Union Budget 2015-16: An Overview and Analysis
An Overview on Budget 2015-16:
1.
GDP growth estimated between
8.0 – 8.5%.
2. Fiscal deficit target relaxed
to 3.9% of GDP in FY 2015-16 with increased focused on public investment in infrastructure and also proposed to fiscal deficit target 3% within 3 financial years.
3. Net market borrowing to be Rs 4.56 lakh crores.
4. No change in personal income
tax slab and rate of tax for companies in respect of income earned in the
financial year 2015-16.
5. Proposal to reduce corporate
tax from 30% to 25% over next 4 years, starting from next financial year
6. Wealth tax abolished,
additional surcharge 2% imposed on individuals having income more than Rs 1
crores.
7. Excise duty on cigarettes is
being increased by 15% to 25%.
8. Service tax is being
increased from 12% plus education cess to 14%.
9. Online and mobile
advertising, radio taxis or radio cabs, services provided byair-conditioned
contract carriages are now under service tax.
10.Total subsidies limited at 1.7% of GDP in FY16 against 2.1% of
GDP in FY15 due to fall in fuel subsidies.
Banking and Financial services:
Announcement of autonomous bank Board Bureau and Holding company
structure for PSU banks in 2015-16 is positive for PSU banks in long term.
Reduce in corporate tax is positive for banking and financial services
companies as most of them pay full tax rates. Overall budget impact is
positive.
Oil & Gas Sector:
The impact of budget on this sector is neutral. The subsidy for
FY16 is 30,000 crore marginally negative for oil companies. Focus on DBT
(Direct Benefit Transfer) to curb subsidy leakages is positive for entire
sector.
Infrastructure / Capital Goods Sector:
Road development allocation has been increased to 85,565 Cr(this
budget) from 37,845 Cr(last budget) in this budget. NHAI target has to complete
8,500 KM road development. It is positive for all road developers. Infra
investment trusts to be set up to securitizes infra project assets.
Announcement of National Investment and
Infrastructure Fund (NIIF) and infuse Rs 20,000 Cr every year in this fund has
been positive for all infra companies.
Power Sector:
Announcement of 5 new Ultra Mega Power Projects of 4000 MW, in
the plug and pay mode is positive for new investments in this sector. Focus on
renewable energy by increasing the capacity is positive for long term.
FMCG Sector:
Increase in service tax and from 12.36% to 14% can hit the consumer
demand and will impact negative for this sector.
Retail Sector:
Excise duty on leather footwear having more than Rs 1000 is
being reduced to 6% from 12%. It is positive for footwear companies. Gold
Monetisation Scheme is positive for jewellers and consumer both.
Travel Sector:
Facility of Visa on arrival to be extended from 43 countries to
150 countries is positive for tourism economy. Development in heritage sites in
India is also positive for this sector.
The budget has been positive for agriculture sector, logistic
sector, real estate. Housing for all is big positive for housing development
companies. For cement and metal sector this budget has been neutral.
While the
budget cleared most of the issues related to FII, it failed to meet general expectations
about reduction of MAT in SEZ, reduction in STT and CTT and reduction of custom
duty on gold. Increase in service tax may discourage the consumption. The
revival of investment in near term is limited but the good result will come in
next 3-4 years not in immediate future.
If you have doubt about investment
product and want more information regarding investment or you need investment services,
feel free to ask us. We also conduct the seminar on investment and financial
planning. If you are interested for conducting seminar in your city, just drop
the mail.
Warm regards,
Arvind Trivedi
Certified Financial Planner
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