Budget 2013-14: Quick Highlights

Here are some quick pointers from common man’s perspective for Budget 2013-14. I have added my thoughts in italics.

Income Tax:

• No revision in income tax tax rates. The tax slab remains the same as of last year. Click here to view the Tax slabs for FY 2013-14 (same as FY 2012-13).
• Education cess to continue.
• Tax credit of Rs 2,000 for income up to Rs 5 lakh. 
• Surcharge of 10% on Rs 1 crore plus income earners. Raised surcharge for only one financial year. Fact: Only 42,800 people with taxable income over Rs 1 crore in India.
• The much awaited DTC (Direct Tax Code) remains work in progress.

RGESS (Rajiv Gandhi Equity Savings Scheme):

• RGESS will be liberalized & the investor will be allowed to invest in mutual funds.
• The investor will be able to do this for a period of 3 successive years.
• The limit for investors wanting to invest in RGESS raised from Rs 10 lakh to Rs 12 lakh.

This is good move and would be safer for new investors.

Housing:

• People taking a home loan in 2013-14 for an amount up to Rs 25 lakh will be allowed an additional deduction of Rs 1 lakh. Hopefully would give push to affordable housing.
• Immovable Property transaction: TDS of 1% to be levied on transactions above Rs 50 lakh. Government is trying to curb black mney generation in property deals.

Banking:

• India’s first women’s Public sector bank to be set up. Woman’s bank license to be in place by Oct, 2013
• All PSU banks branches to have ATMs by March, 2014
• KYC of banks will be sufficient to acquire insurance policies

Tax Free Bonds:

• Tax Free Bonds – Will allow some organisations to raise funds strictly based on need.

Inflation Indexed Bonds:

• In consultation with RBI, the FM proposes to introduce inflation indexed bonds or certificates.
• The details will be announced later.

This is good move and hopefully would benefit retail investors and reduce investment in Gold to an extent.

Stock Markets:

• Pension funds will be allowed to invest in ETFs. This would give a boost to stock markets and also give higher returns to pension funds.
• STT (Securities Transaction Tax) rates cut on equity futures to 0.01% from 0.017%

Duties and Indirect Taxes:

• One time amnesty scheme for service tax defaulters due from 2007
• Higher customs duty on set top boxes from 5% to 10%
• Excise duty on SUVs raised from 27% to 30%. Will not apply to SUVs registered as taxis
• Customs duty unchanged for non agri products
• Extend tax benefit to electrical vehicles
• Increase in import duty on high end motor vehicles from 75% to 100%; and on motor cycles from 60% to 75%
• Service tax to be levied on all air conditioned restaurants
• Excise duty raised by18% for cigarettes
• For phones priced at more than Rs 2,000, the duty is increased to 6%
• To exempt vocational courses, testing services from Service Tax
• Gold duty free limit raised to Rs 50,000 for men and to Rs 1 lakh for women travellers

Others:

• To launch two new industrial cities in Gujarat and Maharashtra
• Indian Institute of Biotechnology will be set up at Ranchi
• To expand private FM radio to 294 cities