At long last, there is some positive move on the roll-out of goods and services tax, which has been held up for last several years.
GST is an indirect tax that will lead to the abolition of all other taxes such as octroi, central sales tax, state-level sales tax, excise duty, service tax, and value-added tax (VAT).
According to media reports, the Centre and the state governments have arrived at a consensus on the sales tax compensation to state.
The Centre has also agreed to a floor rate with a narrow band for the tax, climbing down from its earlier proposal of a uniform GST rate across the country.
It has also given states an option to exit the system, if they find it unviable later.
The roll-out is going to be a phased one, as in the case of value added tax.
By N.C. Hegde and Anoop Kalavath
The FM delivered a budget that brought smiles to investors and consumers alike.
Many industries like Infrastructure, housing, textiles, entertainment and metal processing have reasons to cheer.
Gloom is largely limited to high-end and luxury goods like expensive mobiles, SUVs, and yachts. To get a bird's eye view of what this budget means to you, see our brief analysis detailed below:
Agriculture:
Agriculture has all reasons to cheer. More services like testing service in relation to agricultural produce have been included in the negative list of services. This would ensure that agriculture is out of bounds for service tax.
Customs duty on export of de-oiled cake is eliminated in order to boost export of agricultural products.
From an income tax perspective, agricultural commodities have been kept out of the net of the proposed commodity transaction tax which is applicable on exchange traded commodity products.
Housing
In order to boost the low-cost housing, the Finance Minister announced an additional income tax break for fresh housing loans not exceeding Rs 25 lakh by first-time home buyers. However the reduction of abatement from 75 percentage to 70 percentage on construction services in respect of housing costing more than Rs 1 core or having a carpet area of 2000 square feet would dampen the spirit of wealthy home buyers.
By R Jagannathan
We know Pranab-da left a troubled legacy for Manmohan Sing to fix - including the retrospective Vodafone legislation, and the General Anti Avoidance Rules (GAAR), which have so riled investors.
But did he also leave several financial time-bombs that will have to be defused?
One of his last acts as finance minister was to okay a compensation of Rs 20,000 crore to states for losses on the central sales tax (CST) - a tax on inter-state movement of goods. This is a tax that states promised to eliminate provided the centre compensated for it. The centre hasn't so far done this, and has used non-payment as a lever to ensure that states sign up to the new reform - the Goods and Services (GST) tax - first.
A sign reads "We assume the VAT tax rate increase. We step on the VAT tax rate" as a woman looks around at a shoe store in Madrid September 4, 2012. As of September 1, Spain's VAT tax rate surged to 21% on a range of goods and services as part of a government plan to boost revenues and cut the deficit and avoid a full-blown European bailout. Cash-strapped Spanish consumers and small business owners adjust to a higher value-added tax imposed to cut the public deficit while the country's second recession in three years drags on.
10:11 am Tax expert HP Ranina told CNBC TV18 that securites transaction tax may be reduced and the govenrment's thrust on creating the right environment for investor. He also expects the finance minister to tinker with the sort-term capitla gains tax. The marklet is anyways not doing any great, so this is a viable thing he could do, Ranina said.
As far as the roll-out of the Goods and Services Tax is concerned, Chidambaram is liekly to only reiterate the earlier stance that the govenrment is on course to inctroduce it in after the election, said Dinesh Kanabar of KPMG.
The sensex, meanwhile, was stable with a 0.5 percent rise.
9:42 am Of the 30 Sensex consituents, 28 advanced and 2 declined. ONGC, up 2.6 percent, and Coal India up 2.2 percent were the top gainers The BSE Midcap Index, which was on a roallercoster ride over the last few days, was up 0.5 percent. Of the 250 constituents, 170 advanced, 43 declined, one remained unchanged and 36 were not traded, accordign to the data on the BSE website.
Pankaj Vaish of Citibank told CNBC TV18 that the slowdown is major worry and the need of the hour is a revival in the investment. The only way out for the government is to add capacity massively, he said. He expects the market To consolidate around current levels for now and hit new high before 2014 general elections. The government should also look at providing domestic investors options besides gold.
9:19 am Sensex opens at 19290.32 , up 0.72 percent and the Nifty opened at 5836.45, up 0.68 percent, triggered by positive global cues as Asian shares and other risk assets rose as sentiment improved after US Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus, while a smooth debt sale calmed fears over Italy's political turmoil.
The Indian equity markets are likely to open flat with a positive bias as investors await the Budget for taking positions, while global cues provide support.
Asian shares and other risk assets rose on Thursday as sentiment improved after US Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus, a Reuters report said.
New Delhi: Noting that lot of work remains to be done in implementation of GST, Prime Minister's Economic Advisory Council (PMEAC) today said introduction of the tax reform requires considerable negotiations among the Centre and State governments.
While the desirability of the tax is not in doubt, introduction of GST (Goods and Services Tax) requires considerable negotiations, bargaining and preparatory work on both the structure and operation of the tax, PMEAC said in its Economic Outlook for 2012-13
