The Union Budget was presented on February 1st, 2017 by the Finance Minister Mr. Arun Jaitley. It was a deviation from the usual Budget in two ways. Firstly the Union Budget till now was presented on the last day of February and the Rail Budget used to tabled separately. But this time it is merged in the Union Budget. Let us see how the Budget proposals has affected you.

Effect on your Taxes

• People earning an income between Rs. 2,50,000 and Rs. 5,00,000 will have to pay tax at the rate of 5%. It was 10% earlier. This will lead to a savings of Rs. 12,500 for people in higher income tax slabs.
• If you have a taxable income up to Rs. 5,00,000, you will have a simplified one page form for filing tax returns. This is done to make the tax payment process easy.
• A surcharge of 10% on income above Rs. 50,00,000 per year will be levied.
• Individual taxpayers would be required to deduct taxes at a rate of 5% on housing rentals paid to a resident landlord, if the monthly rent exceeds Rs 50,000. This is done so that HRA benefits are not misused. If there is a tax trail, the transaction can be tracked.
• If you are filing tax returns for the first time, you will not be subject to scrutiny unless there is some information that forces the Income Tax department to do so.
• One can set-off of loss under “Income from house property” against an income source which reduces the amount on which tax is calculated. This loss will be restricted to Rs. 2,00,000. This means your tax burden can increase. But for now, you can carry forward the loss to future eight assessment years.​

Effect on your Investments

• Earnings from sale of equity shares in Indian Stock exchanges will be considered as long capital gains if they were purchased after October 1, 2004 and securities transaction tax was paid. For shares purchased earlier, the base year for indexed cost of acquisition will be April 2001. This is done so that inflation factor is taken care of and the gains are lesser for calculating tax which in turn will be lower.
• Long Term Holding of immovable property has reduced to 2 years from 3 years. So if you have capital gains from selling property even after 2 years of purchase, it will considered tax-free which was not the case earlier.
• The base year for calculating cost for immovable property has been changed to 2001 against 1981. This means capital gains calculated will be lower thus reducing tax payable.
• Section 54EC will now include all bonds notified by the Central Government and redeemable after 3 years. This means capital gains to the extent of Rs 50 lakhs from sale of a long-term capital asset shall be exempt if the you invests the whole or part of capital gains in these specified bonds, within the specified time. Earlier all such bonds were not part of this clause.
• Employees contributing to NPS can withdraw up to 25% of their contribution tax-free. This will take effect from April 1, 2018.
• Varishtha Pension Bima Yojana (VPBY 2017), a modified version of the earlier proposal has been announced. It guarantees pension and rate of return of 8% for 10 years.​

Effect on Spending

• LED lamp components, printed circuit boards (used in mobile phones), silver coins, aluminium ore, and related material, cashew nuts, cigarettes and other tobacco products can become more expensive post the Budget announcements of 2017
• LNG, Solar tempered glass (used in solar panels), fuel cell based power generators, wind operated energy generators, leather products, POS machines, fingerprint readers can become cheaper post the Budget announcements of 2017.
• Services that got cheaper are online booking of IRCTC tickets and group insurance for defence services.
• Cash transactions are allowed only up to Rs. 3,00,000.
• AadharPay – a new way to spend digitally for people who do not have mobile phones or debit cards will be launched.
• The bank accounts of pregnant women who undergo institutional delivery and vaccinate their children will get Rs. 6,000 each under the Maternity Benefit Scheme.

Other proposals announced

• Cash donations to political parties are restricted up to Rs. 2000. They can receive cheques and digital payments. People willing to donate can do so by buying election donor bonds. These bonds will be redeemable. Hopefully, this measure will bring in more transparency.
  
• Affordable housing has been given infrastructure status. Developers and housing finance companies get a boost. More houses will be built in this sector.
  
• Many rural areas were affected negatively due to demonetization and bad monsoon in earlier years. There are proposals to revive the rural economy. There is a huge fund allocation to agriculture and MGNREGA.
  
• Flagship IIM programmes will be exempted from 14% service tax. Earlier this was applicable to students living in the IIM hostels only.
  
• Income tax for firms that have Rs. 50 crore or less as turnover will be reduced to 25%.
  
• The policy on tax concessions for start-ups incorporated after 31 March 2016 can avail of a three-year tax holiday in the first seven years of their existence.
  
• There is a proposal of a fund of Rs 10,000 crore to recapitalise banks who are facing pressure from NPAs and fall in deposits.
  
• A Rail safety fund having a corpus of Rs 100,000 crore will be set-up over a period of 5 years.
  
• The FIPB is to be abolished paving a smooth way for FDI liberalisation.