INDIA INC'S TOP bosses just can't stop smiling. Apart from the goodies rolled out by Fi­nance Minister Pranab Mukher-jee, the Budget's positive delta towards consumption through income tax reliefs has come as a pleasant surprise to most of them. India Inc is relieved that the minister has increased excise duty to 10 per cent, and not more.

A study by the Business Stan­dard Research Bureau shows that manufacturing companies will have to shell out an addi­tional Rs 25,500 crore for the financial year 2010-11. But most of the companies said the high­er excise burden will be passed on to consumers without hav­ing any significant impact on demand.

While the increase in the min­imum alternate tax (MAT) from the current 15 per cent of book profits to 18 per cent is a dis­appointment, the corporate sec­tor is taking heart from the reduction in surcharge. Cur­rently, domestic companies earning a total income of over Rs 1 crore in a year have to pay 30 per cent corporate tax. Besides, a surcharge of 10 per cent and education cess of 3 per cent are imposed on them, taking the total tax liability to 33.99 per cent. This now comes down slightly to 33.21 per cent.

The corporate sector is expected to save Rs 2,100 crore on this account. While the public sec­tor oil and gas major Oil and Natural Gas Corporation Lim­ited (ONGC) will save Rs 240 crore, the savings for Reliance Industries is likely to be around Rs 27 crore.

The MAT increase will mean an additional burden of Rs 4,035 crore for 998 companies which paid 15 per cent corporate tax in 2008-09. The rise in MAT is expected to affect the pre-tax profit of these companies by around 3 per cent. The MAT burden for the top 10 companies in the list is expected to increase by Rs 2,000 crore in 2010-11. While Reliance In­dustries will have to pay an ad­ditional MAT of Rs 536 crore, NTPC will pay Rs 279 crore more, Bharti Airtel (Rs 275 crore), Reliance Communica­tion (Rs 186 crore) and TCS (Rs 184 crore).

The corporate sector is, how­ever, looking beyond the num­bers and looking at the surge in consumption expected from the income tax reliefs. Kaushal Sampat, chief oper­ating officer, Dun & Bradstreet India, said at a time when the Indian economy was firmly on the revival path, what was re­quired from the Budget was a further push for consump­tion and investment. "The Bud­get announcements have done just that." The continued thrust on agriculture, infrastructure and ru­ral development will unlock much of the economic growth potential in the medium term.

Although the excise duty rates have been raised, they still re­main at the pre-crisis level and should not be a deterrent in the process of economic recov­ery, said Sampat. Mahesh Vyas, chief of the Cen­tre for Monitoring Indian Econ­omy, said the Budget has qui­etly encouraged private sec­tor investments. The effective reduction in direct taxes applicable to individuals and to cor-porates, no matter how small, will help sustain the current in­vestment plans of enterprise. The Budget effectively reduces the taxes paid by individuals and, therefore, it increases the discretionary purchasing pow­er in the hands of households. Enterprises will see a direct ben­efit in this. Their confidence in future demand is the key driv­er of their investment decisions. The focus on infrastructure is also being considered to be a big plus. While construction and engineering companies such as Larsen & Toubro, GMR Infrastructure, Jaiprakash As­sociates and Gammon Infra will benefit, real estate companies such as DLF, Unitech and Sob-ha Developers will be winners because of the Budget propos­al to give developers tax de­ductions on existing projects and relaxed norms for built-up area.

Drugmakers such as Dr Red-dy's Laboratories, Cipla and Biocon will also benefit as the Budget has proposed that the weighted deduction on in-house research and development ex­penses will be raised to 200 per cent from 150 per cent now. Ashok Leyland Managing Di­rector R Seshasayee said this might not be a game-changing Budget, but the positives are the fact that the fiscal health is still under control and that there is a fairly significant step up in investment programmes. Bharat Forge Chairman Baba Kalyani sees a lot of positives in the Budget.

"Through this Budget, the fi­nance minister has squarely ad­dressed the three challenges before the economy, which he stated upfront in his speech — to bring back 9 per cent growth and set a challenge tar­get of double-digit growth, to make growth more inclusive and to strengthen the structures of governance by improving de­livery mechanisms," he said.