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Budget 2018: Expectations across market and corporate sectors

Budget 2018: Expectations across market and corporate sectors
Highlights

The government will unveil its budget for the 2018-19 fiscal year on Thursday, with investors expecting increased investment in key areas such as agriculture, and a slew of incentives for businesses.

MUMBAI: The government will unveil its budget for the 2018-19 fiscal year on Thursday, with investors expecting increased investment in key areas such as agriculture, and a slew of incentives for businesses.

On February 1, Modi government will present its last full budget ahead of the 2019 general election. Here is a sector-wise list of expectations from finance minister Arun Jaitley

Disrupted by the roll out of GST and the effects of demonetisation, India's economy is expected to post growth of 6.75 per cent in the 2017-18 fiscal year ending in March, which would be the slowest in three years.

The government is widely expected to increase spending to ensure growth recaptures momentum, but most investors expect it to be prudent as loosening fiscal deficit targets by too much would likely spark a sell-off in the bond market.

Below is a list of expectations across markets and corporate sectors:

TAXES

1) Reduce corporate tax rate to 25 per cent from 30 per cent
2) Cut Minimum Alternative Tax to 15 per cent from 18.5 per cent
3) Enhance tax deductions, exemptions for individuals
4) May tax long-term capital gains in investments

AGRICULTURE

1) Establish fund to guarantee credit to encourage investment in agriculture sector
2) Allocate more funds for crop insurance schemes
3) Increase spending for dams and canals, micro irrigation systems
4) Provide subsidies for building cold storage to avoid wastage of perishable crops
5) Reduce fertiliser subsidies

BANKS

1) Allow full tax deduction for provisioning of non-performing assets at lenders
2) Raise the threshold for tax deduction on the interest paid on bank deposits from current 10,000 rupees
3) Reduce the tenure of tax-exempted retail term deposits to minimum of 3 years from current 5
4) Allow tax relief for proceedings under insolvency code

INFRASTRUCTURE

1) Increase investment by 10-15 per cent in roads from previous budget
2) Provide support for key road projects, including Bharatmala project, which will connect western and eastern India
3) Increase railways investments by 10 per cent from 2017-18 budget

IT/TECH:

1) Provide greater incentives for digital transactions
2) Support digital payments infrastructure
3) Rationalise tariff structure, excise duties for mobile phones, tablet computers
4) Lower GST rates for telecom services to 12 per cent from 18 per cent

AUTO

1) Announce policy on scrapping commercial vehicles that do not comply with emission norms if operational for over 15 years
2) Lower GST rates on electric vehicles, currently at 12 per cent

REAL ESTATE

1) Set single-window clearance for all real estate projects, especially housing to avoid execution and project delays
2) Give infrastructure status to real estate to help bring down finance, project costs, make homes more affordable
3) Reduce GST rate for projects under construction from current 12 per cent
4) Spend more on affordable housing
5) Reduce GST rate for home purchases to 12 per cent; stamp duty could also be cut

OIL & GAS

1) Reduce "cess" duty to 8-10 per cent from 20 per cent for oil and gas exploration and production
2) Set more beneficial GST rates for natural gas
3) Reduce or exempt city gas distribution companies from excise duty
4) Exempt LNG imports from paying basic customs duty
5) Provide subsidy aid to downstream companies selling LPG, kerosene below market prices

METALS & MINING

1) Decrease in basic customs duty on coking coal across grades
2) Decrease in export duty on iron ore above certain grade levels
3) Hike basic customs duty on aluminium scrap to protect domestic industry
4) Accelerate minerals exploration

GOLD

1) Cut import tax on gold to 2-4 per cent from 10 per cent to prevent smuggling

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