Withholding tax leeway for airlines

Indian companies stand to save Rs 9,200 crore from the cuts in import duty, proposed in the Union Budget.

Oil companies stand to save Rs 5,200 crore from the cut in the import duty on crude from 10 per cent to five per cent, though on account of the under-recovery on the prices of petrol and diesel they will still take a hit of Rs 475 crore a month.

Indian Oil Company (IOC), which imported crude worth Rs 36,170 crore in 2003-2004, stands to save around Rs 1,800 crore.

Reliance Industries will save Rs 1,700 crore, followed by HPCL at Rs 466 crore, MRPL at Rs 381 crore, Kochi Refineries at Rs 307 crore, Chennai Petroleum at Rs 265 crore and BPCL at Rs 242 crore.

Meanwhile, the proposed reduction in the peak customs duty rate for non-agricultural products from 20 per cent to 15 per cent is likely to reduce the cost of imports of Indian companies by Rs 4,000 crore in 2005-2006.

Of this, the saving in imports duty on raw materials will be Rs 3,610 crore and on capital goods imports it will be around Rs 390 crore, according to quick calculations.

A quick study by the Business Standard Research Bureau shows that 1,200 companies which imported goods worth Rs 80,200 crore in 2003-2004, will get a benefit of Rs 4,000 crore on account of the lower duties.

Trading companies will be the largest gainers from the duty cuts and the gains are estimated at around Rs 453 crore. Diamond and jewellery exporters stand to gain around Rs 292 crore, steel firms around Rs 257 crore, pharmaceuticals Rs 226 crore, fertilisers Rs 213 crore and IT companies Rs 157 crore.

The Steel Authority of India (SAIL) is the third major gainer with a Rs 122 crore saving. SAIL imported raw material worth Rs 2,430 crore in 2003-2004.

Aluminium and copper major Hindalco will save around Rs 121 crore, followed by Sterlite Industries at Rs 102 crore, Adani Exports at Rs 98 crore, Ruchi Soya at Rs 71 crore and BHEL at Rs 61 crore.