Monday, March 1, 2010

Budget 2010-: Indirect Tax Impact on India Inc

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Steeper course for Cars

Automakers such as Maruti, Hyundai and General 
Motors, enjoying resurgent sales after a long lull, 
as well as consumer durables, steel and cement 
firms could see demand pocked after a hike in 
central excise duty to 10% from 8%. For big cars,
the duty has been hiked to 22%.

Weaker foundation

Government imposes service tax
on construction 
of complexes, which could hobble 
demand for real estat projects. 
Profits of real estate companies 
such as DLF, Unitech and Parsvnath
that are emerging from the slowdown 
could be under pressure.

Time to quit smoking?

Excise duty on tobacco products like
cigarettes, cigars and cigarillos hiked, 
a blow for cigarette makers such as ITC 
and Godfrey Phillips. Though a big price 
hike is unlikely, the market took note with 
ITC shares falling 6.2% to Rs 232.05 on the BSE.

Running out of control

Bulk transporters such as steel, cement 
and fertiliser companies as well as iron 
ore and coal miners could see their
freight costs rise by about Rs 100 per 
tonne after movement of goods, excluding
foodgrain, by railways is saddled with service tax.

Cricket pitch lowered

Govt takes some sheen off the marketing 
prowess of sporting events such as IPL 
and Hero Honda Indian Open (golf) by 
levying a service tax on their promotion. 
The move could dampen the enthusiasm 
of advertisers & strain brands’ profits.

Air turbulence

Setback for airlines such as Jet Airways, 
Kingfisher Airlines, Air India and Indigo, 
whose ticket sales have just about begun 
humming again, as government expands 
service tax to all classes of travel on international 
and domestic flights. Earlier, only international
business class travel was taxed.

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