Mumbai, Feb 26 (UNI) Union Finance Minister P Chidambaram is riding high on his economic agenda in his Budget presentation on Tuesday, particularly when the capital market is scaling its new peak, with corporates posting higher earnings over every quarter of the present fiscal year.
The forthcoming Union Budget will target a lower fiscal deficit and focus on sustaining a growth rate of eight per cent while controlling inflation, according to industry experts and financial analysts.
The Centre would have to focus more on infrastructure, especially power, agriculture and food processing industries to aid an annual GDP growth of eight per cent, while keeping the fiscal deficit target at less than four per cent of GDP.
Citing corrective measures to be addressed in various segments of the economy, tax experts have said the peak customs duty should be reduced to 10 per cent from 15 per cent while that of service tax rate is likely to be raised to 12 per cent from 10 per cent, with more services to be brought under the service tax ambit.
Similarly, corporate tax surcharge of 10 per cent is likely to be removed with simplification of fringe benefit tax.
Sugar, textiles and tobacco are to be brought under value-added tax (VAT) regime.
In the capital markets segment, they felt that securities transaction tax to be raised and expanded to include off-market deals while that of mutual funds will be allowed to set-off gains from derivatives against general losses suffered during the year.
The Lahiri Committee recommendations on easing norms for foreign institutional investments is also to be implemented.
In automobiles, excise duty on autos is expected to be cut to 16 per cent from 24 per cent.
In insurance, the foreign direct investment (FDI) limit is expeced to go up to 49 per cent from the present 26 per cent, as the cap on voting rights at 10 per cent for each shareholder in banks would be reviewed.
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