Attached please find the reaction on Budget by *Mr. Satkam Divya, CEO -
Rupeetalk.com* for your perusal. Also please let me know should you require
any other information from my side.
*IMPACT OF UNION BUDGET ON PERSONAL FINANCE*
The Union Budget 2009-10 has several implications for individuals and their
financial decisions in the coming years. There might not be some direct
implications in terms of benefits for specific areas like mutual funds or
insurance as a lot of things depend upon individual decision. The good thing
is that there is likely to be more money in the hands of individuals,
enabling them to spend or invest more as per their liking. Thus a desired
result can be derived from this situation if there is proper allocation of
the money.
In terms of the *personal income tax rates,* there is a rise in the basic
exemption limit for all the categories of people. This means that for a male
below 65 years, an income up to Rs 1,60,000 will not be liable for any tax,
a Rs 10,000 raise from the earlier limit of Rs 1,50,000. The tax saving on
this amount comes to Rs 1,000, without considering the impact of education
cess. Similarly, the basic exemption limit has raised from Rs 1,80,000 to
1,90,000 for women and Rs 2,40,000 from Rs 2,25,000 for senior citizens
above 65, a raise of Rs 15,000. This provides them with a tax relief of Rs
1,000 and Rs 1,500 respectively without considering the education cess
impact.
The real benefit will come for people who are in the *Rs 10 lakh plus income
bracket *as they will not have to pay a surcharge of 10 per cent on their
income. The saving here can be significant and will be in excess of Rs
25,000 though the exact amount will depend upon the level of income and the
amount of the tax that was being paid by the person.
Though it does not appear a major relief on the *home loan front*,
nonetheless the government has provided an *additional interest rate subsidy
on loans up to Rs 1 lakh*. There has also been an increase in the areas that
will get the benefit of a deduction of the interest paid on education loan.
The loan has to be taken for the purpose of higher education, which will
cover education after the senior secondary level instead of graduation. This
will provide a major incentive to ensure that loans are taken for the
purpose of funding education of the child at various levels including
vocational training.
*New Pension Scheme* (NPS) has not got any benefits in its tax structure.
Currently, it has the provision of Exempt, Exempt and Tax (EET), i.e., the
proceeds is taxed. At the time when the government is promoting NPS at large
scale, the current ruling would be a huge disappointment for a number of
people who were planning to invest under NPS for their retirement. Moreover,
the NPS trust would be exempted from paying Dividend Distribution Taxes and
Securities Transaction Tax which would benefit the end investors in terms of
lesser transaction costs. The only silver lining will be people who are not
central government employees or those are self employed can now also get tax
benefit for investing in the scheme. In terms of channeling the amount spent
by individual donations to political parties has a tax benefit and now this
will be increased for contributions to electoral trusts would also qualify
for the benefit.
The *custom duty *has been increased on gold and silver items, a bad news
for jewellery market which can see a further slump in gold demand in the
economically-starved India which saw a negligible demand in the last fiscal.
Set-top boxes would cost more, a step that will demotivate cable users from
shifting to set-top boxes. Moreover, custom duties on LCD TVs has been
trimmed to push its sales and to keep sensible and high definitions pictures
affordable. Life saving devices on heart would also cost less, an effort
which will promote and incentivize patients to get treated in India.
Against the earlier high expected figures of disinvestment, the government
kept the divestment amount to Rs 1,100 crore. This *along with the increase
in the MAT* rate to 15% of booked profits and no change *in Corporate Tax
structure* led to the sharp fall in domestic bourses. Despite the fall, for
the long-term investment one should look at FMCG companies as the government
has allocated funds to rural flagship schemes such as NREGA. Besides, FMCG
Auto and other infrastructure companies could also gain in the long term
from government's spending drives.
Thank you
--
With personal regards,
Gaurav | Operations Head - Brand PR and Innovation
Moe's Art
A - 303 | Excel house | 13th road I JVPD | Juhu | Mumbai 400049
O: 022.65245716 | M: +91.9833994227/ +91.9619296667 |
E: gaurav@moes-art.com | gauravorion@gmail.com
Practice doesn't make a man perfect. Only the perfect practice makes him
perfect.
- Vince Lombardi
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