Category Archives: Budget Review

Decoding the Budget 2016

Budget 2016 was prepared keeping in mind the existing global scenario and can be termed as an incremental move towards the backdrop of global uncertainty. Though there is nothing much in the budget to provide respite to the common taxpayers & investors community except few announcements which may help in building the confidence of the tax payers with respect to reducing the litigations or ease in handling the income tax scrutiny cases. Let us understand the impact of Budget 2016 in detail-

budget-2016

Income Tax:

  1. No Change in Tax Slabs: There is no change in the income tax slabs, existing slabs to continue.
  2. Limit u/s 87A: The deduction limit u/s 87A of the Income Tax Act has been increased by Rs. 3,000/- from the existing Rs. 2,000, the enhanced limit is Rs. 5,000 per annum from the next financial year. But this section applies to those who have total income of less than Rs. 5 lakh.
  3. NPS Withdrawal: Now, the withdrawals from your NPS on the maturity will be tax free up to 40% of the total corpus accumulated. This is a move to take NPS become closer to the other competing products like PPF & EPF, where the withdrawal is tax -free. Similar provision will also apply on EPF and super annuation withdrawal. It means, if you have Rs. 10 lakhs accumulated at the time when you turn 60 years of age, then up tp 60% of it can only be withdrawn which means total Rs. 6 lakhs can be withdrawn and out of this Rs. 6 lakhs, 40% of corpus i.e. Rs. 4 lakhs will be exempt from tax.
  4. Increase in Surcharge: Super rich have to pay more income tax due to increase in the surcharge rate from the existing 10% to 15% , this applies to the individuals whose earnings are more than Rs 1 crore , those are called super rich as per the income tax department.
  5. Undisclosed income: Now a taxpayer can declare his undisclosed income by paying the total tax of 45% which comprises of 30% Income Tax, 7.5% surcharge and penalty of 7.5 of the undisclosed income. They will get immunity from the prosecution. It means those who had not declared their income to the department and no tax is being paid by them then these people can voluntary declare that income and pay 45% tax on it. It means the black money what they have will become white if they pay 45% tax on it and they will not be harassed or prosecuted in future because of their wilful disclosure & payment thereon.
  6. E-Assessment: Government will launch e-assessment in the seven cities wherein no physical presence will be required to deal with scrutiny cases, this is indeed a great move to help taxpayers get freed from running around income tax offices and worrying about income tax notices or paying huge fees to their chartered accountants.
  7. Turnover Limit u/s 44AD: The total turnover limit under Presumptive taxation scheme u/s 44AD of the Income Tax Act is being raised to Rs. 2 crores providing a huge relief to a large number of taxpayers in the MSME category. This section will also cover the professionals like those who are in to legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration , who will opt for the presumptive taxation scheme also to benefit with the revised limit, now the profit from their profession will be deemed to be 50% with gross receipts up to 50 lakh.

House Rent

The people who do not have any house of their own and also do not get any house rent allowance from any employer today get a deduction of Rs 24,000 per annum from their income to compensate them for the rent they pay. The same limit has now been raised to Rs. 60,000 annually as per section 80GG of the IT Act.

According to the budget proposed changes, the existing provisions under Section 80GG allows a deduction of any expense as incurred by any individual exceeding ten per cent of his total income for the payment of Rent for any furnished or unfurnished accommodation which he had occupied for the purposes of his own residence. Also, to avail the benefit, he must not have granted any house rent allowance by his employer and the benefit was capped at Rs 2,000 per month or 25 per cent of his total income for the year, whichever is less and the same limit is enhanced to Rs. 60000 with effect from the next financial year.

Start-ups

    1. It is proposed to provide a deduction of 100% of the profits generated by an eligible startup which is involved in the business of innovation, development, deployment of new products or processes or services driven by technology or intellectual property.
    2. Start-ups will get 100% deduction for their profits for the first 3 out of 5 years means no tax on income, if any and provided that it is being set up during April, 2016 to March, 2019.
    3. Registration for Start-ups: Government to incorporate changes in the companies act to felicitate registration of new start-ups in one day.

 

Women Entrepreneurs

Stand-Up India scheme will allocate Rs.500 crore for the SC/ST & women   entrepreneurs; let us see how this fund will get allocated to boost entrepreneurship amongst women.

Home

First Time home buyers will get an additional deduction of Rs 50,000 towards interest on their home loan which should be up to Rs 35 lakh and with a condition that the cost of the house should not exceed Rs. 50 lakh.

What will cost you more: Food, Luxury Items, Jewelery etc.

Be ready to shell out more for your cigarettes, branded garments and services like bill payments, air travel or eating out as these are set to become more expensive. Apart from these, Gold Bars or Hiring a Packers & movers, Gold & silver, Jewelery articles excluding silver, E-reading devices, Ropeway, Cable car rides, Lottery tickets, Water including mineral water, Aluminium foil, Air travel, Plastic bags & sacks. The budget had also proposed a Krishi Kalyan cess of 0.5 per cent on all taxable services.

Where you will save more!

You can save money on the footwear, Solar lamp, Broadband, modems, set top boxes, CCTV cameras, low cost houses with less than 60 sqaure meter carpet area, microwave ovens, sanitary pads and Braille paper.

Cars

Car prices are set to rise due to a proposed cess of 1 per cent on small petrol, LPG and CNG cars and 2.5 per cent on diesel cars apart from 4 % on other high-powered vehicles and SUVs.

Budget 2015 & Coverage in leading Indian Media

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Dear Readers,

Our Chief Gardener and Founder Director Mr. Rishabh Parakh (CA) is the  most sought after speaker and on the expert panel of all the leading media. Please go through his budget review  as featured in the leading newspapers like DNA, Idiva (times of India), Pune Mirror, Sakal Times & Lokmat as follows.

http://www.punemirror.in/pune/civic/Reading-the-fine-print/articleshow/46414558.cms  (Mirror)

http://epaper.sakaaltimes.com/449733/Sakaaltimes/01-Mar-2015#page/2/2  (Sakal Times)

http://www.dnaindia.com/money/report-budget-and-what-it-means-for-you-2065139 (DNA)

http://idiva.com/opinion-work-life/union-budget-2015-decoded-for-women/35237 (www.idiva.com of Times of India)

http://epaper.lokmat.com/samachar/epapermain.aspx?queryed=111  (Lokmat Samachar)

Short Summery
Important parameters affecting the Common Man

 

Highlights of Budget: 

1. Introducing the additional limit of Rs. 50000/- contribution towards a New Pension scheme under 80CCD.

2. The limit under section 80D had been increased from the existing Rs. 15000/- to Rs. 25000/- on account of health insurance premium.

3.  Investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income tax and any payment from the scheme shall not be liable to tax.

4. Employee’s contribution to EPF below an income threshold will be optional without reducing employer’s contribution

5. Non-filing of forign assests/accounts or filing with inadequate info will attract rigorous imprisonment

6. Exemption on transport allowance is increased from Rs. 800 to Rs. 1600 per month.

7. Wealth tax has been abolished to compensate the loss existing surcharge of 10% will be increased to 12% for all the Super rich tax payers means people earning more than Rs. 1 crores.

 

Budget by category:

  1. 1.     Budget for Senior Citizens  (above 60 years)
  2. 2.     Salaried Citizens/Individual Tax Payers
  3. 3.     Homemaker
  4. 4.     Young Entrepreneurs

 

1. Budget for Senior Citizens  (above 60 years)

Following are the major offerings in the union budget 2015 for the Sr. Citizens: –

  1. Deduction limit u/s 80DD of Rs. 60000/- increased to 80,000/- for specified diseases like cancer.
  2. Increasing the limit of deduction on account of health insurance premium from 20000/- to 30000/- u/s 80D.
  3. Deduction will be allowed for medical expenses up to Rs.30,000/- for super senior citizens who are not eligible to avail health insurance.
  4. Additional deduction of Rs. 25000 for differently abled persons.
  5. They can also invest in Tax Saver Infrastructure Bond, which have been announced in the budget.

 

2. Salaried Citizens/Individual Tax Payers:

  1. Introducing the additional limit of Rs. 50000/- contribution towards a New Pension scheme under 80CCD.
  2. The limit under section 80D had been increased from the existing Rs. 15000/- to Rs. 25000/- on account of health insurance premium.
  3. Investment in Sukanya Samriddhi Scheme will be eligible for deduction under section 80C of the income tax and any payment from the scheme shall not be liable to tax.
  4. Employee’s contribution to EPF below an income threshold will be optional without reducing employer’s contribution
  5. Non-filing of foreign assets/accounts or filing with inadequate info will attract rigorous imprisonment
  6. Exemption on transport allowance is increased from Rs. 800 to Rs. 1600 per month.
  7. Wealth tax has been abolished to compensate the loss existing surcharge of 10% will be increased to 12% for all the Super rich tax payers means people earning more than Rs. 1 crores.

3. Homemaker & Modern Woman (What budget has in store for the home minister): –

Mr Jaitley had pumped in another Rs 1,000 crore into Nirbhaya fund but the main challenge is that even the earlier money as allocated for this had not been touched yet then the question comes that who is going to use it?

There are no specific schemes which has been announced to please the homemaker this time and rather than increasing their savings increased service tax rates will put immense pressure on them. Let’s see the effect in your daily life as follows:-

  • Dining and Date to cost more: Now going out with your family or taking your boyfriend out on a date would be a much costlier affair all thanks to the increased service tax again; even a pizza delivery will be costlier now.
  • Beauty parlor – planning for a makeover, now be ready to shell out more for your next outing at your beauty parlour, even a simple haircut will cost more forget about pedicure or manicure!
  • Healthcare – looking to shed few kilos or getting that dream figure, now be ready to pay more for your Gym memberships.
  • Leather goods & Purses – By now you must be feeling cheated but here comes a good news for those who just loves to shop for shoes and bags as the reduction in duties will make it available for a much cheaper prices than it is right now, go and put your best foot forward.

 

4. Young Entrepreneurs

  1. The government is creating a mechanism known as Self Employment and Talent Utilisation (SETU) to be techno-financial incubation and facilitation programme to support all aspects of start up business and other self employment activities particularly in the technology driven areas and setting aside Rs 1,000 crore initially for this purpose.
  2. Government will encourage new startups and encourage young entrepreneurs.
  3. Government would allocate Rs 20,000 crore through Micro Units Development Refinance Agency (MUDRA) Bank for the SME sector and will enhance credit facility to boost the growth of small businesses and manufacturing units.

 

TIPS to save and leverage the budget:

1. One can invest in Gold & Metal Bond and earn interest.

2. One can invest Rs. 150,000/- in New Pension Scheme to save tax under section 80CCD as well as insure old age social safety

3. One can save tax by investing more Rs. 10,000/- in medical insurance to cover the family as benefit under Section 80D is increased to Rs. 25,000/-

4. Those who look forward for the safety of their investments can invest in tax-free infrastructure bonds.

5. One should also plan to invest in REIT & IIET (Real Estate Infrastructure Bonds) which are going to become popular soon, a good investment option for investing in property market indirectly.

6. Plan your social outings well in advance as the prices are set to take off on account of hike in price of cigarettes, cigars due to increase in 10-15%

7. Relief to the person expending for specified diseases like Cancer will receive higher benefit of Rs. 20,000/- as limit u/s 80DDB, is increased to Rs. 80,000/-.

8. Similarly, relief to the person expending for disabled person will receive higher benefit of Rs. 25,000/- as limit u/s 80DD & u/s 80U, is increased to Rs. 75,000/-.

 

Critical Analysis:

  1. 1.     Lots of schemes have been announced for senior citizens, but we will come to know the effects after its successful execution which may take a good No. of years.
  2. 2.     Senior citizens (above 80 years) expecting a further increase in the exemption limit who do not come under tax bracket for earnings up to Rs 5 lakh were disappointed.
  3. 3.     The homemaker looking towards budget to reduce their pressure on account of an ever increasing inflation, which has been rising without any respite for quite a few years.
  4. 4.     There should be some sort of maternity medical expense benefit either in taxation or as an aid (by giving a certain amount of funds for meeting the hospital expenses of a delivery) and should also provide better education facilities such as rebate in education loans meant for a girl child in order to empower women.

 

Conclusion:

Overall it is a budget with lot of hopes for the development of a Nation as a whole but there was nothing much in the budget for the man on the street aka common man because Mr. Jaitley had neither changed the income tax rates nor increased the exemption limits for individuals while the corporate tax rate has been brought down to 25% from the existing 30%.

I think it would be a valid question to be asked to Mr. Jaitley that when he can bring down the corporate tax rates then why can’t the he reduce the same for a common tax payers.   Because other than the tax deduction for the premium paid on health insurance policies, which is increased, to Rs 25,000 from the current Rs 15,000 and doubling the transport allowance to Rs. 1600/- nothing major had been changed. Though increasing the additional deduction limit of Rs. 50000/- u/s 80CCD for New Pension Scheme is a welcome move. He had also abolished the wealth tax filing, a good move but indirectly he had asked the details to be declared while filing your income tax returns which makes IT returns filing more complicated then what it is.

 

Now taking your wife out on a date will be a costlier affair all thanks to the increased service tax, even the effect will be seen in the increased outgo across areas like Courier services, Healthcare, Laundry, Beauty parlour, Air travel, Mobile phone, Education, Movies, laptop & internet. Overall a budget which has numerous schemes in the offing with a little less for the common man to take away from.They have offered benefits to those who will come and make in India, but what about those who are making it for India, time for to think for those also who “Make For India” because foreign cos will come and make in India and take the benefits away to their countries and when you announce funds for start ups what about developing an ecosystem for nurturing them, that still doesn’t exist in India.

Let’s hope to have this implemented and change our nation and bring acche din for all the fellow Indians.

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Issued in Public Interest

By Money Plant Consulting

 

Gender Budget: Why Should Men Have All the Fun?

FYI… This article is already featured in my Column with Times of India’s www.idiva.com
Related link: http://idiva.com/opinion-work-life/the-gender-budget-why-should-men-have-all-the-fun/30939
The Gender Budget Why Should Men Have All the Fun

Do you know what’s in store for you in the upcoming Union Budget 2014; do you, as a woman, have a say in government expenditure as planned in the Budget? Do you know whether the budget allocation is working towards empowering women at large and have you ever heard of Gender Budgeting? Let’s understand these better in this exclusive article on gender budgeting and women empowerment through the Union Budget.

What is Gender Budgeting?

It is an initiative whereby the overall policy framework and set of tools are designed to assist the government in bringing gender perspective while planning for the nation’s public expenditure.

Why is it necessary?

For the larger benefit of our economy, our budgets should be made gender-sensitive because it will facilitate superior utilisation of government expenditure towards women-related activities and keep a tab on unbalanced consequences of former economic policies.

Journey so far…

Though our Planning Commission of India has always focused on women-related issues and the same can be seen from its various five year plans which started right from the very first plan and has continued to the tenth five-year plan. However, up until the year 2004, this process of gender budgeting was more reactive than proactive. The scenario largely changed after 2004 due to constant lobbying by the economists and women’s groups which compelled the Ministry of Finance to authorise all the ministries to establish a Gender Budgeting Cell. Even departments were asked to present annual reports and performance budgets highlighting the budgetary allocations for women.

Demands & expectations from the government

The Steering Committee on Women’s Agency and Empowerment for the 12th Plan had suggested several important intrusion to address the gender-based disadvantages experienced by girls as well as young and elderly women. For quite a few years various women’s groups and economists have been demanding that the government review the format of the Gender Budgeting but hardly any progress has been made in this direction. There are long overdue demands of various women’s groups and economists with respect to budgetary allocation for various activities directed towardswomen empowerment as follows:

  • Effective implementation of Pre Conception and Pre Natal Diagnostics Techniques (PCPNDT) Act.
  • Implementation of Protection of Women from Domestic Violence Act, 2005.
  • Fiscal allocation must be made for the salary of crèche teachers and helpers in schools.
  • Improvement of retention rate of girls in the school.
  • Improvement in budgetary allocation for the Public Distribution System (PDS) to fortify the provision of good quality food grains.
  • Improvement in funds for protection and rehabilitation of child workers.
  • Social security and social protection for women in the informal sector and Small Scale Industries.
  • Training Institutes to provide women with more skills development in non-conventional areas.
  • Access to information, finance, training and marketing for women entrepreneurs, SHGs, vendors and self-employed women.
  • Night shelters with toilets and baths for homeless women and girls.
  • Community based half way homes, working women’s hostels and multi-purpose activity centers to meet a variety of needs of women and girls.
  • Support in the area of education, health; housing and skill development must be provided to women-headed households.
  • Protection of interests of women in difficult circumstances such as child prostitutes, homeless women, street girls, abducted girls, child brides, women suffering from HIV/AIDS, single women and elderly women.
  • Safe transport like women special buses and local trains.
  • Well-maintained public toilets for women.

Parting note

Apart from implementing and working on the much-needed areas as mentioned above, the government should also work with all the departments both at the Central and State levels because it has been often seen that resource allocations as made under gender budget do not reach in time or are mostly unspent. Government should focus on effective monitoring of the allocated funds with superior transparency and accountability at all levels.

After all, shouldn’t women have their fair share of fun too :)

An Open Letter to Mr. Jaitley from a Common Woman!

union_budget_letter_to_finance_minister1

Shri Arun Jaitley
Finance Minister
July 2, 2014

Dear Sir,

Subject: Pre Budget Expectations of a “common woman”

At the outset, I take this opportunity to introduce myself as a common woman, the other part of the more-talked-about ‘aam aadmi’ aka common man. I am a big part of a community who are involved in either managing the household or playing an active role in managing the finances as a working woman; nowadays you may find us doing the both.

Though people believe that a common woman is least concerned about the outcome of the Union Budget, I would like to put it on record that, in my capacity of either being a homemaker or a working professional, I do have huge expectations from you too. I hope that you will pay attention to my needs and address my concerns as follows to justify my vote.

The homemaker wants…
Being a homemaker, my first and foremost concern is the ever-existing pressure on account of high inflation. I seek your urgent attention for the rising prices of basic necessities like food, LPG and other important household expenses like the cost of education for my children. It has been rising without any respite for quite a few years now. The various moves to run the economy (for instance rising petrol or LPG prices) ultimately affect me severely because it increases my day to day cost directly and indirectly. Yes, I do not earn but as a housewife, I have an amazing skill to covert my expenses into savings, and later the same into fruitful investments. Hence, I sincerely expect you to take suitable measures to increase my savings by reducing my running costs on various things as mentioned while maintaining a healthy lifestyle.

Introduce some sort of maternity medical expenses benefit from the Government, either in taxation or as aid (by giving a certain amount of funds for meeting the hospital expenses of a delivery). You should also provide better education facilities such as rebate in education loans meant for a girl child in order to empower women.

Mr. Jaitley, please take action on various things that directly or indirectly impact my day-to-day cost of living. Do take the necessary action to increase my cash flow at the end and help me manage my budget effectively.

The working woman expects…
I wear many hats and apart from being a working professional, I run the show at home too. Of course, you’ve probably seen the increase in the number of working class woman. I pay my taxes and contribute directly to the GDP, hence, I also expect a lot to be done for working women like me so that I can save more. Please find below my expectations:

Rise in Income Tax Slabs: In spite of the ever-rising prices across sectors and both direct and indirect taxes, you have not increased the basic exemption limit of income that is not supposed to be taxed. Even the various tax rate limits have been more or less the same without much increase. Though direct tax has proposed a hike, the very act is still to see a light of the day. My expectation is to hike the basic exemption from Rs.2 lakhs to at least Rs.4 lakhs.

Investment limit: The present deduction available under Section 80C is upto Rs.1 lakh only and the same has not been hiked for many years now, this in spite of rising inflation and income. The limit should be revised and increased to Rs.2 lakhs keeping in mind disposable income, deflating value and purchasing power.

Savings account interest and new schemes: I also expect you to hike the limit of taxable interest earned from savings accounts and introduce some exclusive women-oriented government sponsored investment schemes wherein I can park my money.

Medical cost: Health is the biggest worry for me and you know the cost one has to incur on medical treatment in today’s time. I expect you to increase the exemption limits on medical treatment under income tax and also introduce world class medical facility at no extra cost.

Principal amount of home loan and stamp duty charges: Fulfil my dream to own a house because over the last few years, real estate prices have shot up to a great extent and so has the amount of home loan we need to fund the purchase. Hence, limits for tax deduction on these counts should be increased with immediate effect.

Interest on home loan: As mentioned above, due to the rise in home loan amount, interest on the same has also gone up and current limit of tax benefit on interest amount upto Rs. 150000 should also be increased to match the rising inflation.

Tuition fees: The same goes for education cost which is also increasing day by day. Budget should increase the available deduction under IT act or make a separate deduction for the same.

Infrastructure Bonds (80CCF): The deduction was available for investment under infrastructure bonds up to Rs.20,000. The deduction was not available in the last financial budget. The same should be reintroduced with the enhanced limit.

Rajiv Gandhi Equity Scheme (80CCG): This section was introduced to attract small time investors to invest in the equity market. This is still not very much successful due to the complication and eligibility criteria of the scheme, hence relaxation should be provided in the coming budget.

Yours Truly,
A common woman

P.S. Don’t underestimate the power of a common woman.

Budget Impact & review- 2013 (as published in leading newspapers)

Mr. P. Chidambaram has kept his macro promises on the fiscal deficit and has taxed the rich in a token way, but nothing momentous. His assumptions will tell us whether his budget outlays are based on reality or just built on hope and hype. The budget is more for the economy than for an individual and we have to wait for the fine print to figure out whether he has delivered a clean budget or one with wide holes and doubts. Given the huge expectations before the budget, FM has done nothing to unnerve the markets or business but has not excited the public at large either before the elections.

There were three major expectations of an individual from the budge like hike in Tax exemption limit from current Rs. 2 lakh to Rs. 3 Lakhs and increase in Investment limit of Rs. 100000 u/s 80C has not been fulfilled. Also we were looking for further deduction in EMI i.e. interest & principal benefits of home loans. As all these benefits have been recommended by the finance committee for last few years and were expected to be announced. I hope the same should be made available for a common man in coming years looking at the rising inflation and higher outgo on these counts.

Actually Budget was aimed at reviving growth amid the country’s worst slowdown in a decade.

For Working professionals and impact of Income Tax:

1). Tax Credit: FM has proposed a Tax Credit of Rs. 2,000 for people earning an annual income of between Rs 2-5 lakh and. He said that any hike in the exemption limit for direct tax that is paid by individuals would take millions out of the tax net and was neither a pleasing proposition, nor possible.

2). Immovable Property transaction: TDS of 1% to be levied on transactions above Rs 50 lakh

3). Super-rich tax: A levy of 10 per cent surcharge on income of Rs 1 crore and above and a 5 to 10 per cent surcharge on domestic corporates whose income exceeds Rs 10 crore a year has been proposed and he promised to remove extra surcharge on companies and rich people after one year.

4). Home Loan exemption limits raised: Housing loan for first time loan takers of up to Rs 25 lakh would get additional deduction of interest of up to Rs 1 lakh in 2013-14. The additional exemption will extend the tax benefit from the current Rs 1.5 lakh to Rs 2.5 lakh.

5). No Hike in Tax Slabs: No change in tax rates or slabs. Existing tax slabs would prevail.

For Women’s / Homemakers:

With government passing subsidy burden on to customers for LPG usage, etc. Which has really made it difficult for homemakers to manage their day to day life, lot of measures were expected on these counts but nothing has been done to address the same. Though FM initiates lot of moves for women safety & empowerment as follows which will boost credit and channelise savings from women:-

  • Women’s only public sector bank: India will soon get its first women’s public sector bank, which will lend mostly to women and be staffed with women employees. It may address gender related aspects of empowerment and financial inclusion.
  •  Nirbhaya Fund; FM announced a ‘Nirbhaya Fund’ of Rs 1,000 crore to empower women and provide safety in the wake of the Delhi gang-rape incident.
  •  Gold: Duty free gold limit increased to Rs 50,000 in case for male passengers and Rs 1,00,000 in case of a female passenger subject to conditions.
  • Women welfare: Rs 97,134 crore allocated for programmes relating to women

Impact of budget on your investments:

  • Inflation indexed bonds: If you have been worried about inflation eating into your long term savings, you should wait for inflation indexed bonds.
  • RGESS will be liberalised & the investor will be allowed to invest in mutual funds. The investor will be able to do this for a period of 3 successive years. The investment limit in RGESS is hiked from Rs 10lakh to Rs 12lakh. The scheme, announced in the 2012-13 budget, aims to provide tax benefits to first-time investors in the stock market. Now an individual with an income of Rs.10 lakh or less will get tax incentives up to Rs.50,000/- in the stock market.
  • If you are living in a tier II city and find it difficult to find an insurer near your        place, Insurance companies can open officers in tier II cities without prior permission from Insurance Regulatory and Development Authority.
  • Last year, the finance minister had announced that for life insurance premium to be eligible for deduction under section 80C, the premium should not exceed 10% of the sum assured. This Budget has raised this cap to 15% for policyholders with disabilities. It would benefit them as life insurers charge slightly higher premium due to higher risk involved.
  • Securities transaction tax is reduced. STT on mutual fund (MF) and exchange traded fund (ETF) redemptions at fund counters is slashed.
  • You can see more tax-free bonds in the coming year, as some institutions are expected to raise around Rs 25,000 crore via tax-free bonds in 2012-13.

For Businessmen:

If you are a service tax evader then make use of the new voluntary Compliance Encouragement Scheme announced in the budget. You can file a declaration of service tax outstanding since 1 October 2007 and pay it in instalments before the set dates. You do not need to pay interest and penalty and all other consequences will be waived.This is a good move considering that half of the registered service tax people are not filing their returns and govt. cannot catch or reach out to each and every one hence this would provide some additional funds and a good move similar to the VDIS i.e. Voluntary Disclosure of Income Scheme launched few years ago.

 Impact on Retired persons / Senior Citizens:

It was anticipated that budget would hike the limit of taxable interest earned from Savings accounts and reintroduce some Government sponsored investment avenues which can be helpful for Senior Citizens to park their money in as they mostly have passive or no active income coupled with higher expenditure. But nothing specific has been introduced in the budget.

For the Students:

  • Finance Minister announced an increase of 17 percent in the budget allocated to EDUCATION sector.
  • The flagship midday meal scheme at government schools got an allocation of Rs.13,215 crore (over Rs.130 billion).
  • Scholarships to girl students, and those belonging to Scheduled Castes and Scheduled Tribes.
  • Finance Minister allocated Rs.1,000 crore to develop job-oriented skills among youth.

Though all these are good moves but nothing has been specifically done for the general class of people which should have been done.

Impact on day to day life:-

Where can you save!

  1. Leather & leather goods set to become cheap.
  2. Duty-free Imported jewellery set to become cheaper due to increase in limit  .
  3. Zero excise duty for Ready-made Garments.
  4. Specified parts of electric and hybrid vehicles as period of concession extended.
  5. Handmade carpets and textile floor coverings of coir or jute exempted from excise duty

Where you have to shell out more!

  1. Cigarettes and cigars become expensive by 18 per cent
  2. Import duty on set-top boxes will increase costs and delay digitalization
  3. Mobile phone prices to go up; the excise duty is hiked for phones costing more than Rs 2,000
  4. High end motor vehicles & SUVs set to cost more.
  5. Eating out at air conditioned restaurants will become more expensive
  6. Furnishing your home will be costlier as cost of marble tiles are set to rise.

Pre Budget Expectations

  • Expectations of Senior Citizens: To hike the limit of taxable interest earned from Savings accounts and introduce or reintroduce some Government sponsored investment avenues which can be helpful for Senior Citizens to park their money in. Health is the biggest worry coupled with no active income, but higher expenditure. The expectation is to increase the exemption limits on Medical Treatment. 
  • Expectations of Small Businessman: Raising Service Tax exemption limit would be the main area small businessman eying for.
  • Expectations of homemaker: With government passing subsidy burden on to customers for LPG usage, etc.) It has really made it difficult for homemakers to manage their day to day life, apart from the ever existing pressure on account of high inflation. Income tax payers should get some relief in the forthcoming Budget as the government is considering a proposal to raise the annual income tax exemption limit to Rs. 3 lakh from the existing Rs. 2 lakh.
  • Expectation from Small and Medium investors:  Dividend Distribution tax and short-term capital gains taxes are key to market sentiment and should be reduced.
  • The most popular section 80C: The present deduction available under Section 80C is upto Rs.1 lakh only. This limit is in force since 5-6 years. Considering the increasing inflation over the period, the limit should be revised and increased.
  • Principal amount of home loan and Stamp Duty charges: Real-estate prices have risen to a great extent over the last few years and so is the amount of home loans people are taking. Hence limits for tax deduction on these counts should be increased with immediate effect.
  • Interest on Home Loan: As mentioned above about the rise in home loan, interest on the same has also gone up and current limit of Rs. 150000/- should also be increased to provide the much needed benefit.
  • Tuition fees: The same goes for education cost which is also increasing day-by-day. Budget should increase the available deduction under or make a separate deduction for the same.
  • Infrastructure Bonds (80CCF): The deduction was available for investment under infrastructure bonds up to Rs.20, 000/-. The deduction was not available in the last financial budget. The same should be reintroduced with the enhanced limit.
  • Rajiv Gandhi Equity Scheme (80CCG):  This section was introduced in the last financial budget to attract small time investors to invest in equity market. This was not very much successful due to the complication and eligibility criteria of the scheme. Hence relaxation should be provided in the coming budget.