How does the Budget affect your finances?

Written by Vidya Kumar

March 1, 2013

Union Budget, Railway Budget, Budget 2013, financial planning, personal finance

The much awaited Union Budget 2013-14 was presented yesterday by the Finance Minister. Although expectations were high from this year’s Budget, there were no big-bang reforms or measures announced, which resulted in a huge 290 points drop in the BSE Sensex. Let’s give you a quick run-up of how the Budget will affect your finances:



  • There have not been any changes both in tax slabs and in tax rates. However, if you have an income between Rs. 2 lakhs to Rs. 5 lakhs, a Rs. 2000 credit will be given. Also, there has been no increase in Sec 80C investments limit, giving no respite to the salaried class.
  • If you have an income exceeding Rs. 1 crore, then be prepared to shell out 10% surcharge on taxes. This applies to HUF trusts as well. This additional surcharge will be for a period of one year, which is for Financial Year 2013-14.
  • New home loans less than Rs. 25 lakhs, taken between 1st April 2013 and 31st March 2014 for your first home will entail you an additional interest deduction of Rs. 1 lakh, over and above the Rs.1.5 lakh deduction you get under Sec 24.
  • Homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of Rs.1 crore or more will cost you more as the Finance Minister has reduced the rate of abatement for such houses from 75% to 70%. This will increase service tax, which will get passed on to the buyer. 
  • Transactions on immovable properties (other than agricultural land) will now attract 1% TDS if the value of the consideration is above Rs. 50 lakhs. This will result in more outflow as taxes.
  • The scope of the Rajiv Gandhi Equity Savings Scheme has been widened, with income limit being raised from Rs. 10 lakhs to Rs. 12 lakhs. You can invest in direct equity and Mutual fund schemes over a period of 3 years now.
  • The Finance Minister has proposed to introduce inflation linked instruments to help investors protect their savings from inflation. However, details of the same were not announced and are proposed to be announced in due course.
  • Your eating out will now get costlier, with service tax being introduced for all kinds of AC restaurants, including those which do not serve liquor. 
  • Buying ETFs, mutual funds and trading in equity will now get cheaper, as Securities Transaction Tax (STT) has been reduced from earlier levels. STT now stands at 0.01% for equity futures, 0.001% for mutual fund and ETF redemptions at fund counters and 0.001% for mutual fund/ETF purchases and sale on exchanges.
  • If you plan to buy mobile phones worth above Rs. 2000 and SUVs, then be prepared to shell out more, as duties on such mobile phones have been hiked to 6% and those for SUVs have been hiked from 27% to 30%.
  • The permissible premium rate on life insurance policies has been increased from 10% to 15% of the Sum Assured for persons suffering from disability or certain ailments for policies issued on or after 1st April 2013. 
  • You can get a 100% deduction on donations made to the National Children’s Fund.
  • If you play in the commodities market, then be prepared to shell out more, as Commodities Transaction Tax has been introduced on non-agricultural commodities futures contracts at the same rate as on equity futures (0.01% of the price of the trade). 
  • The Finance Minister has indicated that filing of returns is set to become more user-friendly, with e-filing set to become mandatory for more categories of assesses. 
  • Although import of gold has been indicated as the main reason for high Current Account Deficit, there has not been any fresh hike in import duty on gold. Further, the Finance Minister has increased the duty-free limit for bringing jewellery into the country to Rs. 1 lakh for women and Rs. 50000 for men.
  • Railway Budget: The Railway Budget did not hike passenger fares, but proposed an increase in supplementary charge for superfast trains, reservation fee, clerkage charge, cancellation charge and tatkal charges. The freight rates on diesel, kerosene and LPG have been increased by 5.79 %, meaning higher outflow from your pocket, as prices of necessities go up due to higher transportation costs. Some positives in the Rail Budget are proposals pertaining to providing Wi-Fi in select trains, mobile ticketing and increase in the capacity of IRCTC website servers for online booking of train tickets.


Smitha Hari
Team GettingYouRich.com


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