Business Today

Budget 2012: FMCGs want Budget to give more cash to consumers

While last year's Budget brought some cheer in the form of an upward revision in the tax exemption limit, members of the FMCG sector, this year too, expect more disposable income in the hands of consumers with a restructuring of I-T slabs in line with Direct Taxes Code.

Anumeha Chaturvedi        Last Updated: March 2, 2012  | 12:34 IST

While last year's Budget brought some cheer to the Rs 1,30,000 crore fast moving consumer goods industry(FMCG) in the form of an upward revision in the income tax exemption limit and a 250 basis point reduction in corporate tax surcharge, members of the sector this year too expect more disposable income in the hands of consumers with a restructuring of income tax slabs in line with the Direct Taxes Code (DTC) Bill.

DTC is expected to come into force in the next financial year and is aimed at simplifying tax laws and lowering tax rates.

"The FMCG industry's key expectations from the Budget include a consistency in fiscal policy to enable companies to plan for medium term and thereby aid new investments; and measures to manage fiscal deficit by judicious spending," says Kimsuka Narsimhan, Chief Financial Officer, Pepsico India. Budgetary measures should also sustain concessions for Agro based industries to incentivize investments, she says.

Industry insiders also expect a phasing out of the Corporate Service Tax, which increases the cost of products, thereby threatening sale and margins, and an ushering in of the Goods and Services Tax. The standard excise duty at 10 per cent is expected to be maintained in the budget.

"The sector also expects a revision under section 80-IA, whereby the definition of infrastructure can be amended to include rural infrastructure. Defining rural infrastructure will provide incentives to people to make investments in rural projects and will provide them some exemption and tax relief. At present, there is no exemption for such projects," says Krishan Malhotra, Partner at audit firm KPMG. Section 33-A, which specifies tax incentives for processing tea, can be extended to include coffee and tobacco processing, he says.

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