A sigh of relief was heard around corporate India when finance minister Arun Jaitley said that he would be forming a committee to deal with cases of retrospective taxation and also indicated that he would do away with the provision, once pending cases are dealt with. This relief was, however, not shared by a plethora of politicians from Punjab, Jaitley's home state, who made a beeline for the finance minister's office in Parliament on Monday.

Finance minister Arun Jaitley's maiden budget has set aside a Rs 7,300-crore service tax demand imposed on the state-run healthcare scheme for formal sector workers by granting the Employees' State Insurance Corporation. (ESIC) an exemption from the tax with retrospective effect.

Finance secretary Arvind Mayaram dwells upon several aspects of the Union Budget in an interview with Arup Roychoudhury & KG Narendranath. Excerpts:Retaining the interim budget estimate for FY15 GDP growth (5.4-5.6%) doesn't look convincing, as we now have (not-so-encouraging) April-May IIP data. Absence of recovery in private consumption, a probable oil shock and weak monsoon are other negatives, while you can be sanguine about only some early, though rather weak, signs of investments picking up.

The real estate industry cheered the so-called “pass through” status that was given to Real Estate Investment Trusts (REIT) that was announced by finance minister Arun Jaitley in his Budget speech in Parliament on Thursday. However, details in the explanatory statement accompanying the Budget show the tax incentive given to REITs comes with certain riders.REITs are investment entities where the funds drawn from investors are invested primarily in completed, rental income-yielding real estate assets. A part of the income generated from such real estate is distributed among investors as dividends.

It was a good Budget and lived up to the expectations I had. It has taken care of fiscal consolidation, where the main agenda was to bring the economy back to the path of growth. The finance minister also addressed the need to keep deficit under control by promising to cut it to 3% by FY17, which to some extent seems a realist target. Containing the expenditure by setting up expenditure commissions shows the seriousness of the government in having a road map for the coming years. He also made efforts to bring down inflation, which in turn will have an impact on cutting down the interest rates.

From a tax perspective, the welcome changes Budget FY15 brings are the extension of the sunset date for power units to March 31, 2017; the additional allowance of 15% on investment in plant and machinery exceeding R25 crore; lower withholding tax on foreign bonds, at 5%, across sectors; pass-through status to REITs and infra trust; dispute mitigation provisions; time-bound clarification by CBDT and CBEC; extension of Advance Rulings to residents and transfer pricing proposals like roll-back benefit in Advance Pricing Agreements (APAs); a range concept substituting the the arithmetic mean for computing arm’s length price; and allowing the use of multi-year data for TP benchmarking.

Acknowledging that both BSNL and MTNL are currently in financial distress, the government today said it is "quite serious" to restore the health of the two telecom services providers by adopting various measures like a whopping Rs 39,458 crore fresh investment over five years.

Soft drink manufacturers such as Coca-Cola and PepsiCo have always been vulnerable to any increase in price. That is because people tend to cut consumption whenever there is a price revision and, as a result, sales volumes take a hit.Budget 2014-15 has increased the excise duty on flavoured water, as well as aerated water with sugar content, from 12 per cent to 17 per cent - a 40 per cent rise, the highest ever in the past decade. As a result, the sector is expected to take a hit of over Rs 600 crore on an annualised basis.

There was no 'big bang' in the budget but the overall positive tone should keep the country's feel-good factor going, global financial services major HSBC said in a report.The government has stuck to its ambitious fiscal deficit targets and has given the right messages on manufacturing which should keep sentiment in the equity market buoyant, it said.

Sports utility vehicles (SUVs) under R10 lakh may be spared the 3% excise duty hike announced in the Union Budget. The price cap is being proposed to maintain demand for rural and commercially-focused SUVs such as the Mahindra Bolero, Tata Sumo, Chevrolet Tavera and Force Trax in a slowing economy, and is being considered by the finance ministry on the request of the auto industry and the ministry of heavy industries.Some urban middle-class SUV choices like the Mahindra Scorpio, Renault Duster (petrol) and the upcoming Ford EcoSport too may escape the duty hike. In his Budget, finance minister P Chidambaram had increased the excise duty on SUVs from 27% to 30% “since they occupy greater road and parking space and ought to bear a higher tax”.While ruling out any roll-back, the finance ministry had asked the auto industry to figure out a way to separate SUVs used by the middle class from premium models.

Despite extended tax sops and an increase in the investment limit for the much-publicised Rajiv Gandhi Equity Savings Scheme (RGESS), several expectations and demands of the mutual fund industry did not see the light of the day in the Budget.The MF industry is surprised that the KYC norms have only been eased for investments into insurance schemes and is making a representation to the finance ministry through capital market regulator Sebi to rectify this anomaly. “I think mutual funds deserve the same benefit as the insurance companies. After all, investments into mutual funds is also by way of cheque payments and not cash,” said Ajit Menon, executive VP & head, sales, DSP BlackRock Investment Managers. Those who have done their KYC while opening a bank account will not be required to do a separate KYC for buying an insurance policy from April 1, according to the Budget announcement.

Finance Minister P Chidambaram has already started work on implementing Budget 2013-14 announcements, even before the proposals are approved by Parliament. Today, Chidambaram called a meeting of finance ministry officials to prepare a road map to implement the Budget proposalsOfficials said this was the first time a finance minister had started acting on his Budget speech so swiftly. Traditionally, finance ministers have called meetings to review Budget announcements at the end of the first half of a financial year (September). And, these are usually preceded by review meetings at the level of secretaries in April.

Finance Minister P Chidambaram on Monday promised more measures to revive growth and investment when Parliament debates his eighth budget, which has been largely hailed by economists as the best under the circumstances but has received an emphatic thumbs down from the markets. Chidambaram said the final fiscal deficit numbers for the current year could be below the 5.2% projected in the budget, and promised all help to the commerce ministry in its attempt to boost exports, which he saw as the only remedy for the high current account deficit. The commerce ministry is in the process of unveiling a new trade policy.

The Budget proposal to hike dividend distribution tax (DDT) on debt fund investments to 25% from 12.5% is likely to impact returns given by fixed-income schemes with a dividend component. The increase in rates is set to affect the arbitrage between post-tax returns in debt funds and fixed deposits (FDs). “The scope of arbitrage between FDs and short-term debt funds will be significantly reduced. While there won't be any exodus of money per se, investors might become more choosy and opt for FDs over debt investment as returns of debt products with dividend option will decline,” said Jimmy Patel, CEO, Quantum MF.

Buyback of shares has as many adherents as detractors. Share capital, once considered sacrosanct and beyond tinkering by company managements so as to protect creditors’ interests, can now be played around with, without the leave of the court. The US and the UK led the way. Predictably, we followed suit. The rationale trotted out for straying away from what once was considered a holy writ was the self-serving alibi that a company should be allowed to return the excessive capital to shareholders, lest it acts as a drag on returns on their investments.Our policymakers also parroted the same alibi, little realising that it would come as manna from heaven for those lapping it up with ulterior motives.

Deputy Chairman of the Planning Commission Montek Singh Ahluwalia has called for for the complete acceptance of the Shome Committee’s recommendations on Retrospective Amendments in the Income Tax Act.This taxation provision is mainly related to the Vodafone case.Finance Minister P. Chidambaram, in an interview to a television channel , said “What Shome said is as far as possible, the Government should not make retrospective legislation. It becomes necessary to make a retrospective legislation than collect the tax alone, and waive the penalty and interest. That is an unexceptional principle. But today, there is no pressing need for me to move the amendment, that amendment can be moved only after we resolve the Vodafone issue which gave rise to this controversy.”

The Government’s proposal to hike taxes on royalty payments will hurt profitability of Indian subsidiaries of international tech firms and will push up the cost of doing business. The Government has dealt a blow in the 2013-14 Budget by increasing tax on royalty payments from 10 per cent to 25 per cent. Higher bearingThis will increase the cost of doing business for Indian subsidiaries in sectors such as technology, automobiles, pharmaceuticals, oil and gas and others, according to industry watchers. Further, this would have a higher bearing on companies based in foreign countries with which India does not have a tax treaty.

For the telecom sector, which had been seeking infrastructure status, reduction in taxes and clarification on service tax issues, the Budget has been a disappointing one. “There has not been a single incentive for the telecom sector. For that matter there has not been any incentive for the sector for the last three years,” said Cellular Operators’ Association of India (COAI) Director-General Rajan S Mathews.“The industry needed a lot of support from the government as now broadband is happening, 3G has been rolled out in many circles and a number of operators are looking at rolling 4G services,” Mathews added.

The Government’s efforts to woo chip makers to set up semiconductor fabrication units in India may be too little too late. Though the Finance Minister, in the Budget 2013-14 had announced nil customs duty on plants and machineries for semiconductor manufacturers, companies like Freescale Semiconductor are not biting it. “We are already the largest design centre outside of the Freescale US and have fab in location across the globe and we are not looking India as destination for setting up the fab,” Guruswamy Ganesh, Vice-President and Country Manager, Freescale Semiconductor India, told Business Line.

Now, scientists have another incentive to develop solutions that help the common man. Going by Finance Minister P. Chidambaram’s Budget announcement, technologies that promise to deliver useful services to people will be given a shot in the arm. Grassroots innovation A Rs 200-crore fund will be created to encourage innovations, he said, while presenting the Budget for 2013. The move comes as a refreshing change, quite distinct from the usual clamour of scientists going after big institutions and large-funded projects in the country’s effort to catch up as a scientific power. A few amazing innovations have been identified by the Principal Scientific Advisor, Government of India, R. Chidambaram, and the Ministries of Finance and Science &Technology.