All hype, no help

After all the high expectations surrounding Budget 2013-14, what we have got is a pretty much non-event budget. There is nothing to write home about as far as direct taxation is concerned. There are no major changes. The Budget speech consisted of several promises for the upliftment of minorities and women.

Bombay Stock Exchange
A differently abled Mumbaikar follows the Budget telecast at the Bombay Stock Exchange. Pic/Bipin Kokate

Special provisions have been made for women and skill development for the youth. There is also a proposal for an all-women nationalized bank, which will have only women as staff members and will preferably serve only women customers. Meanwhile, here are the provisions of the budget that will have a direct impact on the common man:

Direct Taxation
>> There is no change in the tax slabs and tax rates

>> Persons falling in the income range of Rs 2-5 lakh will get a tax credit of Rs 2,000. Income above Rs 5 lakh will not qualify for such credit.

>> People availing housing loan to the tune of Rs 25 lakh for the first time will get an additional deduction of Rs 1 lakh for the FY 2013-14; this is over and above the existing limit of Rs 1.5 lakh of interest payment. Which essentially means that at the current interest rates, the taxpayer will be able to claim the total interest paid in the first year (interest component for a Rs 25 lakh loan is Rs 2.5 lakh in one year).

But that is only possible if one buys a home in April itself. If someone is availing a loan in the middle of the year, this provision will make no difference. Hence, I see this as only a feel good provision with not many people benefiting from this.

>> Super rich surcharge is introduced. Person having a taxable income of more than Rs 1 crore is liable to pay a surcharge of 10 per cent on tax liability. A very surprising statistic attached to this provision is that only 42,800 people in India are filing returns with income of more than a crore.

>> Similarly companies having taxable profit of more than Rs 10 crore will be subjected to a surcharge of 10 per cent.

Indirect Taxation

What gets costly
>> Excise on cigarettes, cigars and other tobacco products increased
>> Increase in custom duty of mobile phone costing more than Rs 2000
>> Increase in custom duty on import of luxury cars, motorcycles and yachts
>> Any kind of air-conditioned restaurant will have to charge service tax

What gets cheaper
>> Nothing very significant here, except that limit of duty free gold has been increased to Rs 50,000 for male passenger and Rs 1 lakh for female passengers.


What works for us
>> RGESS (Rajiv Gandhi Equity Saving Scheme) is liberalised on two fronts. One is that the upper income limit has been enhanced to Rs 12 lakh from Rs 10 lakh for eligibility. Second is that tax benefit under this scheme will now be available for next three years, instead of the original provision of only first year.

>> STT (Securities Transaction Tax) has been reduced to 0.1 per cent on equity derivatives and MF units.

>> Government is expected to collect Rs 25,000 crore by way of tax-free bonds in the year 2012-2013 and will allow various infrastructure companies to issue such bonds next year, targeting a figure of Rs 50,000 crore. Hence we can expect multiple opportunities to invest in tax free bonds.

>> New revolutionary investment opportunities like inflation indexed products to be introduced.

What works against us
>> Introduction of CTT (Commodity Transaction Tax) on non agro commodities.
>> Surcharge on DDT (Dividend Distribution Tax) to increased from 5 per cent to 10 per cent

The Finance Minister has explicitly mentioned in his speech that the surcharge introduced or increased in this year are applicable only for one year. There is serious attempt to introduce GST, but no specific deadline was mentioned. Also there is a promise to introduce DTC (Direct Tax Code) Bill in this session of Parliament itself. As the mood and consensus in the market is indicating that this is a non-event, it is business as usual for the common man.

The writer is investment advisor with Circle Wealth Advisors

Food subsidy

Kirti Rana
Director, APMC and President of Confederation of All India Traders (Maharashtra)

“The Finance Minister is likely to allocate upto Rs 1,00,000 crore to the National Food Security Bill in 2013-14. Almost 75 per cent of the rural population would be given five kg of subsided grains per month. However, it would be better if the government had made provisions to give them jobs instead. Subsidies can make it difficult to curb inflation.”

Ashok Walunj
Director, Onion Potato Market

“I believe that the Union Minister has presented a good budget, mainly because he gave importance to farmers who are vulnerable. I am happy to know that he proposed to allocate greater money for watershed programmes as compared to last year, especially keeping in mind how this kind of management is very crucial to improve productivity of land and water use.”

Jayesh Vora
Director, APMC Grain market

“The Budget has both its positives and negatives. It is good to know that the focus on agriculture related expenditure has increased. Besides, it has been decided to start pilot programmes on nutria farms for introducing new crop varieties that are rich in micro-nutrients such as iron-rich bajra, protein-rich maize and zinc-rich wheat. But what remains to be seen is that how much time these things would take to be implemented.”

As told to Richa Pinto 

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