What does the Budget say about the things you buy on a regular basis
Announcements made for consumer goods industries
Took a weighted average hike of 16% in cigarettes which is the fourth consecutive sharp hike. Excise duty has been hiked by 25% for cigarettes below 65mm category while for other cigarette size the hike is by 15%.
GST(Goods and Services Tax) expected to be implemented from April 2016.
Housing for all the families in India by 2022. The government targets 20Mn houses in Urban and 40Mn houses in rural by 2022.
Reduction in the corporate tax rate from 30% to 25% over four- year time frame. Also reduction in the corporate exemption.
Continues support to increasing the rural wages through rural initiatives and rural specific funds. Allocated Rs 347 bn towards MGNREGA.
Its Impacts
Negative for all the cigarette companies as it is the fourth consecutive sharp hike. Though companies will be able to pass on the duty increase but it will have a impact on their volume growth and thereby earnings.
GST will help simplify tax structure, reduce significance of unorganised players, making inventory planning more robust and reduce black marketing.
Positive for paint companies like Asian paints, Berger Paints etc and for Pidilite Industries.
Positive for most of FMCG companies which pay tax rate at the maximum marginal rate of 30%.
Positive for most of the companies.
Announcements made for retail sector
No reduction in the import duty of gold.
Introduction of the gold monetisation scheme and impetus on producing gold coin in India
Requirement of PAN for purchase of goods above Rs 0.1Mn by cash
Reduction in the excise duty on the leather footwear to 6%
Increase in the service tax from 12.36% to 14%
No revision of the exemption limits
GST(Goods and Services Tax) expected to be implemented from April 2016
And Its Impacts
Status quo maintained. Reduction in the import duty would have reduced smuggling of gold as they get gold at a price lower than what is paid by the organised retailers
Positive for jewellers as it will improve the supply situation. Will encourage recycle gold by encouraging gold coins.
Negative for the jewellers especially in those areas where the consumer doesn't have a PAN card. Implementation will remain a challenge.
Positive for the footwear companies like Bata India, Relaxo Footwear etc.
Service tax increased from 12.36% to 14% is negative for retail companies like Shoppers Stop, Future Retail, Jubilant foodworks and jewellery companies like Titan, PC Jeweller etc as they have to bear the additional service tax levy.
More tax exemptions would have led to marginally increasing disposable incomes of the urban poor/urban middle class which will boost consumer spending to some extent
GST will help simplify tax structure, reduce significance of unorganised players, making inventory planning more robust and reduce black marketing