Jaswant may bring glad tidings for banking, travel, textiles & health

NEW DELHI: If you are in banking, textiles, healthcare or tourism sectors, keep your eyes open for some exciting offers in the coming Budget. For, the finance minister, Jaswant Singh, is likely to offer sops to these sectors to boost private investments in them.
For the banking sector, there might be some tax breaks for provisioning bad loans, in line with the Kelkar Committee recommendations.
So much for the good news. The bad news is that a number of pending industry demands, like abolition of MAT, are not on the cards. Sources close to the budget formation exercise say that the healthcare sector will get a look in this time. They said the government recognises the lack of proper medical facilities for the poor on account of insufficient public funding. Apparently, the private sector is keen to get into the sector, but the return on investment are not so attractive now.
The healthcare industry has been demanding infrastructure status, calling for 10-year tax holidays along with tax exemption on all income from interest, dividend and long term capital gains.
For the banking sector, indications are that it will get tax breaks for the provisioning of non-performing assets (NPAs) to clean up their balance sheets.
The Kelkar Committee had recommended that the amount of bad loans be restricted to the amount of provisions debited to profit and loss account, subject to the guidelines issued by the Reserve Bank of India.
Sources also claim that the dividend tax was on its way out, as also is capital gains tax. Insiders believe that one omission in the Kelkar Committee report was with respect to the elimination of long term capital gains tax only on listed securities. There is a feeling that, to encourage private equity funds, this might be extended to unlisted securities as well.
One of the main demands of the industry has been the abolition of minimum alternate tax (MAT). This was on the wish list of industry bodies like CII and Ficci last year and finds mention this year too. However, insiders feel that it will not be removed despite a suggestion to that effect by the Kelkar Committee. According to those in the know, this will act as a safeguard against fiscal give-aways.