As the presentation of the budget 2014-15 was a set of promises by the Modi’s government to improve the country’s financial health and enhancing the infrastructural as well as economic background to fight with inflation.
However the common people are concerned about the impact of various tax reforms on their monthly house-hold budget and planning of personal finances made for the future. Here is a glance on the impact of budget on the lives and finances of common player in the country.
Increase in Income Tax Exemption limit:
One of the welcoming announcement done by the Finance Minister for the huge percentage of the census is an increase in personal income tax exemption limit by Rs. 50,000 across all categories. This will affect the lives of many middle class people which makes a huge part in the census of our country. If you are a tax payer and know the tax-slabs then it is one of the good change expected by you. Any tax payer aging below 60 years earning an amount up to Rs. 2.5 Lakhs get an exemption of Rs. 50,000 in their annual income compare to the earlier limit of Rs. 2 LAKHs. There is also a relief for senior citizens it increased upto Rs. 3 Lakhs from the existing Rs. 2.5 LAKHs. There has been no modification in the tax slab, surcharge rate and education cess for either corporate, individuals of Hindu Undivided Families.
Hike in Tax Exemption Limit under Section 80c to boosts retail banking products:
As the government wants to increase the saving habit of every household, there is a policy announced by FM in the budget. It is an increase in the exemption limit in the income tax act under section 80C to influence the common person. The limit has been raised from the present level of Rs. 1 Lakh to the new one of Rs. 1.5 Lakh. As Section 80C covers various investment instruments like NSCs, housing loans, public provident fund schemes, insurance premiums, EPF and ELSS. So, people tend towards using these options for the optimum utilization of their savings and also to save more amount in tax. This is also a nice announcement for the insurance and baking sector.
Increase in Investment limit of PPF:
According to the financial experts after an increase in the Public Provident Fund or PPF investment limit from the prior Rs.1 Lakh to Rs 1.5 Lakhs, investors will now taking PPF investment as a standalone investment product and not just a part of Section 80c tax savings plan.
Announcement of New Personal Finance Instruments:
The budget was focusing on more investment and support both planned and unplanned savings. FM announced some new instruments that can be used for personal financing. A special saving scheme has been launched for the girl child focusing on education, higher education and marriage. There is also a plan to have a single demat account linking all the financial transactions at one place making it easy for the investors to manage the investment account.
Non equity mutual funds:
Among all the exemptions there is a bad news for the long term investors. The investment fall under non-equity categories for example mutual fund schemes there is a hike in the capital gains tax on non-equity mutual funds from 10% to 20%. The duration of the long term plans has also been changed from the current period of 1 year to 3 years. With the announcement public interest in non equity mutual funds like FMPs, gold funds and various international funds is likely to reduce. This may mean increased interest in traditional fixed deposit plans and other financial instruments offering tax concessions under section 80c.
The is a good news for the people dreaming about their own house. There is a tax exemption on the interest paid on the self occupied house under the housing loan from Rs 1.5 to Rs 2 Lakhs. After this announcement for rural and affordable housing, the possibility that more people tend towards applying for home loan in near future.
Overall impact on day to day spending:
Apart from the saving and investment of the personal funds, the budget also affected the daily financial spending of the common man. Like electronic items, mobile phones and shoes priced between Rs. 500-1000 become cheaper whereas tobacco related product’s excise duty has been doubled.
And last but not the least, there are more welcoming nodes rather than the thorns in the budget which is a mixed happiness for the commonairs of India.