Expert Speak

Winning a Zero-Sum Game

Winning

Two days after the Budget was announced, distributors and better known dealers were still holding their prices close to their heart. Ten days later, there is little sign that the haze has settled. The underlying sentiment though is clearly one that does not bring much joy.

Reactions from the industry reflected what the finance minister was trying to do in his politically-driven Budget please all. And we know what that means gain some, lose some.

The customs duty was removed to get the tariffs in the country on par with the zero-tax regime set down by WTO worldwide. The countervailing duty was then added on to counter the loss of income from reducing the customs duty. April 1 is another day, and a whole lot more questions will crop up about the format of the Value-Added Tax implementation.

There is one thing that surprises me among the entire discussion on the latest Budget. As businessmen, no one really seems to be worrying about the hike in surcharge of corporate tax, the fringe benefit tax, and the new depreciation rates. Corporate tax has been reduced by five basis points (35 to 30 percent) but the surcharge has been increased from 2.5 to 10 percent. The overall benefit 2.5 percent! And won’t the 50 paise per liter cess on fuel reflect on your transporter’s bill as well?

There’s a bigger picture a higher income level exempted from tax and a new tax structure, higher limit for deduction. Take a look at how the BSE Sensitive index moved there were incentives for textiles, for students, infrastructure, public sector enterprises, rural telecom, pharmaceutical and biotech industries maybe time to revise the portfolio of corporate clients.

And though much of the wish list may have been left untouched, there is still enough to boost business in the new financial year.

The mood among some of my friends in Lamington Road and elsewhere has been buoyant, to say the least the Budget hardly matters to them. After all, if you are assembling a PC you end up with just a marginal 1-2 percent gain and the arbitrary pricing of products to make the best of the confusion can not last forever. They are in fact busy entering new alliances, bringing in new products and letting go of ones that do not bring in the moolah.

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