What is the change in Tax Liability for you? Income tax exemption limit is raised from Rs 2 lakhs at present to Rs 2.5 lakhs which means you will pay income tax less by about Rs. 5,000. If you are a senior Citizen who is 60 years or above, your income tax exemption limit will be Rs 3 lakhs. Earlier, it was Rs. 2.5 lakhs and for senior citizens above 80 years old, the exemption limit would be Rs. 5 lakhs.
What is cheaper? Packaged food, footwear, Diamond Jewellery, Television sets <=19” and Computers will be cheaper.
What is costlier? Cigarettes, Other tobacco products, Aerated Drinks and Imported Goods will be more costly.
What is good for Investments and Income – The Prime Minister wants to encourage long term savings and therefore has included the following steps:
1. Section 80C investment limit has been raised from Rs 1,00,000 to Rs 1,50,000 which means you will not be taxed for up to Rs. 1.5 lakhs of certain investments.
2. Though it is a small step considering rising real estate prices, something is better than nothing, the limit for deduction towards amount paid as interest on housing loan for self-occupied property has been increased from Rs. 1.50 lakh to Rs. 2 lakh
3. There is an increase in the maximum amount that can be invested in the Annual Public Provident Fund. You can invest up to Rs. 1.5 lakhs. It was Rs. 1 lakh earlier.
4. Savings schemes like the Kisan Vikas Patra and one for encouraging savings for education and marriage of girl children are announced.
5. Monthly pension from EPFO under the EPS-95 scheme is increased. The monthly wage limit has been increased to Rs.15,000 from Rs. 6,500 which means more people can benefit from EPFO’s social security schemes.
What is not so good for Investments? –
1. Long Term Capital Gain tax on Debt Mutual Funds is increased from 10 % to 20% for long term holdings and along term tenure is 3 years or more instead of 1 year.
2. Mutual Funds have to pay Dividend Distribution Tax on gross dividend for Mutual funds tenure increased from 1 year to 3 years which means more outflow of amount as tax
Can an Investor handle finances in an easier hassle free way?
1. It is planned to introduce one Demat account for all type of financial transactions
2. KYC norms would be standardised across the financial sector
3. A unified account will be launched by EPFO so that Provident Fund is portable.
What steps are taken for economic development which will positively affect the common man now or in the near future?
1. It is proposed to increase FDI in insurance to 49 per cent which means more penetration of insurance is possible.
2. Government has proposed to set up 12 medical colleges, 5 IIMs and 5 IITs which means the youth have access to more education facilities which will improve their status in the employment market.
3. There is a proposal to develop 100 smart cities which if implemented properly would bring in economic development and more job opportunities
4. The Government has proposed financial aid to 5,00,000 landless farmers which can improve economic prospects of the rural poor.
5. A fund of Rs. 10,000 crore is earmarked as venture capital for SMEs and start-ups which is to encourage entrepreneurship which will help in economic development and job creation.
6. There is a plan to set up funds for price stabilisation, warehousing for agricultural produce and setting up of farmers’ markets are steps to curb food inflation.
What steps are taken to improve the quality of life of people?
1. New airports in certain cities and metro rail services in Lucknow and Ahmedabad are planned to improve travelling and commuting.
2. Funds have been allocated to improve weather forecasting, piped gas distribution, drinking water facilities and total sanitation which will help people in rural and urban areas in many ways like better preparedness, ease of living and access to cleanliness and hygiene.
3. A Fund of Rs. 100 crore has been allocated towards saving the girl child and education of the girl child. Rs. 50 crore is proposed to be spent on safety of women on the roads. Considering the skewed gender ration and increasing violence against women, these are good steps if implemented properly of course.
4. A fund is proposed to provide low cost housing and cheaper credit to the poor to buy housing.
The announcements have covered many key areas. There are some sops given to individuals though there were more expectations from certain quarters of the society. If the proposed plans are implemented well especially keeping corruption at bay, they can definitely impact the country and economy in a positive manner. How would you rate the budget? Which points do you think affect you the most?
This article was originally published on Indianotes.
The author can be reached at [email protected]
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