The budget seems to be very positive for the economy in the long run with special emphasis on social schemes, healthcare, education, infrastructure and credit. The major sector to benefit directly would be the real estate sector with the ironing of REITs related tax confusion and the target to provide a home to each citizen by 2022. Similarly, infrastructure sector would get a huge boost due to tax free bonds, special new financial institution, higher plan expenditure, PPP model etc. Other sectors to benefit should be pharmaceuticals, power, BFIS (banking insurance & finance sector) and hospitality. Manufacturing companies would get a huge boost with rationalization of duties on intermediate and components.
On the taxation side, there are no major changes in the tax rates except for the reduction in corporate tax over 4 years. However, there is a huge emphasis on black money. Since black money is a very prevalent in our system, the draconian provisions in this regards are going to affect a lot of people and not necessarily the super rich or the politicians. This can dent the overall sentiments going forward if the authorities really target individuals on the money laundering front.
Overall the budget looks good. But there may be many missed opportunities also, especially on MAT, SEZ, Dividend distribution tax, retrospective amendments, clarification on applicability of service tax or customs/excise on softwares, litigation settlement schemes etc. The increase in rate of service tax is going to be very negative for the services sector.
There is not much in particular for the Gems & Jewellery sector except the new gold scheme. However, a lot of generic amendments as discussed in earlier post would definitely affect and impact the G&J companies.
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