Today is a big day when it comes to hopes from Modi’s first Budget. It is testing period for his Government. Expectations are high. But are they delivered? Let us take a look at each budget points which may impact your finance.
1) Tax exemption limit for Individual revised from basic Rs.2,00,000 to Rs.2,50,000
Previously tax exemption limit for an individual who is below 60 years of age was Rs.2,00,000 but now raised to Rs.2,50,000. For senior citizens it is Rs.3,00,000. I added separate post on the new tax slabs for FY 2014-15 (FY 2015-16). Please check at below link.
2) Sec 80C limit raised from Rs.1,00,000 to Rs.1,50,000.
This is a change after long gap. So now you have Rs.50,000 more buffer to invest under Sec.80C and get the tax exemption. So you can invest more in tax saving FDs, ELSS, PPF, EPF, home loan principal and buy life insurance.
3) PPF limit raised to Rs.1,50,000
Previously in PPF one can invest maximum of Rs.1,00,000 now it is raised to Rs.1,50,000. So additional Rs.50,000 is available in FY.
4) Home Loan interest exemption limit raised from Rs.1.50,000 to Rs.2,00,000.
Your Home Loan principal will be available for exemption under Sec. 80C. But interest on Home Loan can be claimed as exemption under Sec.24 which was Rs.1,50,000 previous year and now the same is increased to Rs.2,00,000. So additional Rs.50,000 tax saving option.
But do remember that this is INTEREST which is considered as EXPENSES than INVESTMENT like products available under Sec.80C. So no need to be happy. But I hope for real estate this is a big boosting point to attract buyers.
5) Your Life Insurance attract 2% TDS.
In case your premium is more than 10% of Sum Assured then there will be 2% TDS, means if policy not eligible for Sec.10 10(D) of Income Tax. For detailed taxation of Life Insurance please visit my earlier post “Tax benefits of Life Insurance”
6) Kisan Vikas Patra (KVP) to re-introduced.
Old famous Indian investment product Kisan Vikas Patra be re-introduced. So one more debt option for Indian Investors.
7) LTCG on Debt Funds Raised.
Long Term Capital Gain for Debt Funds raised to 20%. Previously it was 10% without indexation and 20% with indexation. No only 20% with indexation.
8) Definition of LTCG for Debt Funds raised.
Previously long term means more than year but not it is 36 months.
9) Dividend Distribution Tax payment procedure changed.
Previously if Rs.100 was the surplus and Rs.80 will be distributing dividend then tax will be on Rs.80. But now this changed to total surplus available for payment of dividend. You may view detailed procedure in Mr.Pattu’s latest post. Below is the calculator which give you exact changes, again prepared by Mr.Pattu.
10) One Demat Account and single KYC for all Financial Transactions-
As of now you used to have multiple demat accounts to transact. But Finance Minister proposed to make it as one person and one demat. This will actually make your life ease. Also currently if you are planning to transact with mutual funds, banks and demat accounts need separate KYC procedure. This will be clubbed to single KYC.
11) Unified Account for EPF
From now onward you will have single EPF account and same will follow you whenever you change employment. So no need of either closure of old account or transfer it with new.
12) Currency notes will have Braille
Braille is the language for blind people. This implementation will actually ease the life of all blind people who need to depend either on other persons or be expertise themselves to identify the currency notes.
These are the changes which I felt important and will effect your personal finance.
Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net