Sabka Budget 2015-16 – Personal Finance Highlights

The finance minister, Arun Jaitley presented the Union Budget on February 28th 2015. There were lot of expectations from the budget as the BJP had promised a lot of things during the election campaign and after the won the elections. It has some steps that will take India on the path of growth. Let us look at the key highlights –

sabka budget

Budget Personal Finance Highlights-

– There is no change in income tax slabs and no revision in income tax rates. Individuals with an income of Rs. 1 crore or more per year will have to pay a surcharge of 2%. It is proposed that wealth tax will be abolished.

Exemption limit on health insurance premium has been increased from Rs. 15,000 to Rs. 25,000. (for senior citizen Rs 30000) Senior citizens above the age of 80 years, who cannot generally take insurance can avail of deduction for medical expenditure up to Rs. 30000. For specified diseases, the limit is  increased to Rs. 80,000. Tax deduction limit is increased by Rs. 25,000 for differently abled persons.

– Investments in the savings account launched for girl children- Sukanya Samriddhi Scheme is eligible for deduction under Section 80C and any interest earned in this account is tax free – EEE. (we will be reviewing it next week)

– Limit on pension scheme (NPS & Life Insurance) increased to Rs. 1,50,000 rupees. There is also an additional deduction of Rs. 50,000 rupees for contribution to new pension scheme (NPS) under section 80CCD. . EET (some clarity is needed in this)

Transport allowance exemption has been increased to Rs. 1600

– Service tax exemption on Varishth Bima Yojna

– An individual has to quote PAN number for all transactions that are of value greater than Rs. 1,00,000. (no cash transaction of above Rs 20000 in property)

– Monetising Gold – Gold monetisation scheme to allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account to be introduced. – Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed.

Invest in Equities – Government to bring enabling legislation to allow employee to opt for EPF or New Pension Scheme. For employee’s below a certain threshold of monthly income, contribution to EPF to be option, without affecting employees’ contribution. Minimum 5% to maximum 15% investment in private EPF should be invested in Equities.

 – Tax Free Bonds on the table again

– Real Estate Investment Trust (REIT) taxation – Rationalisation of capital gains regime for the sponsors exiting at the time of listing of the units of REITs and InvITs. – Rental income of REITs from their own assets to have pass through facility. (taxation may be similar to Equity MF)

– No New Direct Tax Code (DTC) – Most provisions of Direct Taxes Code have already been included in the Income-tax Act, therefore, no great merit in going ahead with the Direct Taxes Code as it exists today.

 – Social Security for Poor –

  • Pradhan Mantri Suraksha Bima Yojna to cover accidental death risk of `2 Lakh for a premium of just `12 per year.
  • Atal Pension Yojana to provide a defined pension, depending on the contribution and the period of contribution. Government to contribute 50% of the beneficiaries’ premium limited to `1,000 each year, for five years, in the new accounts opened before 31st December 2015.
  • Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk of `2 lakh at premium of `330 per year for the age group of 18-50.

Budget Highlights for the Consumer –

Service tax has been increased to 14% from 12.3% which makes services like stock broking, air travel, restaurants, financial planning etc. expensive 🙁

– Excise duty on tobacco has been increased leading to increased prices of cigarettes and other tobacco products.

– Excise duty on leather footwear has been reduced which can lead to prices lowering in leather footwear.

– Packaged fruits and vegetables, microwave ovens, mobile phones and solar water heaters can become cheaper as the processes/ parts involved in making them are exempt from service tax.

– Ambulance services and visits to zoos, museums and national parks will become cheaper as these are exempt from service tax now

– Visits to amusement parks will be costlier as they come under the ambit of service tax now.

Budget Highlights for Companies –

Corporate tax for 2016 will be 30% but gradually reduced to 25% in next 4 years 🙂

GAAR (General Anti Avoidance Rules) has been deferred by 2 years.

GST from next year

– Law for checking Black Money & Benami Property.

– Custom duty on 22 items has been reduced

– Custom duty on commercial vehicles, import tax on iron and steel and metallurgical coke has been increased.

Other highlights –

– There will be an increase in investment in infrastructure by Rs. 700 billion

– A national investment infrastructure fund will be set up.

– Rs. 2.46 trillion is allocated for defence and Rs. 331.5 billion is allocated for the health sector.

– Food subsidies are set at Rs. 1.24 trillion. Fertiliser subsidies are set at Rs. 729.69 billion and fuel subsidy is set at Rs. 300 billion.

– The Government will set up Mudra Bank which will be funding the unfunded.

– It proposed improvement of national heritage sites and provide visa on arrival for 150 countries to boost tourism

– There will be greater devolution of resources to states in the form of tax revenues and not grants which will make states more responsible with the funds.

There was an overall positive reaction to the budget in the market but some specific sector announcements or non announcements like funds infusion for PSU banks and no changes for the jewellery sector seem to have upset some corners. (Budget Highlight – Complete Document )

How do you think the Budget affects you and do you think the Budget will support economic growth in inclusion in the country? If you have any questions feel free to add in comment section.

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{ 10 comments… add one }
  • santanu March 2, 2015, 12:01 PM

    I think in one line our expenditure is going to increase after this awesome visionary Budget 2015. Service tax and Swachh Bharat Cess will gradually increase the inflation indirectly and we are going to feel again is it the “Achee Din” promised by Govt?
    May be for long term few steps are good, but we have to wait to see really those promises are impacting or not.

  • Ravi Paandey March 2, 2015, 2:37 PM

    Is there any mention of senior citizen PPF in budget? Will arbitrage fund be continued to be treated as equity funds?

  • Sayan Kundu March 2, 2015, 5:03 PM

    I have a question. I am a central govt. employee and my annual NPS subscription is about ₹65000/-. I also subscribe for PPF @ ₹150000/- per year. From next year can I claim deduction of ₹200000 from taxable income (taking NPS and PPF together)?

  • pradyuman March 2, 2015, 5:44 PM

    Same question as Sayan. What is that extra 50K for NPS? is it 150K(anything of 80C) + 50K(NPS)? or You need to put 150K in NPS to get benefit on that extra 50K?

  • HG Sharma March 2, 2015, 5:54 PM

    What is age limit for contribution to NPS.
    Can a self employed pay in NPS to get exemption from tax and avail benefit under Atal Pension Yojana.

  • Manirul March 3, 2015, 10:20 AM

    NPS does not have any clarity, I have some doubt
    1) Additional deduction of 50000 U/s 80 CCD what does it mean by Additional, previously 80CCD comes under 80C only
    2) How units of NPS is allocated and at which date after deduction from salary, generally deduction from salary shall be done at 1-5th day of the month
    3) If not deducted from salary, can one directly deposit to NPS like savings A/C at any times of the month, if so How units will be allocated?

    TFL team may put some lights on NPS.

  • gsreddy March 3, 2015, 5:55 PM

    Indirect taxes are bleeding.
    So also daily travel costs with jacked up fuel prices..

    Go green…
    Subsidy On EV. Electric vehicles Limited to Only Few States

  • RD Swamy March 3, 2015, 10:56 PM

    Is the exemption for Varishtha Pension Bima Yojana from Service tax with prospective effect or for the entire period window? It is
    a close ended scheme for just 1 year.

  • anup sharma March 7, 2015, 10:33 AM

    could you please throw some light on art. 87 A ?

    • Manirul March 9, 2015, 9:59 AM

      The rebate under 87A is applicable from 01.04.14 i.e assessment year 14-15 and SUBSEQUENT assessment year. As per my knowledge 87A is not amended by FM in recent budget. So it is ON.

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