FM asks India Inc to do its bit

Corporate India is still counting the brownies in the Budget Bag of 2004, but sometimes one hears small yelps of pain as a cess pierces here and a closed loophole pinches there. It really is a mixed bag for India Inc in the Budget this year, if there is a two per cent cess that is making companies call their accountants to see how the Finance Minster will gather Rs 5,000 crore through it, there is also the much-awaited increased foreign direct investment limits in aviation, telecom and insurance.

Of course, the pre-Budget wishlist of reduced corporate taxes, tax incentives for export profits and extension of the sunset clause in Section 10B beyond 2009, were not going to come true, so nobody is really upset about it. What hurts is the continuation of the surcharge, increase on the services list, the 2 per cent service tax rate hike to 10 per cent, a hike in the tax on dividends for corporate investors to 20 per cent. Complains Kamal K Sharma, MD Lupin Ltd, 8220;On the contrary, the corporate sector has been saddled with an additional levy of 2 per cent cess on all direct and indirect taxes.8221;

The closing of the divided and bonus stripping loop hole See box hurts as well. The steel sector has been punished for not reducing prices after the cut in exicse duties earlier this year with a four per cent hike in excise duty to 12 per cent. 8220;It8217;s an unfortunate step as this is the only core sector industry which has been singled out for such treatment,8221; says Prashant Ruia, MD, Essar Steel. Carmaker Maruti has already announced a price hike in reaction to this.

While individual companies react to their specific proposals. Kumar Mangalam Birla, Chairman of the Aditya Birla Group takes a big picture view: 8216;8216;Given the constraints, the FM has done a very good balancing act. Revenue deficit will go down. Fiscal prudence and social equity have been well focused upon.8217;8217;