initial estimate.
The FM said that current account deficit was a bigger problem than fiscal deficit. But the Budget did not
have anything specific on how oil and gold imports will be curbed.
There has been a sharp increase (46 percent) in allocation to the Rural Development ministry, and that
was only to be expected considering that general elections are due in barely a year. The FMCG industry
must be hoping that a pickup in rural consumption should add to their bottomlines.
For full article, Click here
