Every budget changes lots of things in the personal finance space. Here is a list of 16 things that has changed for you.<\/p>\n
The income tax slabs have largely remained unchanged for individuals. There are two major changes. People with income less than Rs. 5 Lakhs have to pay Rs. 2,000 less in taxes. For people with income of more than Rs 1 crore, a surcharge of 10% has been levied. You can check the details of Income tax slabs and download the income tax calculator for FY 2013-14 by clicking here<\/a>.<\/p>\n Rajiv Gandhi Equity Savings Scheme (RGESS)<\/a> under section 80CCG which was launched in the last budget has seen some tweaking in this budget.<\/p>\n Also Read:<\/span> Mutual Funds Eligible for RGESS<\/a><\/strong><\/p>\n A new section 80EE has been introduced which would give additional 1 lakh tax exemption to first time home buyers on home loan interest over and above present Rs. 1.5 Lakhs limit under sec 24. Read more details here.<\/a><\/p>\n The buyer has to deduct Tax Deduction at Source (TDS) of 1% of the transaction value if the sale of property (other than agriculture land) exceeds Rs 50 Lakhs. He has to pay the tax to the government, obtain a tax deduction account number, file a TDS return and issue a TDS certificate. This would increase a lot of paper work and effort from buyer side.<\/p>\n Such a proposal was also made in last budget of 2012 but was eventually dropped. This would be effective from June 1, 2013. Considering that the TDS is to be charged on the gross transaction value rather than net gains, sellers will have a cash-flow impact in situations where the sales are at a loss or at zero or negligible gains<\/p>\n If you buy a property for lower than the stamp duty valuation of the property, the difference amount would be added to the annual income of the buyer and taxed according to the tax slab. This is in addition to the seller also being taxed on the same difference as capital gains. The difference would be calculated on the date of transfer of the property or the date of agreement of sale.<\/p>\n Until now, Capital Gains was exempted on agriculture land situated beyond notified distance of up to 8 KM from the limits of notified municipalities. The requirement of notification of municipalities is being removed and distances are being linked to population levels of municipalities or cantonment boards \u2013<\/p>\n Since there are 45 cities with population in excess of 1 million as per the 2011 census, sale of many agricultural lands would now come within the ambit of capital gains. Most agricultural lands on the periphery of major cities are being acquired by investors and, therefore, this would not affect many genuine agriculturists, but would tax such investors.<\/p>\n Also Read<\/span>: What is\u00a0Long Term Vs Short Term Capital Gains on Real Estate?<\/a><\/strong><\/p>\n You can expect more tax free bonds<\/a> to open for subscription in FY 2013-14 as budget has allowed tax free bonds up to Rs 50,000 crores next financial year. The finance minster said that in 2012-13, institutions allowed to issue tax-free bonds are collectively expected to raise around Rs.25,000 crore, much lower than the sanctioned limited of Rs.60,000 crore announced in last year\u2019s budget.<\/p>\n Reserve bank of India (RBI) would give more details about Inflation Indexed Bonds by June 1, 2013. These bonds are good move and would act as hedge against rising inflation.<\/p>\n The finance minister has proposed a public sector bank exclusively for women. Finance Minister has allocated Rs 1,000 crore as initial capital for this. I think it will encourage women and make them more confident. There are a lot of women planning to start their own business. A bank for women will help them become financially independent.<\/p>\n Also Read:<\/span>\u00a0What is the salary of a homemaker in India?<\/a><\/strong><\/p>\n The Know Your Customer (KYC) done by your bank would be valid as KYC for buying new insurance policies. This would make buying insurance much easier. I wonder why mutual funds KYC have not been synced with banks KYC.<\/p>\n The finance minister has allowed insurance companies to open up branch offices in tier II cities and below without prior approval from the Insurance Regulatory and Development Authority (IRDA). This would increase insurance penetration in small towns and cities.<\/p>\n Also Read:<\/span>\u00a0Life Insurance \u2013 Claim Settlement Ratio \u2013 2011-12<\/a> The finance minister in this budget has proposed bankers to act as brokers. Until now banks are allowed to act as agents of insurance companies. This means they are allowed to sell insurance of one company only. In case banks choose to become brokers, they would be allowed to sell insurance plans from different companies. This would increase the footprint of insurance and make banks accountable in the way they sell insurance products.<\/p>\n In the last budget insurance premium up to 10% of the sum assured for insurance was eligible for tax benefit<\/a>. In this budget this limit has been hiked to 15% of the sum assured in case of insurance for the disabled and those suffering from ailments.<\/p>\n The STT on equity futures is now reduced to 0.01% from 0.017%, mutual fund (MF) and exchange traded fund (ETF) redemptions at fund counters to 0.001% from 0.25% and for MF, ETF purchase or sale on exchanges to 0.001% from 0.1% only on the seller.<\/p>\n STT was introduced in India in FY 2004-05 by P Chidambaram in place of long term capital gains tax which was made 0 from 15%. STT is payable whether you buy or sell a share and gets added to the price during the transaction itself.<\/p>\n CTT would be levied at the rate of 0.01% on non-agricultural commodities futures contracts.<\/p>\n Until now Liquid and Money market funds had Dividend Distribution Tax (DDT) of 25% while other debt funds had DDT of 12.5%. Now the DDT has \u00a0been made uniform at 25% irrespective of type of debt fund.\u00a0Read the details here.<\/a><\/p>\n In the last budget, under section 80D, amount up to Rs 15,000 was exempted from tax for preventive health check up for one\u2019s family or contribution to the Central Government Health Scheme (CGHS). Now contribution made to other health schemes run by central and state governments are also included in this section. And so this contribution up to Rs. 15,000 would be allowed for tax exemption.<\/p>\n2. Changes in RGESS<\/h3>\n
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3.\u00a0Additional Tax exemption of Rs 1 Lakh on Home Loan (Section 80EE)<\/h3>\n
4. 1% TDS for sale of property exceeding Rs 50 lakhs<\/h3>\n
5. Undervalued Property Sale\/Purchase added to your Income<\/h3>\n
6. Change in Definition of Agriculture land for Capital Gains Tax<\/h3>\n
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7. Tax Free Bonds<\/h3>\n
8.\u00a0Inflation Indexed Bonds<\/h3>\n
9. All women Bank<\/h3>\n
10. Buying Insurance becomes easier<\/h3>\n
\n<\/a><\/strong><\/p>\n11. Bankers as brokers<\/h3>\n
12. Income Tax Exemption up to 15% of sum assured for insurance premium for special cases<\/h3>\n
13. Lower Security Transaction Tax (STT) on equity futures and Mutual Funds<\/h3>\n
14. Commodities Transaction Tax (CTT) introduced<\/h3>\n
15. Dividend Distribution Tax hiked on Debt Mutual Funds<\/h3>\n
16. Contribution to Central and State Health Schemes eligible for tax deduction<\/h3>\n