'Union Budget aims at inclusive growth' - Alok Inds
Alok Industries Limited comments on Budget:
The Budget 2009-10 was a continuity budget where Government has not made any drastic changes in the direct and indirect taxation rates, except for few measures relating to personal taxation and discontinuation of FBT.
A clear indication was, however, given that government aims at achieving GDP growth rate of 9% at the earliest with focus on all-round development of the economy i.e. inclusive growth. Growth in Farm Sector is being targeted at over 4%.
The Budget also focused on Infrastructural growth with increased allocation on public spending. The Revenue deficit projected at 4.8% of GDP and Fiscal deficit as a percentage of GDP is projected at 6.8% in B.E.2009-10.
Custom Duty Proposals
There has been no major change in the custom duty rates on textile related items. The custom duty on cotton waste and wool waste has been reduced from 15% to 10%. The basket of textile machinery exempted from custom duty has been further widened.
Excise Duty Proposals
i) Restoration of Excise Duty on Polyester products:
Excise duty on polyester products i.e. man made fibres, yarn, PTA & DMT and polyester chips has been restored to 8% from 4% reduced in the stimulus package.
This is, however, not likely to impact the Industry much as it should be able to pass on the increase in Excise Duty to the end consumer. Also, since the duty is cenvatable, the net increase in prices at the hands of consumer would be marginal.
ii) Optional Excise duty of 4% for pure cotton:
The budget has restored optional excise duty of 4% for pure cotton products.
Since the Industry has option to choose Nil duty or 4% duty, this would not have any adverse impact. In fact, manufacturers can use this option to adjust their accumulated cenvat credit and encash it.
For exporters, two taxable services namely, “Transport of goods through road” and Commission paid to foreign agents” have been exempted from the levy of service tax. This measure should administratively ease up the process.
i) Fringe Benefit Tax (FBT):
FBT has been abolished, which would benefit corporates paying tax on fringe benefits provided to their employees.
ii) Minimum Alternative Tax (MAT):
The MAT rate has been increased from 10% (effective 11.33%) to 15% (effective 17%). The carry forward tax credit period, however, has been extended from 7 to 10 years. This would increase the tax outgo in the hands of corporates who were under MAT.
iii) Sun-set clauses for deduction in respect of export profits:
The export profit benefits under section 10A and 10B of the Income Tax Act has been extended for one more year till FY 2011. This would benefit 100% EOUs.
i) Continuation of Interest Subvention of 2%
Interest subvention of 2% on pre shipment credit has been extended till 31st March 2010 from 30th September 2009. This is expected to benefit the textile exporters in terms of the lower interest cost.
ii) Mega Clusters for Development of Handloom and Power Loom.
The Government proposes to set up two handloom mega clusters each in West Bengal and Tamil Nadu and one power loom mega cluster in Rajasthan. It is also setting up New mega clusters for carpets to be set up in Srinagar (J&K) and Mirazpur (UP).
This would benefit the growth of handloom and power loom sector in line with the Government objective of inclusive growth.
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Alok Industries Limited