Budget 2014: Withholding tax at 5% on bonds issuances by all sectors is a welcome step, says Punit Shah

By Punit Shah

Finance Minister Arun Jaitley's Budget has stimulated investors' confidence with announcements on revival of capital and bond markets, said Punit Shah, Co Head of Tax, KPMG in India.

Talking about the plus points, Shah said, "FII capital gains taxation clarity and withholding tax at 5% on bonds issuances by all sectors is a welcome step."

Shah also applauded the measures taken by the Finance Minister in realty sector. He said, "Several measures for revival of real estate sector such as REIT tax pass through, FDI regime relaxation especially for affordable housing sector, are extremely encouraging."

Sharing his views on Jaitley's approach towards the revival of manufacturing sector, he said, "Manufacturing sector may get some boost due to introduction of investment allowance," he said.

Bond prices and the rupee had initially rallied after Finance Minister Arun Jaitley stuck to the fiscal deficit target of 4.1 per cent of gross domestic product for this fiscal year set by the previous government.

The tight fiscal deficit targets are expected to help keep a lid on prices, a critical factor in a country where consumer price inflation was 8.28 per cent in May, and could potentially allow the Reserve Bank of India some room to cut interest rates.

(With inputs from ET Bureau)