Finance + Budget

Agenda
• Company Fundamentals
• Stock Market
• Oil Marketing Companies
• Budget
 Company fundamentals
• What is a company
• What is Debt and Equity
• What are assets and liabilities
• What is a balance sheet
• Functioning of a company
 Stock Market
• What and why
• How to list a company : SEBI norms
– Nw 1 cr for 3 yrs
– Profit 3/5
• Some terminology
• How does market function
 OMC
• This is a break up considering crude oil at 130 $ per barrel.

• Following details are for per litre petrol in Rs.

Basic Price = Rs 21.93
Excise duty = Rs 14.35
Education Tax = Rs 0.43
Dealer commission = Rs 1.05
VAT = Rs 5.5
Crude Oil Custom duty = Rs 1.1
Petrol Custom = Rs 1.54
Transportation Charge = Rs 6.00
Total price = Rs 51.90

• So for a Rs 22 litre petrol at pumps we people pay Rs 28 tax extra.

 OMC
• Why does the OMC make a loss ?
• What does the govt tax petrol so much ?
• How does the govt compensate the OMCs ?
 Economy of India
• GDP : $1.242 trillion (2009) (nominal; 12th)
$3.528 trillion (2009) (PPP; 4th)
• GDP growth : 6.7% (2008/2009)
• GDP per capita : $1,032 (2009) (nominal; 139th)
$2,932 (2009) (PPP; 128th)
• GDP by sector : agriculture (17.5%), industry (20%), services
(62.6%) (2009 est.)
• Inflation : (CPI)7.8% (CPI) (2008)
• Population below poverty line : 22% (2008)
• Labour force : 467 million (2009 est.)
• Labour force by occupation : agriculture (52%), industry (14%),
services (34%) (2003)
• Unemployment : 9.5% (2009 est.)
 Economy of India
• Exports : $155 billion f.o.b (2009 est.)
• Export goods : software, petroleum products, textile
goods, gems and jewelry, engineering goods,
chemicals, leather manufactures
• Main export partners : US 12.3%,UAE 9.4%,China 9.3%
• Imports$232.3 billion f.o.b (2009 est.)
• Import goods crude oil, machinery, gems, fertilizer,
chemicals
• Main import partners China 11.1%, Saudi
Arabia 7.5%, US6.6%, UAE 5.1%, Iran 4.2%,
Singapore 4.2%, Germany 4.2%
• Public debt : $163.8 billion (2009) 60.1% of
GDP
• Revenues : $153.5 billion (2008 est.)
• Expenses : $223 billion (2009 est.)
• Economic aid : $1.724 billion (2005)
• Foreign reserves : $287.37 billion (end-Dec
2009)
 Economic Survey
Positive Indicators of the Economy
• Growth recovery in H2 FY10 mainly due to fiscal stimulus
• Expect growth of 8.2% in government expenditure in FY10
• Expect growth of 4.1% in private expenditure in FY10
• Trade gap narrowed to USD 76.24 bn in April-December
• 32.5% savings & 34.9% investment (of GDP in 2008-09) put
India
• in league of world's fastest growing nations
• Renewed momentum seen in manufacturing sector
• Services sector growth seen at 8.7% in FY10
• Industrial sector growth expected at 8.2% in FY10
• GDP growth on full recovery to breach 9% in FY12
 AGRICULTURE
• Will reduce fertilizer subsidy
• Focus to improve food security
• To provide Rs 400 cr to extend green revolution to eastern India
• Sets aside Rs 200 cr for a new agricultural initiative
• Repayment tenure for farmer loans extended by 6 months to June 30th 2011
• To provide 2% loan subsidy to farmers
• Proposes to increase subvention to 5% in repayment of farmer loans
• Allocates Rs 1,200 cr for drought mitigation
• Agri credit flow target for this year increased to Rs 3,75,000 cr from Rs 3,25,000 cr
last year
• To set up 5 more mega food park projects
• Rs 300 cr for Rashtriya Krishi Yojna
• Rs 100 cr allocated for women farmers
• External commercial borrowing will be available for food storage industries
 EDUCATION
• Govt allocates Rs 31,036 cr for school
education and Rs 3,675 cr for elementary
education
 Automobile and Ancillaries
• Excise duty on large cars, SUVs, multi utility
vehicles raised to 22% from 20%
• Full excise cut on electric cars
 Banking & Financial Companies
• Sets aside Rs 16,500 cr for PSU banks to get minimum 8% tier 1 capital by March
2011
• RBI to release additional licenses to pvt sector banks and non-banking financial
institutions
• Repayment tenure for farmer loans extended by 6 months to June 30th 2011
• Agri credit flow target for this year increased to Rs 3,75,000 cr from Rs 3,25,000 cr
last year
• To provide 2% loan subsidy to farmers
• Proposes to increase subvention to 5% in repayment of farmer loans
• IIFCL disbursements at Rs 9,000 cr by March 2010
• Housing loan: 1% interest subvention scheme extended, allocation Rs 700 cr
• Allocates Rs 100 cr for new pension scheme, to benefit 100,000 low income
citizens
• All villages with 2000+ population to get banking facilities by 2012
 Cement
• Partial rollback of excise duty on cement
 Infrastructure & Engineering
• 44% of total plan outlay allocated to infrastructure
• Budget allocates Rs 1.73 lakh cr for infrastructure
• IIFCL disbursements at Rs 9,000 cr by March 2010
• Delhi-Mumbai industrial corridor taken up for development
• Road transportation kitty increased 13% to Rs 19,894 cr
• Govt allocates Rs 16,500 cr for railways
• Rs 66,1000 cr allocated for rural development in FY11
• 35% of development funds to be invested in rural India
• Urban development allocation up more than 75% to Rs 5,400 cr
• Rs 100 cr for financial inclusion fund; Allocation for Bharat Nirman at Rs
48,000 cr
• Additional Rs 20,000 deduction available for investment in infra bonds
• Government committed to SEZs to promote exports
• No import duty on some equipment in road projects
 Fertilizer
• To provide govt subsidy in cash instead of
bonds for fertilizer
• Will reduce fertilizer subsidy
• Rs 300 cr for Rashtriya Krishi Yojna
 FMCG
• To set up 5 more mega food park projects
• External commercial borrowing will be
available for food storage industries
• 35% of development funds to be invested in
rural India
• Rs 66,100 cr allocated for rural development
in FY11
• Duties on smoking and non-smoking tobacco
products up
 Gems & Jewellery
• Import duty on silver raised to Rs 1,500 per kg
 Healthcare
• Focus to improve healthcare systems
• Govt allocates Rs 22,300 cr to healthcare
• Weighted deduction from 150% to 200% for
in-house R&D
 IT/ITES
• UID authority given Rs 1,900 cr
• Government committed to SEZs to promote
exports
 Oil & Gas
• To discuss Kirit Parikh report in due course
• Petroleum products: basic duty of 5% crude ,
7.5% on diesel & petrol; 10% on refined
products
• Rs 1 per litre excise on petrol, diesel
• To provide govt subsidy in cash instead of
bonds for oil
 Power
• Govt to facilitate 20,000 MW of solar power by 2022
• Govt to have a coal regulator for allocation of coal
blocks
• To levy clean energy cess on imported coal
• Funds for power allocation raised from Rs 2,232 cr to
Rs 5,132 cr
• Propose to hike allotment for renewable energy by
61%
• For solar mission, solar power generating units rates
are to be reduced by 5%
• Cut in duty for photovoltaic units
 PSU
• Divestment proceeds budgeted higher in FY11
vs FY10
• Govt to raise Rs 25,000 cr through
disinvestment
 Real Estate
• Indira Awas Yojana: allocation up by Rs 10,000
cr
• Sops for real estate, housing projects
extended by a year
• Housing loan: 1% interest subvention scheme
extended to March 2011, allocation Rs 700 cr
• Delhi-Mumbai industrial corridor taken up for
development
 Telecommunication
• Allocation for Bharat Nirman at Rs 48,000 cr
• Mobile accessories market to get tax breaks
 Textile
• FM extends interest subvention of 2% for exports of
handlooms, handicrafts and SMEs for 1 year
• Exclusive skill development programme in textile and
garment sector
• Khadi institutes get Rs 400 cr
• GOI sign USD 150 mn deal with ADB for implementing
Khadi programme
• One time grant of Rs 200 cr to Tamil Nadu for textiles
• Government committed to SEZs to promote exports
 Tourism
• To boost tourism investment, offers
investment linked tax deductions
• Rs 200 cr for Goa to restore beaches
 Corporate Tax
• Reduces current surcharge of 10% on domestic comp to
7.5%
• Peak excise duty hiked from 8% to 10%
• Weighted deduction from 150% to 200% for in-house R&D
• Limits for turnover for purpose of presumptive taxation of
small business enhanced to Rs 60 Lakhs
• Goods and Service Tax (GST) and Direct Tax Code (DTC)
Positive
• Implementation of GST and DTC by April 2011
• MAT
• Minimum Alternate Tax up from 15% to 18% on book
profits
 MAT
• According to this section, if the taxable income of a company computed under this
Act, in respect of previous year 1996-97 and onwards is less than 30 % of its book
profits, the total income of such company is chargeable to tax for the relevant
previous year shall be deemed to an amount equal to 30 % of such book profits. 
A new tax credit scheme is introduced by which MAT paid can be carried forward
for set-off against regular tax payable during the subsequent five year period
subject to certain conditions, as under:-When a company pays tax under MAT, the
tax credit earned by it shall be an amount which is the difference between the
amount payable under MAT and the regular tax. Tegular tax in this case means the
tax payable on the basis of normal computation of total income of the company.
• MAT credit will be allowed carry forward facility for a period of five assessment
years immediately succeeding the assessment year in which MAT is paid.
Unabsorbed MAT credit will be allowed to be accumulated subject to the five year
carry forward limit.
• In the assessment year when regular tax becomes payable, the difference
between the regular tax and the tax computed under MAT for that year will be set
off against the MAT credit available.
• The credit allowed will not bear any interest.
The End