BUDGET 2008 - 2009 at a Glance

	Budget 2008-09 at a Glance Income Tax Individual Positive Income Range Proposed Tax Rate Up to Rs.1,50,000 Nil Rs.1,50,001 to 3,00,000 10% Rs. 3,00,001 to 5,00,000 20% Rs. 5,00,001 and above 30% Personal income tax exemption slab for women raised to Rs 1.8 lakh Personal income tax exemption slab for Senior Citizens raised to Rs 2.25 lakhs Corporate Neutral No change in corporate tax No change in rate of surcharge on tax. Other Tax VAT Production of seeds added to VAT list STT Governmentt to introduce STT on commodities derivatives Levy of STT on option premiums. Capital Gains Tax Short-term cap gains hiked to 15% Sectors Automobile Positive Excise duty on small cars cut to 12% Excise duty on hybrid cars cut from 24% to 14% Excise duty on buses & chassis cut from 16% to 12% Excise duty on 2-wheeler, small cars cut from 16% to 12% Excise duty on three wheelers cut to 12% Banking Neutral Banks will get the support from government in lieu of waiver of Rs 60,000 cr on farm debt 288 PSU Bank Branches to be opened in backward areas by March 2008 Financial Market Negative Asset management service under mutual funds, services by stock exchanges to be brought under Services Tax net. PAN requirement extended to all financial markets Short-term cap gains hiked to 15% Cement Negative Excise duty on bulk cement at Rs 400/tonne or 14%, which ever is higher Excise duty on clinker increase to Rs 450 per tonne from Rs 350 per tonne Construction/Civil Sector Positive Bharat Nirman Programme gets allocation of Rs 31,280 cr Engineering/Capital Goods Positive Growth in capital goods still healthy at 20.2% Customs duty on project imports cut to 5% vs 7.5% Fertilizers Positive Government proposes move to nutrient based fertilizer subsidies scheme Fertilizer subsidies to continue Customs duty exemption on Naphtha withdrawn, except for that used for making fertilizers Seed companies to get 150% deduction on R&D expenses Production of seeds added to VAT list FMCG Positive Special purpose tea fund to get Rs 40 cr in FY09 Perpetual fund for rubber, cardamom in FY09 Rs 18 cr allocated for coffee in FY09 Filter, non-filter cigarettes to be taxed at par Food Processing Positive Duty cut on food processing machinery Excise duty exemption on food mix and Biscuits Excise duty reduced to nill from 16% on packaged coconut water, tea & coffee mixes & puffed rice. Health Care Positive Allocation of Rs 16,534 cr for health in 2008-09 National Rural Health Mission allocation hiked by 15% Rs 1,042 cr allocated for Polio eradication in UP, Bihar Health cover of Rs 30,000 for every worker in BPL category Customs duty on few bulk drugs cut to 5% vs 10% Excise cut on all pharma goods at 8% vs 16% 5-year tax holiday for setting up hospitals in non-urban cities Information Technology Positive To allot Rs 100 cr to IT Ministry to link knowledge institutes Few IT, hardware components exempted from customs duty Education Positive Government to set up 3 IITs; one each In AP, Bihar, Rajasthan To set up 3 IISCs in Bhopal and Trivandrum Allocation To JNURM Hiked To Rs 6,866 Cr From Rs 5,482 Cr 16 central universities to be set up 20% higher outlay for Education Media & Entertainment Positive No duty on set-top boxes Steel/Aluminum Positive Customs duty on steel scrap cut to 0% vs 5% Customs on steel melting, aluminum melting cut to 0% vs 5% Oil & Gas Positive Coal regulator to be established, more reforms in coal, electricity NELP-VII to attract upto USD 8 bn investment Customs duty on crude/unrefined sulphur cut to 2% vs 5% Imported naphtha for polymer will attract duty Power Positive Urge To Open Bidding For Five More UMPP´s National fund for power transmission, distribution Plan Rs 800 cr for accelerating power reform in FY09 Special Countervailing Duty on power imports. Set up of new T&D fund Paper Positive Excise duty on some paper types cut to 10% from 12% Telecom Positive CENVAT reduced from 16% to 14% on all goods Textiles Positive 30 integrated textile parks approved Rs 450 cr provision for textile parks Allocation for TUF at Rs 1090 cr up from Rs 911 cr Tourism & Hospitality Positive 5 year tax holiday for 2, 3 and 4 star hotels in NCR regions till March 31st 2010. Tourism infrastructure to get an allocation of Rs.520 crore as against Rs.423 crore last year. Agriculture Positive Agriculture estimated to grow at 2.6% in FY08 Agriculture credit target at Rs 2.8 lakh cr for 2008-09 75% farm credit by Scheduled Commercial Banks Aim to hike farm contribution to GDP to 1.6% in 11th PlanFY09 Irrigation outlay seen at Rs 20,000 cr Vs Rs 11,000 cr 24 major, 750 irrigation projects in FY09 Irrigation resources finance to have Rs 100 cr capital National agriculture insurance plan to get Rs 64 cr in FY09 Market Reaction Indices Open At 1:00 PM Change (%) Sensex 17,779.54 17,439.45 -2.16 BSE Auto 4,830.17 4,849.83 0.41 BSE Bankex 10,021.76 9,856.57 -2.16 BSE Capital goods 16,577.45 16,169.71 -2.59 BSE Consumer Durables 4,789.24 4,743.12 -1.08 BSE FMCG 2,248.81 2,263.61 0.43 BSE Healthcare 3,918.59 3,888.70 -0.94 BSE IT 3,965.45 3,873.30 -2.37 BSE Metal 16,923.65 16,550.96 -2.48 BSE Oil & Gas 11,113.94 10,822.71 -3.06 BSE Realty 9,845.50 9,651.01 -1.85 BSE Power 3,330.31 3,256.28 -2.41 Markets reacted negatively; lost 2.16% around 1:00 PM The Indian markets opened lower at 17,779.54 down tracking weak global cues as U.S. markets ended in red and Asian indices too were trading lower with the exception of Shanghai Composite. Also, the news that Citigroup India arm is on cost cutting exercise after feeling the pinch of sub prime losses raised worry among investors. The markets were down till mid day trade as market participants were in wait-n-watch mood. The markets gave up soon after the budget speech started and plunged to 17,439.45 down by 385.03 or 2.16%. Proposal of hike in short term capital gains tax to 15% from 10% and to levy STT on commodities derivatives has triggered selling pressure. Automobile industry has welcomed the Finance Minister decision of excise cut. Consequently,Mahindra & Mahindra rose 1.15% to Rs 688, Eicher Motors up 1.07% to Rs 284 and Maruti Suzuki rose 1.83% to Rs 850.25. Fertilizer sector has reacted negatively as subsidy continues to farmers only and no subsidy has been provided to producers. Tata Chemicals down 1.88% to Rs 324, Rashtriya Chemicals down 4.73% to Rs 84.60, National Fertilizers down 4.95% to Rs 66.30, Deepak Fertilizers down 5.88% to Rs 135.30, and Coromandel Fertilizers down 8.08% to Rs 123.50.