The annually awaited Budget circus has come and gone. As usual we had people glued to their televisions, palmtops, laptops, tablets and chairs all day expecting the budget to wave like a magic wand and fulfill all their wishes.
It is time that we Indians stop expecting from the Budget and start focusing on our financial plans and tweak the plans a bit based on the Budget. This year too, like many previous years, the budget has had little promise for the common man. However, the finance minister has given a few concessions to individuals by taxing their incomes lesser. Here is an analysis of the fine print.
In new income-tax slabs, lower middle class and upper middle class ignor-ed: The new slabs only serve those who are in the `8 to `10 lakh slab income in a better manner. The benefit for a person earning just less than `10 lakh in this category will be around `20,000 of reductio-n in taxes. For the rest the-re are hardly any benefits.
A person earning `5 lakhs as taxable income this year would have had to pay `32,000 as taxes this year. Next year he/she will need to pay `30,000 for the same income. A saving of `2,000 only!
A person earning `9 lakh as taxable income would have paid `122,000 as taxes. For the same income next year the person would need to pay `1,10,000. A meager saving of `12,000. The expectations of all salaried people related to the hike in the slabs have been shattered again this year.
Better healthcare
The earlier benefit related to health care which only had health insurance premium payment has been widened to include health check up too to the extent of `5,000. This is beneficial as many people have paid higher premium to take up exotic health insurance plans which were not all that beneficial.
Rajiv Gandhi Equity Plan
Probably the best thing related to personal income tax saving, is the newly introduced and yet to be fully defined, Rajiv Gandhi Equity Saving Scheme. The good thing is that this is an equity oriented fund. This will help the investors to earn better money over the long term and also benefit the society. However this benefit is available only for those who earn less than `10 lakh. The maximum amount that will get tax benefits will be upto an investment of `50,000 and the fund will have a lock-in period of 3 years.
Better healthcare
Tax free infrastructure bonds will continue this year too. Though the financial returns on these bonds are limited, one can have the pride of having contributed to the growth of the nation’s infrastructure by saving in these bonds.
Savings interest rate
Interest from savings accounts can be deducted upto a limit of `10,000. Though a common citizen may never earn such interest (it is required to have a year-long minimum balance of `2.5 lakh to earn this interest), it will be beneficial for a few people with a good bank balance.
Savings interest rate
The interest subvention of 1 per cent on amount upto `15 lakh on housing loans upto `25 lakh which was introduced last year has been retained.
(The writer is CEO of BankBazaar.com)