Pre Budget Expectations

Transcription

1 TM Pre Budget Expectations th March 2012 Page 1 of 1

2 Executive Summary The Union Budget of India, referred to as an annual Financial Statement in Article 112 of the Constitution of India is an annual budget of the Republic of India, which is presented each year by the Finance Minister of India in the Parliament. The Union budget has to be passed by the House before it can come into effect on April 1, the start of India's financial year. The Union Budget will be presented on 16th March 2012 by the Union Finance Minister Pranab Mukherjee. While economic growth, investment spending and business confidence have weakened during , interest rates remain high and concerns regarding inflationary pressures are yet to be eliminated. Recently, the Reserve Bank of India (RBI) indicated that it may be constrained from lowering the policy rate to respond to the slowing economic growth in the absence of credible fiscal consolidation. This has heightened the expectations from the Union Budget for to provide a realistic roadmap for fiscal correction, through a combination of augmenting tax revenues and restricting the growth of revenue expenditure (particularly subsidies). At the same time, it is expected that the Budget may increase outlays and announce policy measures to boost infrastructure spending, which would ease supply constraints and raise the potential growth rate of the Indian economy. The Budget for set an ambitious target to rein in the fiscal deficit to 4.6% of GDP in from 4.8% of GDP in , despite the expected decline in non-tax revenues following the one-time inflow of funds from the telecom auctions held in However, the fiscal situation of Government of India (GoI) has displayed considerable signs of stress in the current fiscal year, on account of factors such as a slower than anticipated economic growth, unfavorable equity market conditions and a widening of fuel subsidies. The current fiscal situation does not afford much space for providing a direct stimulus to growth, through lower taxes or substantially higher spending in the event of a deeper-than-expected domestic slowdown or an external crisis. Accordingly, prioritizing additional expenditure towards infrastructure spending would ease structural bottlenecks and buffer economic growth from any externally driven economic slowdown in the coming year. In particular, GoI may need to raise the rates of excise duty and service tax and widen the tax net in the forthcoming Budget to support fiscal consolidation, cap the Central Government s borrowing programme and prevent crowding out of private investment. Moreover, a credible roadmap for fiscal consolidation may prompt the RBI to embark on monetary easing in early The Union Budget for may reduce the annual turnover threshold for exemption from paying excise duty to widen the tax net, shift items to a higher excise duty bracket and prune excise exemptions further to align the same with the proposed Goods and Services Tax (GST). Given the pressing need for fiscal consolidation, a key revenue enhancement measure that GoI may adopt is the introduction of a negative list of services for the imposition of service tax. This would substantially widen the base for service tax from the present 119 services and augment indirect tax revenues. Additionally, GoI may consider raising the peak rate of central excise duty and the rate of service tax above 10% in the forthcoming Budget, carrying forward the process of unwinding the stimulus measures instituted in In the absence of such measures, the pace of growth of indirect tax collections is expected to remain moderate in , with the pace of expansion of economic activity unlikely to revive sharply in the coming fiscal year. GoI s non-tax revenues were boosted in on account of the receipts from the auction of 3G and BWA spectrum, which exceeded Rs. 1 lakh crore. In contrast, GoI has not been able to raise the targeted Rs. 13,000 crore from BWA auction so far in Accordingly, GoI s non-tax revenue receipts contracted by around 55% in the first ten months of , as compared to the same months in the previous fiscal. This also resulted in a 13% de-growth of GoI s revenue receipts in April 2011-January 2012 relative to April 2010-January However, higher revenues through dividends and profits from some PSUs may aid GoI in meeting it s BE for for non-tax revenues. In , auction of 2G spectrum following the cancellation of 122 licenses by the Supreme Court may enhance GoI s non-tax revenues to an extent. Disinvestment proceeds in April 2011-Janaury 2012 (around Rs. 1,150 crore through the FPO of Power Finance Corporation) have been small as compared to the BE for of Rs. 40,000 crore. Although the improved equity market conditions since January 2012 may prompt GoI to raise funds through a few issues in March 2012, it is likely that actual inflows will fall substantially short of the BE for With a pipeline of prospective issues in place, GoI may set a similar target of Rs. 40,000 crore capital receipts in the coming fiscal year. Nevertheless, the magnitude of disinvestment proceeds would depend upon the timing of issues, valuation levels and market sentiment. Moreover, the volume of funds raised through disinvestment would remain small relative to the size of the fiscal deficit at an absolute level. Page 2 of 13

3 SENSEX has jumped 19% this year (ignoring today s fall of more than 100 Nifty points) on enormous liquidity from EU & USA & has wiped more than 3/4th of 25% losses it suffered in whole of The rupee, too, has strengthened this year, climbing around 7% against US$, after a drop of about 18% last year that added to the losses for U.S. investors in the Indian stock market. Liquidity is due to printing of billion of Euros & USD by respective Central Bank & offering it on low interest rates. A lot of this money has found its way into Equities in emerging markets such as India. FFI s have poured nearly $5 billion into Indian stocks this year as compared to a pullout of $357 million in Our stocks are among the best-performing in calendar 2012 (after Egypt, Russia & Turkey), but whether this rally has legs could depend on 3 key events in March. Following 3 events in March is of great importance for deciding the course of the market going forward. State elections, Release of the federal budget, and a Central-bank review of interest rates will offer signals on whether the government is likely to adopt policies desired by investors. Areas of Concern:- Economic growth has slowed due to 13 interest-rate increases by the RBI to combat inflation. Growth is expected 6.9% for the year to March 2012, the slowest in 3 years. Stock market rally started with RBI s muted signal to ease monetary policy. Right now it seems unlikely due to advent of new CPI & inevitable rise in prices of Petroleum product during 1st week of March. The lack of intention to push economic reforms, the lack of investments in infrastructure & the damping of business sentiment haven't gone away just because of a turn of the calendar. No major Indian company has lately talked about investing in large business projects. Govt. need to ensure that confidence back. Government needs to be more proactive while being fiscally prudent. With a coalition setup, can Govt. ensure no repeat of rolled back its decision to allow foreign multi brand retail stores, like Wal-Mart, Tesco to set up shop in India. 117-year-old land-acquisition law, which has been a major stumbling block to infrastructure development. A new land-acquisition bill was introduced in Parliament last year that, among other things, would make it easier for companies to buy land for industrial uses, but no headway has been made. The government's promised overhaul of India's tax regime aimed at streamlining and increasing collections, has also been stalled in recent years. Union Budget Expectations & Highlights: Economic Overview The Central government may incentivise the pharma sector to boost the higher spending in research and development and also to lower the taxes and duties on life saving drugs and active pharmaceutical ingredients (API) to offer fillip to the growth of the industry. Ministry of Petroleum & Natural Gas has requested the Union Finance Ministry to lower the excise duty on branded diesel in the upcoming Budget due to the strong decline in the sale of the fuel. Union Budget 2012 is expected to witness Union Finance Minister Mr. Pranab Mukherjee attempt to push the entrepreneurs for more investment by introducing major investor-friendly policies. Centre may unveil a series of measures in the Union Budget to help the export sector and also the micro, small and medium enterprises (MSMEs) in India. Association of Biotechnology Led Entrepreneurs (ABLE) has demanded various fiscal and tax incentives from the Union Budget. Centre is planning to increase the income tax exemption for up to Rs 3 lakh paid as interest on housing loans in one year as compared to the current limit of Rs 1.5 lakh with the aim to strengthen housing sector credit. Agriculture Ministry has demanded lowering of interest rate on crop loans to 3% for those farmers who pay in time, from the existing 4%. The micro, small and medium enterprises (MSMEs) sector is seeking separate consultations with them in the runup to the Union Budget Tax Proposals Direct & Indirect Tax Proposal Expectations There is a demand to raise income tax exemption limit to Rs 3 lakh from existing Rs 1.8 lakh. Budget to provide relief to inflation-hit households. The highest personal income tax rate of 30% should apply to annual income above Rs10 lakh, as against Rs8 lakh. A proposal to increase factory gate duties on a number of items to 12% from 10% is also under consideration. Page 3 of 13

4 Since Centre is witnessing widening fiscal deficit, there are apprehensions in the industry that excise duty is expected to be surged in the Union Budget. However, the industry chamber has proposed the continuation of 10% standard rate of excise duty in the next financial year. Aam Aadmi Expectations The upcoming Union Budget 2012 is one of the most awaited events of the year. There are several things that are being discussed; fiscal deficit, revenue collections, macroeconomic outlook, but how does it impact common man, his wallet and investments? Expectations of Common Man Subsidy on Gas, Oil, Fertilizer, Food etc. Subsidies in FDI norms in sectors like Retail, Media and BFSI etc. Relaxation in service taxes. Tax reforms like implementation of GST and DTC. Salaried Person: Union Budgets affect directly to a common man through changes in income tax exemption and deduction limits. There are other indirect ways too by which the budget affects the aam aadmi most. for Instance, A proposed duty on diesel cars can eventually affect a potential buyer s decision to purchase such cars because they make diesel cars more expensive. Similarly, changes in excise duties of consumer goods like cigarettes or computers or mobiles will also affect the spending patterns of an ordinary person. Any changes in Housing loan sector like exemption of principal or interest amount can affect a potential buyer s intention to buy. It is expected that the exempted income tax limit for the male salaried individuals will be raised from Rs. 180,000 to Rs. 200,000. This way, the salaried people and employees of different organizations will be benefited. Investor: Investors (specially HNI s & FII s) eyes are always on Budgets because the government has a habit of periodically changing the rate of taxes on trading transactions, especially in the stock market which is also called STT or Securities Transaction Tax. Budget is also the time when Government outlines its plan to disinvest its stakes in Govt. owned companies with specific target of raising money from this process. This time expectations are high that in union Budget, the STT will be cut and Finance ministry may allow foreign investors to directly buy corporate bonds. Businessman: Businesses are among the one who always look forward to the Budget. Mostly they have a wish list and hopes revolving around variety of duty cuts across sectors that they believe will boost both investment and demand. The biggest fear for Businesses is an increase in the rate of corporate tax or other surcharges. Indirectly, businesses are affected when government changes spending allocations for certain sectors. For Instance, an increased spending in infrastructure means greater gains for infrastructure companies, which will benefit from more project opportunities. Housewives: Union Budgets certainly affects Housewives, directly or indirectly, as they are the one who run your house with limited resources. For Instance, a proposed hike in LPG prices or rationing of LPG cylinders at subsidized rates will eventually affect any household expenses. Similarly any changes in the taxes of essential household commodities will be the reason to cheer or concern as housewives will be left with more/less cash at the end of the month. Sectoral Expectations Automobile Sector Automotive products export of EU to India grew by 51 per cent last year, including 109 per cent growth in car exports. This is against 11 per cent growth in import of automotive products from India to EU, and decline of 15 per cent in cars. Expectations Page 4 of 13

5 There is a speculation that higher taxes could be imposed on diesel passenger vehicles as the subsidized fuel has been diverted for personal use by the affluent. CSE had demanded an additional duty of up to Rs 1.62 lakh on big diesel cars to prevent the misuse of subsidized diesel for luxury. Specific excise duty on diesel passenger vehicles could hurt Mahindra & Mahindra (100% vehicles are diesel) and more for Maruti Suzuki (30% vehicles are diesel) as demand may shift to less profitable petrol vehicles. No increase in allocation towards rural sector under schemes like NREGS (National Rural Employment Generation Scheme) will lead to moderation in tractor, two-wheeler sales to 10, 13% in fiscal Agricultural Sector The finance ministry is all set to increase the agriculture lending target by around 25% in the budget for despite a sharp increase in the non-performing loans in the sector. The Agriculture Ministry has demanded lowering of interest rate on crop loans to 3% for those farmers who pay in time, from the existing 4%. FMCG An irregular and restrictive tax regime has been giving major FMCG and retail businesses a rather hard time and that's the biggest issue they want the finance minister to address in this year's budget. Expectations Hope that the government will roll out the red carpet for Goods and Services Tax. This tax is expected to do away with levies like octroi, central sales tax, value added tax and entry tax making goods cheaper. The sector is expecting that the government will not increase the excise duty and service tax, as that will impact the selling prices which ultimately may again impact the demand in the sector. Retail sector needs law to operate 365 days and extended hours. Energy Sector Ahead of the Budget, the importance of energy security has been ironically underscored by geopolitical tensions surrounding Iran, leading to big question marks over India's ability to ride out what is increasingly been touted as a possible crude shock. Expectations The government may notify natural gas and LNG as declared goods which will attract 5% sales tax as it will bring in uniformity of gas pricing across states. It may exempt LNG from 5% import duty to bring down cost of imported natural gas Extend tax benefits to the upstream sector to incentivize exploration and production activity and encourage new finds It may also levy an additional duty of Rs 80,000 on diesel passenger cars to ensure better targeting of diesel subsidies The power sector, which is in the middle of a crisis and is currently facing several hurdles including environmental clearances and acute shortage of gas and coal for power projects, too have a long wish list. Exemption of Customs/Excise duty on coal mining equipment for integrated power cum mining projects Exemption of customs duty on imported coal Benefits under Section 80IA of Income Tax Act to be extended The companies are also expected to seek permission for diversion of surplus from captive coal blocks Real Estate The real estate sector is the second largest employer contributing 5% to the GDP and generating large-scale jobs across its varied verticals. The real estate sector has witnessed rapid growth in the recent past. However, raising funds continues to be a big constraint. Currently, it is not possible for foreign investors to repatriate real estate investment proceeds for three years, which is hampering investment flows. Expectations: Government to relax norms for repatriation of FDI and external commercial borrowings (ECBs). To relax norms for FDI and ECBs, especially for township projects that will give developers source funds at a much reasonable cost. The sector should be given an industry status that will enable developers to have access to debt lending at competitive rates from banks and financial institutions. Abolition of service tax for residential apartments up to Rs 50 lakh to promote affordable housing. Developers are also expecting the Government to increase the subvention of 1% on interest rate to be available to broader price band. Page 5 of 13

6 Textile Sector They also demanded that exports be included in priority sector lending by banks and duty on readymade garments be either reduced or withdrawn. The Ministry of Textiles has demanded Budget allocation of Rs 24,597 crore from the Planning Commission for the 12th Five-Year Plan period for the development of the sector and also for the creation of 15.8-million jobs by the fiscal year The Ministry is mulling to continue modernization along with the technological upgradation of the sector via the restructured Technology Upgradation Fund Scheme (TUFS). Education The last two budgets were instrumental in setting up and funding the National Skill Development Corporation, which within a very short span of time has done a yeoman's job of forging public-private partnerships and co-incubating for-profit business models with entrepreneurs to attack skill development and employability on a large scale. We already have college education loans in place and we know 80% of our college graduates are unemployable at the end of it; so why not create a lean and laser-focused national vocational education loan scheme that creates real employability? For sure, industry would welcome such a move as it would unlock supply side constraints on skilled talent. To that end, the government can use Budget 2012 to direct public sector banks to make vocational education loans a priority lending sector item. Instead of various ministries pouring big money down the drain year after my ear in the form of direct subsidies to mediocre training organizations and NGOs that are not accountable for employment outcomes, let the government park funds with banks to provide a default guarantee for only the 10-25% of the vocational education loans that may go bad. That way, the nation would get 4-5X the leverage in terms of skill development impact compared to what we have today. Engineering Ministry of Commerce-sponsored engineering exporters body Engineering Export Promotion Council (EEPC), has demanded a technology upgradation fund in the upcoming Budget with an aim to boost export. Pharmaceuticals There is an expectation that weighted deduction under section 35(2AB) be extended to the expenditure incurred outside the R & D facility Infrastructure Sector The industry leaders also sought infrastructure status for aviation, telecom and education sectors, and continuation of interest rate subvention scheme for exporters till 31 March, Metal Industry The government may announce incentives for the iron ore miners to encourage more value-addition and pelletisation. Budget Glossary AD-VALOREM DUTIES These are the duties determined as a certain percentage of prices of the product. ANNUAL FINANCIAL STATEMENT "It is a statement of receipts and expenditure of states for the financial year, presented to Parliament by the government. It is divided into three parts: Consolidated Fund, Contingency Fund and Public Account. APPROPRIATION BILL This Bill is like a green signal enabling the withdrawal of money from the Consolidated Fund to pay off expenses. These are instruments that Parliament clears after the demand for grants has been voted by the Lok Sabha. BALANCE OF PAYMENTS The difference between demand and supply of a country's currency in the foreign exchange market. BALANCE OF TRADE The difference between monetary value of exports and imports of output in an economy over a certain period of time. It is the relationship between a nation's imports and exports. Page 6 of 13

7 Banking cash transaction tax (BCTT) BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single day. The basic idea is to curb the black economy and generate a record of big cash transactions. This tax was introduced in budget. BUDGETARY DEFICIT Such a situation arises when expenses exceed revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area. BUDGET ESTIMATES It is an estimate of Fiscal Deficit and Revenue Deficit for the year. The term is associated with estimates of the Center's spending during the financial year and income received as proceeds of tax revenues. CAPITAL GOODS Goods used in the manufacturing of finished products. CAPITAL BUDGET Capital Budget keeps track of the government's capital receipts and payments. This accounts for market loans, borrowings from the Reserve Bank and other institutions through sale of Treasury Bills, loans acquired from foreign governments and recoveries of loans granted by the Central government to State governments and Union Territories. CAPITAL PAYMENTS Expenses incurred on acquisition of capital assets. CENVAT This is a replacement for the earlier MODVAT scheme and is meant for reducing the cascade effect of indirect taxes on finished products. This is more extensive scheme with most goods brought under its preview. CESS "This is an additional levy on the basic tax liability. Governments resort to cess for meeting specific expenditure. For instance, both corporate and individual income is at present subject to an education cess of 2%. In the last Budget, the government had imposed another 1% cess as secondary and higher education cess on income tax to finance secondary and higher education. CURRENT ACCOUNT DEFICIT This deficit shows the difference between the nation's exports and imports. CURRENT ACCOUNT SURPLUS Excess of receipts over expenditure on current account in a country's balance of payments. CUSTOM DUTIES These duties are levied on goods whenever they are either brought into the country or exported from the country. The importer or the exporter pays custom duties. COUNTERVAILING DUTIES (CVD) This is levied on imports that may lead to price rise in the domestic market. It is imposed with the intention of discouraging unfair trading practices by other countries. CONSOLIDATED FUND This is one big reservoir where the government pools all its funds together. The fund includes all government revenues, loans raised and recoveries of loans granted. CONSUMER PRICE INDEX It is a price index covering the prices of consumer goods. CONTINGENCY FUND It is more or less similar to that extra little bit of savings that all mothers set aside in case of an emergency. Likewise, the government has created this fund to help it tide over difficult situations. The fund is at the disposal of the President to meet unforeseen and urgent expenditure, pending approval from Parliament. The amount that is withdrawn from the fund is recouped. CAPITAL EXPENDITURE Long-term in nature they are used for acquiring fixed assets such as land, building, machinery and equipment. Other items that also fall under this category include, loans and advances sanctioned by the Center to the State governments, union territories and public sector undertakings. Page 7 of 13

8 CAPITAL RECEIPT Capital Receipts consist of loans raised by the Center from the market, government borrowings from the RBI & other parties, sale of Treasury Bills and loans received from foreign governments. Other items that also fall under this category include recovery of loans granted by the Center to State governments & Union Territories and proceeds from the dilution of the government s stake in Public Sector Undertakings. CENTRAL PLAN OUTLAY It refers to the government s budgetary support to the Plan. It is the division of monetary resources among different sectors in the economy and ministries of the government. DIRECT TAXES Taxes paid directly by the person or organization on whom they are levied. Income Tax and Corporate Tax fall under this tax category. DISINVESTMENT It is the dilution of government s stake in Public Sector Undertakings. DEMAND FOR GRANTS It is a statement of estimate of expenditure from the Consolidated Fund. This requires approval of the Lok Sabha. EXCISE DUTIES These duties refer to duties imposed on goods manufactured within the country. FINANCE BILL It is the government s proposals for imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament. FISCAL DEFICIT It is the difference between the Revenue Receipts and Total Expenditure. FISCAL POLICY Fiscal policy is a change in government expenditure and/or taxation designed to influence economic activity. These changes are designed to control the level of aggregate demand in the economy. Governments usually bring about changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure. FRINGE BENEFIT TAX (FBT) It is the tax levied on the fringe benefit / perks given by a company to its employees. Companies could no longer get away with marking such expenses as ordinary business expenses and escape tax when they actually gave out club memberships to their employees. Employers had to now pay a tax (FBT) on a percentage of the expense incurred on such perquisites. This tax was introduced in the budget. FRBM ACT Enacted in 2003, the Fiscal Responsibility and Budget Management Act required the elimination of revenue deficit by This means that from , the government was to meet all its revenue expenditure from its revenue receipts. Any borrowing was to be done to meet capital expenditure i.e. repayment of loans, lending and fresh investment. The Act also mandates a 3% limit on the fiscal deficit after ; one that allows the government to build capacities in the economy without compromising on fiscal stability. GROSS DOMESTIC PRODUCT Total market value of the goods and services manufactured within the country in a financial year. GROSS NATIONAL PRODUCT Total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market. GST A GST (Goods and Services Tax) contains the entire element of tax borne by a good / service including a Central and a state-level tax. INCOME TAX This is the tax levied on individual income from various sources like salaries, investments, interest, etc. INDIRECT TAXES Taxes imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties. Page 8 of 13

9 INFLATION A progressive increase in prices of goods and services. It is the percentage rate of change in the price level. In inflation, everything tends to appear more valuable except money. MINIMUM ALTERNATE TAX (MAT) It s known that a company pays tax on profits as per the Income-Tax Act. If a company's tax liability is less than 10% of its profits, it has to pay a minimum alternate tax of 10% of the book profits. MODVAT It stands for Modified Value Added Tax and is a way of giving some relief to the final manufacturers of goods on Excise Duties borne by their suppliers. MONETIZED DEFICIT Measures the level of support the RBI provides to the Centre s borrowing program. NATIONAL DEBT Total outstanding borrowings of the central government exchequer. NON-PLAN EXPENDITURE Expenses that don t form a part of the government s five year plan. These expenses consist of Revenue and Capital Expenditure on interest payments, Defense Expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to State governments, Union territories and foreign governments. NON-TAX REVENUE Any loan given to state governments, public institutions, PSUs come with a price (interests) and forms the most important receipts under this head apart from dividends and profits received from PSUs.The government also earns from the various services including public services it provides. PEAK RATE It is the highest rate of Custom Duty applicable on an item. PERFORMANCE BUDGET It is a compilation of programs and activities of different ministries and departments. PER CAPITA INCOME The national income of a country, or region, divided by its population. PROGRESSIVE TAX STRUCTURE A tax structure in which the marginal tax rate increases as the level of income increases. PUBLIC ACCOUNT It is an account where money received through transactions not relating to consolidated fund is kept. PUBLIC DEBT The difference between borrowings and repayments during the year is the net accretion to the public debt. Public debt can be split into two heads, internal debt (money borrowed within the country) and external debt (funds borrowed from non- Indian sources). PLAN EXPENDITURE Consists of both Revenue Expenditure and Capital Expenditure of the Center on the Central Plan, Central Assistance to States and Union Territories. PLAN OUTLAY Plan Outlay is the amount for expenditure on projects, schemes and programmes announced in the Plan. The money for the Plan Outlay is raised through budgetary support and internal and extra-budgetary resources. The budgetary support is also shown as plan expenditure in government accounts. PRIMARY DEFICIT Fiscal Deficit minus Interest payments. PROPORTIONAL TAX A tax taking the same percentage of income regardless of the level of income. Page 9 of 13

10 REGRESSIVE TAX A tax system in which the poor pays a larger percentage of income than the rich. It is the opposite of Progressive Tax. REVENUE DEFICIT It is the difference between Revenue Expenditure and Revenue Receipts. REVENUE SURPLUS Opposite of Revenue Deficit, it is the excess of Revenue Receipts over Revenue Expenditure. REVISED ESTIMATES Usually given in the following budget, it is the difference between the Budget Estimates and the actual figures. REVENUE BUDGET Consists of Revenue Receipts and Revenue Expenditure of the government. REVENUE RECEIPT Consists of duties imposed by the Centre, interest and dividend on investments made by the government. REVENUE EXPENDITURE Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government. SUBSIDIES Financial aid provided by the Center to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies. SUBVENTION This is how a government bears the loss that financial institutions incur when asked to give farmer loans below the market rates. SURCHARGE This is an extra bit of 10% on the tax liability that individuals pay for earning more than Rs. 10 lakh. Companies with a revenue of up to Rs. 1 crore are spared. SECURITIES TRANSACTION TAX (STT) STT is a small tax you need to pay on the total amount you pay or receive in a share deal. In the Budget, the government did away with the tax on profits earned on the sale of shares held for over a year (known as long-term capital gains tax) and replaced it with STT. TREASURY BILL (T-BILLS) These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure. VAT This tax is based on the difference between the value of output and the value of inputs used to produce it. The aim here is to tax a firm only for the value it adds to the manufacturing inputs, and not the entire input cost. Thus, VAT helps avoid a cascading of taxes as a product passes through different stages of production/value addition. VOTE ON ACCOUNT It is a sort of interim budget where the government presents accounts required to keep the process on until the next government takes over. WAYS AND MEANS ADVANCE (WMA) RBI is the banker for both Central and State governments. Hence, it provides a breather to manage mismatches in their receipts and payments in the form of ways and means advances. WHOLESALE PRICE INDEX Prices of goods that are dealt with wholesale (mostly inputs to production, rather than finished commodities). Page 10 of 13

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Kindly also note all the risk disclosure documents carefully before investing in Equity Shares, IPO s, Mutual Fund Schemes, Insurance Schemes, Fixed Deposit schemes, Debt offers, Hybrid Instruments, or other instruments traded on Stock Exchanges or otherwise. Prospective investors can get all details and information from the sites of SEBI, IRDA, AMFI or respective Mutual Fund Companies, Insurance Companies, Rating Agencies, Stock Exchanges and individual corporate websites. Prospective investors are advised to fully satisfy themselves before making any investment decision NSE - INB , INF BSE - INB About RR RR is first generation business set up in Shri. Rajat Prasad, a professional qualified Chartered Accountant, is the main founder. He is the architect of its growth and in the last decade has steered the group to be a diverse and respected financial and Insurance Services Organization with nationwide presence with offices in more than 100 cities and a team of 800 Employees. RR has the presence in all metro cities and towns across the length and breadth of the country. RR is headquartered in New Delhi, Capital of India with regional offices in Mumbai, Ahmedabad, Baroda, Jaipur, Chandigarh, Lucknow, Calcutta, Bangalore, Chennai, Noida and Dehradun. It has Associate offices in other cities and Locations totalling 600 locations & 100 cities. It has agent presence in over 500 cities across the country. RR is the only Company in India which provides research based seamless service to its customers through own offices, franchisees and agents. About RR Research RR Research provides unbiased and independent research in Equity, Commodity, Currency, Fixed Income, Debt Market, Mutual Funds, Insurance. The research team consists of more than 10 analysts, most of which are CAs and MBAs from premier business school with experience ranging from 0 to 10 years. The team is equipped with state of the art analysis tools, software. The research team is engaged in almost every activities of the capital market. In the fundament research front, the team is involved in Economic Analysis, Sectoral Analysis, Company Coverage and Updates. In the trading front, dedicated technical team is employed to provide online technical calls, trading tips, derivative strategies to clients. The team is online during the market hours and anyone through our website can chat live with analysts and can solve any investment related query. The team has extensive network of industry contacts and regularly attending analyst meets/ conference calls to get insight of the company. On regular basis, the team shares its view with leading electronic & print media houses. Page 12 of 13

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