Economy News 21st Feb 2008
- Rupee plunges to 5-month low of 39.90
- Budget may roll tax sops for power sector
- Budget likely to give relief to income tax payers
- Budget wishlist: Excise duty drop on steel
- Budget may cut excise duties to boost manufacturing
- Indian salaries rose an average 15.1% in 2007:Hewitt Associates
Rupee plunges to 5-month low of 39.90
The Indian rupee plunged by 13 paise against the greenback on Feb 19 to close at its five-month low of 39.90/91 as heavy demand for dollar continued to pour in from domestic banks amidst the US currency's scarce availability globally. At the Interbank Foreign Exchange (Forex) market, the Indian unit fell to the intra-day low of 39.94 a dollar after resuming steady at 39.75/77 a dollar. It had fallen by ten paise to close at 39.77/78 per dollar on Feb 18.
Budget may roll tax sops for power sector
The Union Budget is an opportunity both for populist as well as meaningful measures to kickstart various sectors and power is one such area, which could do with more incentives. Finance Minister P Chidambaram is all set to announce a new set of measures to add capacity in the sector. According to sources, there may be an excise cut on power equipments from 16 per cent to 10 per cent. The income tax exemption for investment of up to Rs 50,000 in power bonds may be allowed, sources said, adding that CFLs and Energy efficient ACs may get excise cut by 5-6 per cent. The appreciation of rupee may hold FM from making any change in customs duty currently at 5 per cent for non-mega power projects but the cut in excise duty rates may be sufficient for the industry as the cut will translate into lower operational cost for the companies in the business.
The power sector also feels there is a strong case for rationalization in duties as that will make the sector more attractive. "There is a case for excise duty cut," said Ravi Uppal, Chairman, ABB India. The electrical equipment companies have grown at a rapid pace in the last few years. However, going by the order inflows of these companies and with the sops expected in the budget, we can expect a much higher growth in the sector. With spiraling fuel prices, there is an urgent need to give incentive to renewable and non-conventional energy and the finance minister may do exactly the same.
Budget likely to give relief to income tax payers
Income tax payers are likely to get a major relief in the Budget 2008-09, as the government prepares itself to please the middle class in the election year.Finance Minister P Chidambaram can give a marginal but visible relief to personal income tax assessees this year, as tax collections have substantially improved over the past three years. With buoyant tax collections in 2007-08, there is significant pressure on Chidambaram to reduce the effective rates. The Minister himself has acknowledged that with better tax compliance, there could be a case for cut in rates. The minimum income threshold limit for income tax payer could be raised from Rs 1,10,000 to Rs 1,25,000 or Rs 1,30,000, sources said. Similarly, the income threshold for 30 per cent tax rate could be raised from the current Rs 2,50,000 per annum, sources said, adding that this had been kept constant since fiscal year 2005-06.
Budget wishlist: Excise duty drop on steel
First came the price rollback and now India's steel lobby wants the Finance Minister P Chidambaram to do his bit to bring down the price even more, a relief not just for the aam admi but also for the industry. The Union Steel Minister Ram Vilas Paswan has already flagged off the agenda seeking to halve the excise duty to 8 per cent but expectations don't stop here.Tax cuts The steel minister proposes to reduce excise duty on steel to half from 8 per cent, export tax to be up on iron ore and Import duty on iron ore to be nil besides cut in import tax on coking coal to nil from 5 per cent.The steel lobby also wants hike tax on iron ore exports and a simultaneous cut in customs on ore imports. The industry is also demanding to coke coal imports duty free and cut in customs duty on other raw materials like zinc, nickle, LNG.
The iron ore exports should be banned. Declining profits The steel sector has seen many ups and downs in one year since the last budget. Looking at the ups, yes the steel prices have gone up but they have not been able to catch up with the raw material price hikes and this has squeezed the margins of the steel players but those feeling the heat the most are the smaller steel producers.
Budget may cut excise duties to boost manufacturing
Concerned over the slump in industrial production and to maintain inflation around 4 per cent, the Government is likely to provide relief to the manufacturing sector by marginally cutting excise duty rates or sector-specific duties in the Budget 2008-09. Finance Minister P Chidambaram may announce cut in excise duty rates across the board from 16 per cent to 14 per cent or sector-specific duty cuts in the budget to be presented on February 29, official sources said. Sectors like pharmaceutical, textile machinery, food processing, paper and auto including two wheelers, tyres are expected to get relief in excise duty, but like last year Chidambaram could also prune excise duty exemptions to maintain revenue collections, sources said.
According to Finance Ministry, due to various excise duty exemptions the estimated revenue foregone touched Rs 9,690 crore in 2006-07 as against Rs 66,760 crore in the previous year. It includes area-specific tax exemptions of Rs 7,000 crore in 2006-07. With the approval of over 400 special economic zones, the revenue foregone figures could be much higher for 2007-08, although some tax exemptions were withdrawn in the last budget.
Indian salaries rose an average 15.1% in 2007:Hewitt Associates
According to a survey by human resources firm Hewitt Associates, Indian salaries rose an average 15.1% in 2007 with the highest increase coming from the real estate sector. Compensation in the real estate sector surged 25.2% in 2007. Salary rise for employees at junior, senior and middle management levels was higher than that for the top mangement.
Hewitt expects the momentum to continue in 2008, rising about 15.2%, but will stabilise at 9%-10% by 2012.
The report suggests the struggle for talent and sustainability is large and rapidly growing in India. However, it also forecasts a shortage of people with specialist and technical skills and lack of leadership talent in India.
Hewitt found that the attrition rate was at an all-time high, led by insurance industry, followed by IT-enabled services and hospitality sectors.
Direct tax collections surged over 40% in Apr 07-15 Feb 08.
Direct tax collections surged over 40% in April 2007-15 February 2008. Net direct tax collections jumped 41.4% to Rs 228745 crore from Rs 161776 crore in the corresponding period of the previous fiscal. It achieved over 85% of budgeted direct tax target of Rs 267490 crore.
Corporate tax collection advanced 38.78% to Rs 138073 crore in April 2007-15 February 2008 compared with Rs 99488 crore in the corresponding period of the previous fiscal. Personal Income Tax (including FBT, STT and BCTT) catapulted 45.64% to Rs 90356 crore from Rs 62040 crore.
Securities transaction tax (STT) leaped 84.64% to Rs 7878 crore as against Rs 4267 crore. Fringe benefit tax (FBT) scaled up 29.75% to Rs 5216 crore from Rs 4020 crore. Banking cash transaction tax (BCTT) rose 16.81% to Rs 478 crore compared with Rs 409 crore.
0 comments:
Post a Comment