The Hon’ble Finance Minister Mr. Pranab Mukhrjee presented union budget in the parliament. The budget is neither reform looking nor favorable to common man. The GDP growth for 2011-12 is estimated at 6.9% as compared to 8.4% in preceding two years. India’s GDP growth in 2012-13 is expected to be 7.6% +/- 0.25%. The disinvestment target is set at Rs. 30,000 crores for the 2012-13. The budgetary deficit is estimated at 5.1% of the GDP i.e. around Rs. 5 lakhs crores which is a big concern. On one hand he has given some direct tax benefits and on the other hand indirectly increased the burden on common man by increasing and widening the service tax base. He has preferred to play safe looking at present political situation.
The main highlights of the budget relating to personal finance are:
► The Income Tax limit in general category is raised from 1,80,000 to 2,00,000, giving nominal benefit of Rs. 2,000 per annum for individuals having income less than 8 lakhs.
► The tax slab of 20% is revised from 5 lakhs to 8 lakhs, to 5 lakhs to 10 lakhs. Individuals having income more than 8 lakhs will benefit from this proposal. Maximum benefit shall be Rs. 22,660.
► The senior citizens are exempt from paying advance tax if they have their income other than business or profession.
► New benefit up to Rs. 5,000 under section 80-D is provided for preventive health check up within the existing limit of Rs. 15,000.
► Proposal to allow individual/H.U.F.’s, a deduction of up to Rs. 10,000 for interest from savings bank accounts.
► New Rajiv Gandhi Equity Savings Scheme is announced which will allow for income tax deduction of 50% for new retail investors, who invest up to Rs. 50,000 directly in equities. The same however is available only to individuals whose income is below Rs. 10 lakhs. The scheme will have a lock in period of 3 years.
► The deduction of Rs. 20,000 for infra bond u/s 80-CCF is not extended.
► For Insurance Policies purchased after 1st April’2012 benefit u/s 10(10)(D) of Income Tax Act, in respect of maturity proceeds of life insurance policies, will only be available if premium paid during any year does not exceed 10% of the sum assured.
► Service tax on traditional life insurance plans raised from 1.54% to 2.06%.
► TDS of 1% in levied on all transaction of property except agricultural land above 50 lakhs in specified cities and Rs. 20 lakhs in other areas.
► ELSS scheme benefit u/s 80-C will continue next year also. DTC proposes to withdraw this benefit.
► The limit for audit raised from 60 lakhs to 1crore for business man and from 15 lakhs to 25 lakhs for professionals.
► The Service tax rate is hiked from 10.30% to 12.36%. Standard Rates for excise duty also raised from 10 to 12%.
► The STT is reduced from 0.125% to 0.1% for delivery of equity shares.
► Customs duty on standard gold raised from 2% to 4%.
► The GST to be rolled out from August’ 2012. DTC postponed for another one year.
Budgetary deficit, Inflation, higher interest rates and political uncertainty still a concern for double digit growth. The coalition dharma politics has taken away the opportunity available to the finance minister. Hike in oil prices in coming days is inevitable.
