The Hindu Business Line : Shot in arm for healthcare

Healthcare providers such as Apollo Hospitals, Fortis Healthcare, Max Healthcare and Wockhardt Hospitals could benefit from the five-year tax holiday, if they set up hospitals in tier II and tier III regions for providing healthcare. As proposed in the Budget, the companies will be able to take advantage of the new insertion in Section 80-IB section from April 1, 2008, provided the hospitals become operational before the window closes in 2013. This will lead to quicker pa yback periods in this highly capital-intensive industry, which has a long gestation period.

Rural push

Companies making a wide range of agri-inputs will be indirect beneficiaries of this Budget’s rural thrust. The loan waivers, in an environment of rising agricultural product prices, could leave more money in the hands of farmers, boosting demand for several agricultural inputs. An expansion in irrigated area has positive implications on demand for pesticides (Monsanto India, Rallis India, Coromandel Fertilisers, United Phosphorus), hybrid seeds (Advanta, Kaveri Seed, Monsanto) and micronutrients (Aries Agro). Seed companies have also received sops in the form of exemption from tax on income derived from seedlings and saplings grown in nurseries.

Take-off spur

Reverse Mortgages, which have been in the market for a while now, might finally take off now that the Budget has clarified taxation issues relating to the product. Reverse Mortgages

allow senior citizens to borrow against their homes. They receive the loan amount in the form of regular monthly payments from the lender. During their lifetime, they can continue to live in their house and at the same time supplement their monthly i ncome. Upon death, the property is sold off and the bank settles the loan amount outstanding.

The Budget has clarified that the monthly payments will not be treated as income. Also, it has clarified that the receipt of a loan upon mortgage of property will not constitute a “transfer” under the Income Tax Act and will, therefore, not give rise to capital gains tax. A borrower under reverse mortgage will be liable to income tax only on sale of property by the bank (mortgagee) for the recovery of the loan.

A thread of disappointment

Compared to previous packages, this year’s Budget turned out to be a disappointing one for the beleaguered textile industry. Along expected lines, the provision for the Technology Upgradation Fund (TUFS) was hiked by about 20 per cent from Rs 911 crore to Rs 1,090 crore.

The increase in allocation is much lower than that of the previous Budget. It is, nevertheless, positive for some of the larger players that have continued their expansion plans even amidst the export market slowdown such as Alok Industries, Welspun India, Vardhman Textiles, Raymond and Bombay Rayon Fashions.

Textile Machinery maker Lakshmi Machine Works, however, stands the most to gain. Being a key producer of spinning machinery, it may also not be impacted by the removal of the exemption on excise duty on shuttle-less looms. The latter is used in weaving and will now attract an excise duty of 8 per cent.

Contrary to expectations, there were no further customs duty cuts on textile inputs. Import duty cuts on key fibre intermediates had already been announced ahead of the Budget.

The only other measure was the removal of the 1 per cent National Calamity Contingent Duty on Polyester Filament Yarn. This will have a negligible impact on polyester yarn companies such as Spentex Industries, JBF Industries and Century Enka. Overall, with no major boosts from the Budget, textile stocks are likely to remain subdued.

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