Overall this is a very populist budget balancing act- Lots of Waivers, subsidies go up, more things moving out of books. Read the Budget papers.
Personal income tax changes – 🙂 big changes in historical terms. 🙂
- 150000 to 300000 – 10%
- 300000 to 500000 – 20%
- 500000+ 30%
Womens start – Rs 1,80,000 Senior Citizens start – Rs 2,25,000
No change in overall rebate structure or rebates U/s 80c. 😦
Postal Deposits and Senior Citizens Savings Scheme added to 80C rebate basket,. (not very useful until bank fd rates fall below 8%)
Mediclaim relief U/s 80 D – 🙂 for payments made other than in cash to
- HUF / Individuals for self/ family members or dependents amt to Rs 15000,
- to Children who pay premium for parents health care amt to Rs 15000 .
- For Senior citizens above age of 65 it is RS 20000.
Banking transaction tax to be exempted
Nothing on low cost housing in cities which is desperately required – is disappointing. 😦
ST Capital gains tax U/s 111a for STT paid transactions increased from 10 to 15%. Bad news because it has been done during a period of falling markets.
Nothing for the investor: No change in STT and DDT unchanged at 15%
- Dividend of subsidiary company will be released from DDT
- STT to be treated as a business deduction not set off.
- Service tax on Stock exchanges, Clearing houses and AMC services for ULIP
- CTT on Commodity transactions on lines of STT .
Expected tinkering in rates, Excise rates pared down from 16% to 14% in certain goods as an attempt to reduce prices of commodities in accounting the wpi index, which is key to inflation accounting.
- Excise rates on 2 wheelers etc cut to 10%,
- Cut in duty on small cars and eco cars and buses.
- Excise duty of Rs 1.35/litre applied on unbranded petrol
- Excise duty of Rs 4.6/litre applicable on unbranded diesel
- Set top boxes: 100% exemption
- 5% cut of customs duty on some bulk drugs
- Central sales tax: Reduced to 2%
PAN requirement to be extended to all transactions in capital market subject to a threshold.
Announcement of creation of Transmission and distribution fund may be positive for Power Sector.
Massive Farmer loan waiver – to benefit four crore farmers incuring a liability of Rs 60,000 crores. Short to long term negative for PSU Banks as it is still unclear who will pay the bill and when. Overall this will also effect the ability of the banks to get repayment of loans as this step creates indiscipline and incentives es farmers to not pay back their loans or delay the installments.
PDS to get Rs 32,676 as subsidy
Overall i expect inflation might go up due to the grandiose plans, coupled with the recession fears.