Dr. Sanjiv Agarwal
While it could be said that the Union Budget 2014-15, the first of the present Government may be considered as a balanced exercise in the given circumstances, it provides impetus to real estate, infrastructure and social development including improved urban cities.
On personal taxation front, it has tried to strike a balance between savings and taxes in the back drop of hope for better compliance. The provisions will also encourage people to go in for own house and at the same time enjoy enhanced tax benefits.
The major cheer is in the fact that no new taxes have been imposed nor there is any rate hike in tax rates. However, there is no relief from existing surcharge or education cesses. On tax front, income tax basic exemption limit has been raised by Rs. 50,000 each resulting in the exemption limit now to be Rs. 2.50 lakh for all assessees and Rs. 3 lakh for senior citizens. This would imply a tax gain of Rs. 5000 in lowest bracket. However, tax benefit would also result from the reliefs grated in investment / savings under section 80C benefits. The threshold exemption limit goes up from Rs. 1 lakh to Rs. 1.5 lakh resulting in a tax savings of Rs. 5000 in lowest tax slab. Now are one invest in PFF, NSC, insurance etc upto Rs. 1.5 lakh per annum and claim tax relief. But to save on tax, one will have to compromise on liquidity as such investments would be subject to lock-in depending upon the investment. Another erstwhile popular savings scheme, Kisan Vikas Patra (KVP) is being re-introduced to channelize unbanked money.
The investment limit for public provident fund has also been raised form Rs. 1 lakh to Rs. 1.5 lakh allowing investors to earn tax free interest and claim benefit under section 80C as above. Home loans have been made more attractive as deduction limit of interest on home loans has been raised from Rs. 1.5 lakh to Rs. 2 lakh for loans for one house. Thus, in absolute terms, the investor or assessee gets direct monetary benefits of Rs. 50,000 each in the form of bank exemption, 80C benefits and interest on housing loans.
There is however, some disappointment to debt mutual fund investors wherein holding period for long term capital gains has been extended from 1 year to 3 years and rate of tax is also higher @ 20 percent which means that tax rate has been doubled.
One the flip side, the budget fails to seriously address the issue of inflation and corruption, which people at large are suffering from. However, on an overall note, it is a bundle of schemes, promises and policy framework, which, if implemented in right earnest, shall have positive impact in long run.