FM P Chidambaram’s budget speech was a mixed bag for the middle class, giving some while taking others.
Here’s a summary of how this budget affects you as a consumer:
1. Expect more safe tax-saving investment options as institutions will be raising around Rs 25,000 crore via tax-free bonds in 2012-13. Some institutions will issue tax free bonds worth Re. 50000 crore in 2013-14.
2. The income limit for investment in the Rajiv Gandhi Equity Saving Scheme (RGESS) has been raised from Re. 10 lac to Rs 12 lakh now. But remember that entry to this scheme is restricted to first-timers only and the investments are also through direct equity.
3. You can claim an extra tax break of Rs 1 lakh on interest payment on a home loan of less than Rs 25 lakh. This is apart from the Rs 1.5 lakh permitted now.
4. If you are losing sleep over inflation eating into your savings, wait for inflation-indexed bonds and inflation-indexed national security certificates. Watch out for more details.
5. Insurance companies can now open offices in all tier II cities without getting prior permission from Insurance Regulatory and Development Authority.
6. Cheers ! A tax credit of Rs 2,000 for individuals earning less than Rs 5 lakh p.a. Very simply, if your tax payable is Rs 10,000, your will get a flat “discount” of Re. 2000/- and you need to pay Rs 8,000 only.
7. The Securities Transaction Tax (STT) on mutual fund (MF) and exchange traded fund (ETF) redemptions at fund counters is down to 0.001% from 0.25%. The STT payable on MF/ETF purchase and sale on exchanges is down from 0.1% to 0.001%, applicable only on the seller.
8. The STT on futures contracts has come down to 0.01 %. But on the flip side, if you are a derivative trader in the commodities market, you need to pay CTT at the rate applicable to equity futures. There was no CTT earlier.
9. The duty-free shopping limit has been raised to Rs 50,000 for males and to Rs 1 lakh for a female passenger travelling abroad.
10. Expect the cell phone prices to go up as the excise duty has been hiked from 1% to 6% on handsets costing more than Rs 2,000.
11. You may use the new Voluntary Compliance Encouragement Scheme in case you have evaded service tax in the past. You can declare your service tax dues since 1.10.2007 and pay them in one or two installments before the prescribed dates. No interest or penalty or other consequences will be due on these payments.