What are the impacts of BUDGET 2018 on Gold?
Indian gold traders feel Union Budget 2018 is "positive" for the sector. A comprehensive gold policy to develop gold as an asset class and establishing regulated gold exchanges have been cited as the "positives" by Surendra Mehta, national secretary, India Bullion & Jewellers Association (IBJA).
Certain trade officials speculated whether as part of the gold policy a separate regulator would be set up to regulate the trade and spot gold exchanges. Spot exchanges in a state can be regulated by state authorities such as APMCs for Agri spot markets, etc. Some even speculate whether SEBI can get a remit to regulate a spot gold exchange.
"The budget has met all IBJA's demands like Gold policy, spot gold exchange and tweaking of GMS," said Mehta. "The minimum crop price and free health facilities will leave lot of surplus in hands of farmer and middle class, which in turn would be spent on gold. Govt also moved gold from demerit goods to an asset class, which is extremely positive for industry."
Budget 2018 Impact:
Corporate tax relief for the SME sector
Companies with a turnover of less than Rs. 250 crore in FY17 would be required to pay tax at 25 percent (and not at the erstwhile rate of 30 percent) in FY19.
Finance Minister Arun Jaitley in his Budget speech announced a major change in corporate taxation rules. Though the amendment will be particularly beneficial for the micro, small, and medium scale enterprises (MSMEs), it does not offer any relief for big companies.
What is the new provision?
Companies with a turnover of less than s 250 crore in FY17 would be required to pay tax at 25 percent (and not at the erstwhile rate of 30 percent) in FY19.
Out of 4,721 Indian listed companies that reported their numbers for the year ended March 31, 2017, 963 companies (20.3 percent of the total) could bemajor gainers.
The median tax rate for the above companies is approximately 34 percent for FY17. Consequently, the difference in tax rate (to the tune of 9 percent) is expected to improve their profit after tax margins, thus leading to better earnings visibility.