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Budget 2013: No impact on paper industry

March 01, 2013 09:55 IST
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Paper: Budget 2013-14 Analysis

Outlook: Neutral

Budget Provisions

Companies investing Rs 100 crore or more in plant and machinery during the period FY14 and FY15 will be entitled to deduct an investment allowance of 15% of the investment.

Increase surcharge from 5% to 10% on domestic companies whose taxable income exceed Rs 10 crore. In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2% to 5%, if the taxable income exceeds Rs 10 crore.

Current surcharge increased from 5% to 10% on dividend distribution tax or tax on distributed income. 

Concessional rate of tax of 15% on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.

Removal of cascading effect of DDT in a multi-tier structure where dividend received by a domestic company from its subsidiary (which is also a domestic company) is distributed to its shareholders

No change in the normal rates of 12% for excise duty and service tax. No change in the peak rate of basic customs duty of 10% for non-agricultural products. Education cess to continue at 3%

The Budget has allocated a 17% hike in allocation to education over FY13

Industry Expectation

The customs duty for import of Paper and Paperboards should be increased and brought in line with agricultural products

5% customs duty on pulp be reinstated only for Hard Wood Pulp

Policy measures put in place to facilitate private sector participation in plantation development programmes.

Reduction in excise duty on poly(plastic) coated paper.

Nil customs duty on imported environment friendly machinery.

Accelerated depreciation for new capex in environment friendly machines.

A suitable Technology Upgradation Fund Scheme.

Budget Impact

No major announcement from this year’s budget by Finance Minister.

Stock to watch

Ballarpur Industries, West Coast Paper Mills, Tamil Nadu Newsprint & Papers and JK Paper


Presently, Indian paper industry is seeing good demand. Since no major expansion is expected to come in next 2 years, demand – supply situation looks pretty good.

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Union Budget, as it unfolded on February 28

Complete coverage: Union Budget 2013-14

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