India Budget 2015, What matters most!

I had not built up too many hopes on the FM , for very good reason

Budget 2015 from FM Jaitley, to me has turned out to be a damp squib considering all the pre-elections talk by Mr Jaitley . Cost of life for the middle and lower middle class goes up while the slab rates don’t really change in accordance with inflation and price rise.

Worse the Senior citizens and small investors will suffer the effects of  the TDS and tax scrutiny monster. Just hope that there is no tax inspector raj and small man is not harassed by the taxman in desperate attempt to garner more revenue for the revenue.

FM has indulged in some minor tinkering with exemptions. This is not going to boost personal spending in any way whatsoever.

The FM does not have what it takes to increase tax base by taxing the rural super rich, neither has he made a serious attempt at  taxing the land mafia and the builder mafia many of whom are politicians or politically connected. No wonder he picks on the meak ie salaried class and retirees.

First  the lollypops :-

1. MEDICLAIM u/s 80 D

In view of continuous increase in medical expenditure, it is proposed to increase the limit of deduction under section 80D from Rs. 15,000 to Rs. 25,000. In case of senior citizens, the limit of deduction is proposed to be increased from Rs. 20,000 to Rs. 30,000.

A deduction to the extent of any payment made on account of medical expenditure but restricted to Rs. 30,000 under section 80D, for very senior citizens not covered by Mediclaim. Awaiting the fine print . A  minor surgery costs Rs 50000 or more in a low cost private hospital these days, so this is not going to bring real respite to very senior citizens or to govt run general hospitals which are in a bad shape due to overcrowding and apathy.

ie Mediclaim costs + medical expense limited to Rs 30000.

2.  Increase in limits of deduction under Section 80DD and 80U for disabled person from from Rs. 50,000 to Rs. 75,000. It is further proposed to raise the limit of deduction in respect of a person with severe disability from Rs. 1 lakh to Rs. 1.25 lakhs.  This while hospitals mark up annually at least by 10 to 15 %.

3. Rebates

Overall limit of deductions under Section 80C, 80CCD and 80CCC still capped at Rs. 1.50 lakhs as per existing provisions of Section 80CCE.

Investment in Sukanya Samriddhi Account Scheme to come under Section 80C – Also the interest accruing on deposits in, and withdrawals from this account will be tax exempt.

4.  The limit for contribution to a pension fund u/s 80CCC up  to Rs 150000 from Rs 100000.

5. The FM has attempted to promote the NPS among the upper middle class with more disposable income, by introducing an additional deduction upto Rs. 50000,   in respect of any contributions made by any individual assesse under the NPS. which is still Exempt Exempt Taxable at maturity.

The Good

  • A very basic attempt to simplify and streamline tax system.
  • No more Wealth Tax , but 2% increase in surcharge instead for the super rich earning over a Crore.
  • 10% TDS Introduced For EPF Withdrawal Before 5 Years if amount is above 30,000 (move against tax evasion)
  • Service tax hike of 2.4% for non-economy class air travel
  • Excise duty on mineral water & aerated drinks increased to 18%
  • PAN compulsory for transactions above 1 lakh.
  • Gold monetization scheme (aim to disclose gold holdings + bring gold into the system) ? bound to fail ? time will tell!
  • To provide incentives for debit/credit card transactions (more power to visa and mastercard ?)
  • Exemption of transport allowance doubled to 1,600 from 800. Considering an avg BEST bus or metro ticket cost of Rs 20 per day this is a joke on the salaried taxpayer.
  • TDS on Recurring Deposit implemented (earlier individual had to file tax)
  • Co-operative banks to also deduct TDS now

The Bad

  • Service tax, previously at 12.36% now 14%
  • Excise duties, which were at 12.36% now 12.5%
  • Govt to impose additional swachh bharat cess of 2% on services
  • NREGA still continues….. when the govt revenues are down quite considerably.

and The Ugly :

  • TDS on OVERALL interest earned above 10,000 in a bank and not branch.(That is so ridicuously low, the same as the Section 80TTA Deduction) ( Terrible news for retirees)
  • DDT Increased From 19.99% To 20.36% in FY16

This means , please invest in property or file ur form 15 H and G. or spend on filing your returns and wait patiently for that refund ! Govt finances are a mess and  the small and senior citizens are bound to suffer as govt wants to extract the maximum in TDS from the most week and defenceless.

Imagine if a senior citizen who earns 250000 from FD interest in banks forgets to file form 15 will have to spend approx Rs 1500 to 5000 on an accountant to file his returns to claim his tds in refund.

Imagine you a small investor with 100 Reliance shares, getting a dividend of Rs 950, will pay the same tax as Mukesbhai Ambani whose dividend is in crores .

Sadly his move on increased DDT is pro rich and regressive and will hamper investor culture as the small investor who may be in the 10% tax slab will end up paying @ 38.8% (Tax @25% + ECess @2% + SHEC @1% & DDTax @17% + EduCess @2% + SHEC @1%).

The way he has treated small shareholders of PSUs to balance his budget eg COAL INDIA, GAIL and ONGC was an early indication of things to come.

Mr Jaitleys policy on Taxing a companys  small shareholders is regressive and anti Long term Equity investments culture . Small investors who will be incentivized to exit short term and pay 15 % STCG.

SLAB RATES for your reference :-



INDIVIDUALS: Upto 2,50,000 – Nil

INDIVIDUAL RESIDENTS 60 TO 80 Yrs: Upto 3,00,000 – Nil

INDIVIDUAL RESIDENTS 80 Yrs +: Upto 500,000 – Nil ?


I. Upto 5,00,0000  {10% of the amount exceeding Tax free Income}

II. Upto 10,00,000 –  {I + 20% of the Income over 500000}

III. Above 10,00,000 –  {I + II + 30% of the Income over 1000000}



SHORT TERM EQUITY  1YR – : 15% (after STT)

LONG TERM DEBT  3YR + : 20% (after STT)

Deductions and Rebates

Sec 80 D MEDICLAIM : MAX Rs 25000 / 30000 for Senior Citizens

Section 80 TTA: MAX Rs 10000 on Savings Interest.

80DDB :relating to treatment of chronic diseases :Upto Rs.40,000 / Rs 60000 Senior C :Deduction limit increased to Rs80,000 from Rs60,000 with respect to the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS etc., in case of senior citizen.

Section 80DD and 80U for persons with disability and severe disability: Rs.50,000 (Rs.1,00,000 in case of severe disability) :Additional deduction of Rs25,000 allowed for medical treatment differently abled dependant.

Maximum overall Deductions allowed u/s. 80C, 80CCC & sec.80CCD(1) is Rs. 1,50,000*

Sec 80 C :

 Life Insurance Premia, PF, PPF, NSC, ELSS, Units of Mutual Fund referred to u/s.10(23D), Tuition Fees(max. 2 Children), Repayment of Principal of Housing loan, Bank Fixed Deposit of 5 yrs period, notified Bonds of NABARD, Deposit in an account under Senior Citizens Savings Scheme rules, 5 year time deposit in an account under Post Office Time Deposit Rules, 1981 etc.

Sec 80 CCC : Premium paid towards approved Pension Fund (like LIC’s Jeevan Suraksha) Max Investment. 1.5 lakh.

Sec 80 CCD : NPS  Max Investment now Rs 150000 * + 50000

Sec 80 CCG: Rajiv Gandhi Scheme : 50% of the amount invested subject to a maximum of Rs.25,000 (failed scheme)

The deduction is available to a new resident retail investor whose gross total income does not exceed ten lakh rupees.


Rebate of Rs 2000 for individuals having total income up to Rs 5 lakh

  • Rebate is available only to Resident individuals and not available to Non Residents.
  • Rebate available to both Male and Female assesses
  • If the total tax payable by is less than Rs. 2000/-, rebate is restricted to “total tax payable”.
  • Rebate is allowed before levy of Education Cess, SHE Cess & Surcharge.
  • Rebate benefit is available to all category of Individuals but not to super senior citizen, since he is already fully exempted up to Rs. 5 lakh.

India Budget 2009- What matters most.

This is the 3rd budget by Pranab Mukharjee and there were great
expectations from it especially from city folks and salaried class which gave massive support to Congress so as to enable it to sweep cities like Delhi,in the recent polls..

Sadly it looks like Mukharjee has bongled and  this budget offers little and is expected yet again to increase the fiscal deficit and  is  inflationary and sufficiently ambiguous, as many things haven’t been provided for, especially the expected expenditure under new food guarantee act.

This reminds me of Mr PCs qoute  “Trust me. Do you think I am so stupid as to not provide funds for such an important scheme?”  that on the NREGS and the results are plain to see. More ambiguity means more  corruption and lack of clear thinking not good in an economic downturn.

What matters most- DIRECT TAXES


Other than the lollipop of increased rebate of 10000, just so that there is a rosy headline in tomorrows papers, there is nothing on offer to the middle and salaried class that pays between 10 and 30% income tax.
New Cut-offs/ Exempt limit for tax free income will be



160000 for RESIDENT MEN.

Surcharge Scrapped: 10 lakh + earner gets relief.

Direct Benefits: Less than a Rs100  a month. A mere 1000 Rs a yr tax rebate that when CPI inflation has been in double digits for an extended period of time.
Come on folks – We are the Middle Class, not the UPAs aam admi ,we don’t vote anyways so will never have a voice or be on the FMs mercy radar.

Sec 80DD: Disabled Dependents : Increase in scope and rebate  to Rs 1 lakh.
Sec 80E: Deduction on Education loan scope increased to cover
Vocational training after class 10.


Fm had declared the income on investments into the NPS trust as tax free and free of STT and DDT , not the proceeds so it is in effect still EET to the investor, but at reduced costs .

This is a big plus disappointment / let down for unorganised sector worker who was expecting it to be  an EEE scheme so the govt is not  too serious on implement the NPS, which would never have taken off without this exemption. Is it is time i seriously consider opening an NPS account?

I think i should Wait and Watch and Rethink especially if i want to invest big money in it on a yearly basis.


No change in tax rates (expected)

FRINGE BENEFIT TAX Scrapped (again expected)
81 D (9) Benefits extended to natural gas and bidders of NELP8

MAT (minimum alternative tax) rate to be increased to 15% versus 10% of book profit

Sunset clause extended by one year and tax holidays for exporters is extended to 2011

GST to come into effect from April 01, 2010 ??? is it possible
CTT on Commodities abolished. A big relief to commodity traders

No change in status quo on STT. Govt to hold 51% in PSUs.

Market operators will be unhappy and markets will go down.

Mukherjee Doubled import duty on gold bars from Rs 100 per 10 gram to Rs 200 per 10 gram, while other forms of gold (excluding jewellery) is increased from Rs 250 per 10 gram to Rs 500 per 10 gram.

Full exemption from excise duty on branded jewellery. who buys branded?
5% Customs duty on STBs – bad for dth and cable operators.
5% Customs duty on LCD panels – Will the producers of lcd tvs pass on the benefits ?


The Total budget expenditure for 2009-10 will Rs 10,28,032 crore, crossing Rs 10 lakh crore mark.The targetted fisc deficit will go up from last yrs estimate of 2.7% to 6.8% which means the govt has estimated something close to the last yrs actual deficit of 6.07 percent which was revised to 6 percent of gross domestic product from an initial estimate of 2.5 percent. Can the govt balance its books ? I doubt it, if  we look at the govts past performance. Worse with the State Centre and the off budget expenses last yr the fiscal deficit was between 11and 11.5%, any guesses to the current deficit?

Subsidy bill will no doubt go up. No mention however of accountability that will reduce corruption and leakages.

The government plans to borrow nearly Rs 4,00,000 cr from markets during 2009-10, a rise of about 50% over what it borrowed a year ago, to fund the widening fiscal deficit. Thats like 4.51 trillion rupees or $93 Billion!.

National ID Card provision of Rs 120 crore and is expected to be implemented within 1.5yrs  Read this wonderful article for more on that project.

Rural Spend

Crop loan at 6 pc interest for farmers on short term crop loan
for farmers who pay their dues in time.

An allocation of Rs 39,100 crore to be made for NREGA in
2009-10, an increase of 144 per cent.
Gram Sadak Yojana allocation has been hiked up 59% to Rs 12000 crore.
Rs 2,000 crore for rural housing fund under National Housing Bank. Indira Awas Yojana, allocation to be increased by 63 per cent in 2009-10 to touch Rs 8,800 crore.

Rs 7,000 crore to rural electrification scheme.

Direct transfer of subsidy to farmers being worked out.
Subsidy regime for fertilisers to change to nutrient- based rather than price-based.
This could be revolutionary if implemented correctly.

Infrastructure spend

NHAI allocation up by 23 per cent.

Allocation for the Railways has been increased from Rs.10,800 crore made in the Interim Budget for 2009-10 to Rs.15,800 crore

IIFCL will refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next fifteen to eighteen months.

Urban Spend

New funds allocation to the  Jawaharlal Nehru National Urban Renewal Mission (JNNURM) being stepped up by 87 per cent to Rs.12,887 crore in the current budget.

Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA)
More funds of Rs.500 crore allocated to help Mumbai fight floods during rains.

Provision for Rajiv Awas Yojana (RAY) to improve the lot of the urban poor.


New DIRECT TAX code to be implemented in 45 days

will it make the complex it return forms and procedures and the harassment go away?

New Arbitration panel for tax litigation cases.

Karnataka will have a tax database for all returns filed digitally.
A sign of automantion but still very ambiguous – Will this
offer any real change in the Tax officer raj? when most refunds
are never sent electronically, refunds require 10% speed money,
and harassment of small taxpayers under draconian scrutiny laws
is common.

100 per cent tax deduction for donations for electoral funds
How will it really increase accountability? No political party returns are scrutinized anyways and are out of? the ambit of  RTI.

Highlights of Union budget 2009-10 ET

bored , Frustrated , irritated ? chk out Fallen Princesses