J. Ravikumar, CFO, The Dhamra Port Company Limited

The budget is overall fine but does not have its punch - no big ideas in the budget . There is still a lack of political will to bring agricultural income under tax net . It is surprisingly MAT is allowed to continue and that too at a higher rate . FBT continues despite many cases challenging the validity of the levy are still pending before various HCs . Some minor adjustments can not justify FM's stand that this levy needs to protected. Corporates were disappointed on this score. Rather FM could have enhanced corporate surcharge or basic rate by 1 or 2% more . Lots of hassles would have been eliminated . Sec 10(23)(g) exemption is now removed when there is no sign of interest rate coming down . This is a harsh step on infrastructure companies or developers on BOOST basis while FM himself has acknowledged that infrastructure sectors like Port , airport etc have made visible growth impact in last fiscal.

Service tax needs to have a separate legislation and in three aspects the revenue is targeted every time. One is by way of enhancement in the rate , second one expanding the base of existing taxable services and third one abolishing some exemptions given or abatement given . While the threshold limit for basic exemption is kept at a very low figure of Rs 4 lacs , confusions already set in by way of department's circulars are not addressed ( for e.g Dept's circular on branded software in the light of TCS case). Dredging activity which is a core essential service in relation to development of port is not exempted and it is illogical to continue to levy service tax on dredging which is otherwise 1/3 of the port development cost.

Levying 4% CVD on all imported goods is a welcoming step but for service sectors like Ports etc should be able to take this credit for adjustment towards service tax payable by them .Otherwise this has positive impact only to manufacturing sectors and not to others.

A clear road map for CST -phase out is immediately required . The compensation of Rs 3000 cr for states which may go for VAT does not appear to be adequate in the light of experience gained in 2004-05 . Unless all non vat states come on board , implementation of GST will remain a dream . It was a good move to bring LPG under declared goods . But states will plead for compensation on this score.

FM could have done more and lots of suggestions consolidated by Apex bodies unfortunately are required to be repeated next year too.

V. B. VYAS, Senior Manager, of an Indian Corporte, MUMBAI.

Over and above the contents, the presentation skill of Hon'ble Finance Minister deserves to be complimented. He has endeavoured to make happy, all the sections of people of country. It would be appreciated if Director General of Service Tax (DGST) or Tax Research Unit (TRU) is assigned the job of preparing the negative list clearly listing the activities which remain outside the purview of service tax net. In other words, the listing of activities which could be a grey area in services already notified should be clearly spelt out.

Time frame need be fixed for accomplishment of this task. This would facilitate industry in overcoming the avoidable hardship of facing likely areas of dispute which may arise due to different interpretations by field formation. This would also enable the better utility of productive time of officials.

Mr. Malvinder Mohan Singh, CEO & MD, Ranbaxy

Building on strong economic fundamentals and fiscal prudence, the budget for 2006-07 provides continuity with a focus on social justice, and merits a rating of 8 out of 10. It focuses on enhancing infrastructure which will increase productivity and efficiency, while the substantial increase in government expenditure on healthcare, education, and rural infrastructure will extend the benefits of growth to a larger number of people.

The reduction of customs duties on AIDS and cancer therapy drugs and other life-saving drugs will make these more affordable for a larger proportion of people. The pharma industry will benefit from changes in the FBT, and while incentives to R&D expenditure under Section 35 (2AB) of the Income Tax act remain untouched in this budget, we hope this support and incentive will be enhanced and extended next year.

Sanjiv Bhasin, Managing Director and Chief Executive Officer, Rabo India Finance Pvt. Ltd.

"I foresee a constructive path laid forward by the Finance Minister’s budget as one of considerable impetus to the development of key growth sectors. A responsive and insightful budget best describes the policies outlined for the food processing and agricultural sectors. The farm credit increase of roughly 24% is a step in the right direction to afford incentives in farming and agriculture.

Additionally, I am pleased to see the place been afforded to sustainability in India through resolutions to support education, R&D and institutions. The sector specialised institutes with the new budget support will be able to create centres of excellence propelling these specialised sectors forward. The thrust on agro-processing infrastructure and market development and the sanctioning of the National Institute of Food Technology Entrepreneurship and Management are cases in point.

The increased focus on rural infrastructure, credit, insurance and agricultural growth, on the lines of the previous two budgets coupled with an increasing thrust on food processing (initiatives addressing both the demand and supply side) is one of the key highlights of the Union Budget of 2006-07.

Mr. BVR Mohan Reddy, Chairman and Managing Director, Infotech Enterprises Limited

• This budget, while certainly a growth-oriented one, it thrives more on consolidation of initiatives taken in the last two budgets than introduction of new policy initiatives.
• Levy of Excise duty on computers and on packaged software will be detrimental both to domestic industry and educational/training institutes
• Disappointed that there is no initiation of clarification on Income Tax related issues and simplification of tax procedures
• No major announcements on employment generation initiatives or urban infrastructure creation is another disappointment.
  

S. Tirumalai, Former President of FAPCCI

CVD at 4% on all Imported Goods
This measure was publicised earlier as an alternative tax proposal and revenue measure to compensate the States against reduction in CST from 4% to 2%. It is unfortunate that while the CVD at 4% has been announced there is no commitment towards reduction of CST. This is key to the VAT reform process as CST is antithetic to VAT.

Service Tax at 12%
The law was governed by circulars till the middle of 2004 and after that with the increase in number of services is in a State of unhealthy flux which does not contribute towards an efficient collection process. Without simultaneously removing the ambiguities in this legislation to add to further services and increase the rate will effect of the "tax reform" process. The tax will get further exported on all export services which is an issue that has not been addressed at policy level.

Customs Classification
With reduction in peak rates over the years the age old principle of differential rates for raw materials and finished products and intermediates has lost relevance. The opportunity to do away with multiplicity of rates should have been availed. Customs revenues.

CED
Willy Milly an intermediate rate of 12% has cropped up in between 8% and 16%. This is again not in consonance with the long term policy of convergence. The general CENVAT rate of 16% should have been reduced and measures announced at a policy level on strengthening of the CENVAT Credit availment process so as to avoid revenue leakages.

Tax Arrears / Reform
With the National Tax Tribunal in limbo measures should have been announced to extend the Advance Ruling process to residents, the settlement Commission to Service Tax and have time bound process for the Electronic initiatives on the Customs and Excise and Service Tax side that have been languishing for a long time. Without thus "transaction Costs" will remain high.

Satish Reddy, Managing Director & COO, Dr Reddy's Laboratories

Overall, it is a good budget, aiming for a 10% GDP growth, which is quite commendable. It is focused on infrastructure development for the country, which is in the right direction and is laudable. But when we come to specifics of the pharma industry, we find there is very little in it for us.

Reduction in peak custom duties from 15% to 12.5% will bring down imported raw material costs, which is a positive sign for all!

The FBT on free samples has been removed which is good as it was irrational to tax free samples given to Doctors which were in turn passed on to needy patients. However it is too small a change to make any great impact.

There has been no tinkering of tax rates, which is again good. There was no mention of extension of the weighted deduction on R & D. Last year's budget announced that it was applicable till 2007 and we hope this good practice will continue after 2007 too.

With the patent regime on in India, its time the Government encouraged innovation and supported the Industry by announcing grants for Research & Development. In the past only announcements have been made but no action has ever happened on the special fund for R&D. We hoped for incentives to set up R & D centers in India. This would have created numerous spin-off benefits to help create a base for innovation in India. But Budget 2006 has been disappointingly silent on this aspect.

B. Ramalinga Raju , Chairman and Founder - Satyam Computer Services Limited

It is a satisfactory budget that reinforces the goals of "Bharat Nirman". There is a significant increase in the outlay for social development initiatives which should aid in unlocking the potential of the rural sector. The stress on improving quality of healthcare and education is laudable and should greatly benefit the process of nation building.

While the emphasis on infrastructure is encouraging, there is definitely an urgency to move fast in areas such as urban development and power in order to keep pace with the growing economy. The budget has largely been neutral for the IT services sector though the stress on infrastructure and education should be positive for the industry from a long term perspective. The imposition of 8% excise duty on packaged software and the increase in service tax apart from bringing items like international air travel under the service tax ambit are dampeners that could have been best avoided.

The reduction in fiscal deficit brought about by a growing economy as well as an improvement in the Government's fiscal discipline is heartening

'I give PC ten out of ten for the budget': Nalini

Finance Minister P Chidambaram has one more reason to cheer with his lawyer-wife Nalini giving him a "ten out of ten" for this year's Union Budget he presented today.

"I give him ten out of ten for this year's budget...It gets better every year," she said, as she walked out of Parliament House soon after Chidambaram presented the Union Budget. Hoping that housewives would be happier with revised duties, she said, "with reduction in excise duties, household expenditures should come down".

With a sharp focus on the social sector, this was "a long-term vision budget", Nalini said, applauding the Minister for enhancing allocations to education, health, rural infrastructure and other developmental sectors.

Ms Rama Devi Chairperson, National Task Force on Panchayat Raj Jurisprudence and Former Governor of Himachal Pradesh and Karnataka

The Focus of this year Budget is more on uplift of Rural Development and Education.

The idea of implementation of the activities like rural development, agriculture and education is a very good. I wish the projects relating to all three sectors are properly implemented. I appeal that the budget allotments earmarked for Rural areas are properly utilised.

On the whole this is a prominent budget provided the implementation is taken care of. I wish that my ideas are published so that the authorities who are in the field of implementation of the above projects are made aware of the projects taken care by the progressive budget.

On the lighter side, I wish that there would be elections in some selected states after presentation of Budget every year.

Federation of AP Chambers of Commerce and Industry (FAPCCI)

FAPCCI President C.V. Atchut Rao welcomes budget. While the railway budget has overlooked the State of A.P., to a certain extent, the Finance Minister's announcement that the request of the A.P. Government to include Hyderabad Metrol Rail also be considered under MURM Scheme is a welcome development.

However, bold economic reforms were expected to be taken in view of the favourable economic conditions. As the economy seems to be growing as indicated in the economic survey additional efforts should have been made to give a fillup to growth. Probably some political compulsions might have been holding back the Hon'ble Finance Minister. Industry was infact eagerly looking forward to the announcement of labour reforms in this budget.

For achieving a 10% economic growth, massive expansion in the infrastructure sector like roads, ports, power were essential. Similarly, specific proposals are also required to be spelt out for encouraging industry.

FEDERATION OF INDIAN EXPORT ORGANISATIONS (FIEO)

FIEO HAILS ROADMAP FOR GST BUT LAMENTS LACK OF INCENTIVES FOR RAPID INFRASTRUCTURE DEVELOPMENT : O. P. GARG, PRESIDENT, FIEO.

FIEO hailed the Union Budget 2006-07 which has reduced the peak duty on non-agriculture products from 15% to 12.5% and drawn a roadmap for uniform Goods and Services Tax (GST) by 2010.

The reduction in customs duty on key textiles inputs, rationalization of excise duty on manmade fibre and filament yarn together with increased allocations under Textiles Upgradation Fund would give a boost to textiles exports which has hitherto not exploited the opportunities in post quota regime, said President FIEO, Shri Garg. The lowering of duty on primary steel products, ores and concentrates and refractories will give fillip to engineering exports which are already on the upswing. The grant of priority sector status to food processing will encourage corporates to enter the fields thereby increasing prospect of agriculture exports particularly the value added agro products.

V G Gopalakrishnan, Chief Finance Officer, Colorplus Fashions Limited, Chennai

The Finance Minister has continued the reform measures and this is a laudable step in the right direction. While there have been many expectations, I think the budget is a fair one across sectors. Reduction in peak level of customs duty, minor modifications in FBT, increasing service tax to 12%, reduction in excise duty on small motor cars and aerated drinks, extension of TUF scheme for textile sector and a similar fund for handloom sector are all growth oriented with the ultimate aim of making India a preferred global hub for manufacturing... kudos to the policy and planning team at the finance ministry.

B V Kumar, Former Member, CBEC

My first reaction after hearing the Hon’ble Finance Minister’s Speech is given below:

The Budget 2006-07 appears to be development oriented, in as much as; there is great emphasis on the Development of infrastructure in all its aspects and also to a certain extent covers rural infrastructure.

Further, social justice is proposed to be achieved by providing extra budgetary support for Education, Health, Family Welfare and Rural Development.

Recognition has been given to marginal farmers by providing credit facilities. Hopefully, this may save a couple of families from committing suicide.

Coming to the proposals on Indirect Taxes, the reduction in Customs duties is welcome. The imposition of CVD of 4% across the board will provide some amount of protection to the domestic industry, while raising resources.

Removal of End-Use Notifications will stop to a great extent the harassment of importers by Departmental Officers. Let us hope that they will change their mind set.

Rationalization of Central Excise duty and slight reduction in respect of a few items will also give a boost to the manufacturing sector.

The widening of the Service Tax base and increase of Service Tax to 12.2% in respect of certain services will increase the tax burden and could also be inflationary. It also may result in evasion of taxes.