| News Announcement |
Impact Analysis |
| Budget projects Indian economy GDP at $5 trillion in 7 years from now |
- The GDP growth rate assumed is around 7-8% in real terms and 12% in nominal terms
- The budget has also looked at a likely GDP of $10 trillion beyond 2030 making it the third largest economy
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| Budget suggests raising public shareholding limit to 35% |
- The limit is currently 25% and could lead to share sale by promoters to the tune of Rs.5 trillion
- There are a total of 1400 companies on the BSE where the promoter stake is more than 65%
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| Buybacks will now be taxed at the rate of 20% of their profit value |
- This removes the tax arbitrage that buybacks had over dividends that are subjected to DDT
- This will be negative for IT companies that are cash rich as they will not have incentive to opt for buybacks now
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| Disinvestment target of Rs.105,000 crore has been set in the Budget |
- This is substantially higher than the current target of Rs.80,000 crore set for the year
- This target includes the strategic sale of Air India, which has in the past received tepid response from the market
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| NRIs to be now regulated under the common FPI regulations |
- The idea here is to tap the $75 billion that NRIs remit as bank deposits into India each year
- A word of caution is that such routes have been misused in the past and that will have to be plugged
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| Caps for FIIs to be linked to sectoral caps for respective industries |
- The respective sectoral caps will apply for all companies and the government will still have discretion to regulate
- The current limit of 24% for FIIs will now no longer be applicable and that stands scrapped
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| Import duty on gold raised from the current 10% to 12.5% |
- The idea is to discourage the imports of gold as it distorts the balance of payments
- However, local jewellers are up in arms as it is likely to increase the cost and could be negative for them
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| PSU banks to get recapitalization to the tune of Rs.70,000 crore |
- This should help the banks to shore up their capital and also help them build their asset books
- This capital infusion combined with the IBC recovery will be a boost for the stronger PSU banks
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| Housing finance companies will be now regulated by the RBI |
- The idea of bringing HFCs under RBI regulation is to ensure greater transparency and stringency in regulation
- The FM noted that the existing regulator, NHB, had a clear conflict of interest in regulation as it was also a refinancer
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| Banks to make line of credit for NBFCs to the tune of Rs.134,000 crore |
- Banks will be allowed to lend to NBFCs only where there are liquidity issues and not solvency issues
- The government will also give a partial guarantee for such funding subject to the money being lent to sound NBFCs
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| Budget increases the income tax surcharge on the super rich |
- Persons earning over Rs.2 crore will now pay surcharge of 25% on the tax payable up to that slab
- In addition, persons earning over Rs.5 crore will pay a surcharge of 37% on the tax payable
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| FDI norms for sensitive sectors under consideration |
- The FDI caps on defence, aviation, media and insurance may be raised to appropriate levels based on deliberations
- The budget has permitted FDI up to 100% in insurance intermediation companies
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| Budget lays out massive and aggressive infrastructure plan |
- Budget has promised to invest Rs.100 trillion into infrastructure over the next five years
- In addition, the government will also explore options like public private partnership (PPP) for easier execution
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| Budget gives special benefits for electric vehicles as per green norms |
- Electric vehicles will be allowed to import necessary inputs and equipment at zero duty and GST will be just 5%
- In addition, the car loans taken for buying EVs will entitle borrowers to additional Rs.1.50 lakhs of tax benefit
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| The Union Budget has offered special concessions on affordable homes |
- Section 24 for interest on home loans will be increased to Rs.3.50 lakhs per annum for homes up to Rs.45 lakhs
- This benefit is only available to affordable homes and will be a boost to apartments in smaller towns
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| Local sourcing norms for FDI in retail eased |
- This is likely to help a lot of large MNC companies that are into retailing in India via ecommerce
- This is apparently a response to placating the Americans who have been miffed with the new ecommerce regulations
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| Threshold for corporate tax rate cut increased to Rs.400 crore |
- This used to be Rs.250 crore before for 25% tax and has disappointed corporates expecting a blanket cut
- According to the FM, this will cover nearly 99.3% of the Indian companies in numbers if not in sales or profits
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| Budget rationalizes the securities transaction tax on options |
- The STT will now be charged only on the difference between market price and strike price in case of ITM options
- This should help traders to leave options to expiry as currently the deliver STT is charged on the notional value
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| Budget proposes lower tax on fund of funds |
- This is intended to help the government meet its divestment targets through the CPSE ETF route
- The budget is also exploring if the ELSS benefits can be extended to the CPSE ETF with the necessary lock-in
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| The PAN card and the Aadhar are likely to be inter operable |
- Going ahead, the Aadhar may become the default identity card for all Indians, considering its spread
- That means, it will be possible to actually file returns and also make high value purchases purely with Aadhar
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| Dividends from the RBI pegged at Rs.90,000 crore for the y ear |
- The overall dividends received from the RBI last year was around Rs.68,000 crore so it is a big shift
- This would also be in line with the recommendations that come from the Jalan Panel
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