19 Ways Budget 2015 Impacts our Spending, Saving, Investment and Taxation

We have already discussed the impact of Budget 2015 on Income Tax and TDS.

This post covers other aspects which would directly or indirectly impact us.

1. Wealth tax abolished.

2. The highest tax slab has increased to 34.6% from 33.99% due to 2% increase in cess for super rich (people with annual income of more than Rs 1 crore).

Download: Income Tax Calculator for FY 2015-16 [AY 2016-17]

3. Employees would get an option to choose between EPF (Employee provident Fund) and NPS (National Pension System). Also EPF contribution by employees may be made optional based on certain monthly salary threshold.

4. Quoting PAN Card would be compulsory for any transaction of more than Rs 1 Lakh.

5. The service tax has been increased from 12.36% (including education cess) to 14%. This can further go up to 16% on account of additional 2% Swachh Bharat Cess. This would increase your service related expenses like eating out, telephone and internet bills, transportation, staying in hotels etc by around 1.5%.

6. TDS introduced for Recurring Deposits and premature EPF withdrawal.

7. Form 15G/15H can be submitted to prevent TDS for amount received at the time of maturity of Life Insurance.

8. Varishtra Pension Bima Yojna, an immediate annuity scheme for senior citizens has been exempted from service tax.

9. There has been minor increase in effective DDT (Dividend distribution Tax) on account of increase in surcharge from 10% to 12%. After Budget 2015 DDT Tax: 25%, Surcharge: now 12%, Cess: 3% Effective DDT rate : [(25%)(1+12%)] * (1+3%) =28.840% [Earlier it was 28.33%]. This would lower the returns on dividend option of all non-equity funds like debt funds, MIPs, etc.

10. No More capital gains tax on merger of Mutual Funds Schemes: Earlier investors had to pay Short/Long Term Capital gains tax in case the fund they had invested in is merged with a different fund. This was considered as sell and buy transaction. Budget 2015 has done away with such taxes. It’s a good thing as investors are not at fault when schemes merge and so they should rightly not be taxed!

11. Gold Monetization Scheme to be launched wherein the depositors can get interest on the gold deposited and jewelers can get loan on gold deposit accounts. (More details awaited)

12. Sovereign Gold Bond as an alternative to investment in Gold to be launched. More details awaited.

13. Debit/Credit card transactions would be encouraged while disincentivizing Cash transactions. More details are awaited on this but it’s a good move to curb black money.

14. Tax free bonds may make a comeback in FY 2015-16 for projects in rail, road and irrigation sectors

15. Atal Pension Yojana would be launched which would provide defined pension based on amount and period of contribution.

16. Pradhan Mantri Jeevan Jyoti Bima Yojana is launched which would cover both natural and accidental death risk of Rs2 lakh at premium of Rs 330 per year for the age group of 18-50.

17. Tobacco products and cigarettes to become costlier on account of hike in excise duty.

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

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