Budget 2013 highlights – Not much for investors this time

Budget 2013 was much awaited, however it did not excite investors as there was nothing much for them. It was a flopshow for investors considering they had high expectations from finance minister. Here is a quick summary for things which you should know

Budget 2013 highlights

1. No Change in Tax Slabs

There was no change in tax slabs . Finance Minister said that the changes happened just last year and it was not possible for any increase this year. I could clearly see the discomfort in his voice when he said that. So no tax till Rs 2 lacs , 10% tax between 2-5 lacs, 20% between 5-10 lacs and 30% tax for above 10 lacs.

2. Rs 2,000 credit back for lower income group 1.8 crore taxpayers to benefit.

While there is no change in slabs, A Rs 2,000 credit back will be given to income tax payers in lower income group of Rs 2-5 lacs. I assume that you will pay Rs 2,000 less than your actual tax due to this. You can call it as a discount of Rs 2,000 in tax payment this time :) .

3. Inflation Linked Bonds to be introduced

They are going to introduce something called as Inflation Linked Bonds, which will help you save your money in instruments which will match the returns with inflation . A lot of investors look at something on this kind, What do you feel ?

4. Claim upto Rs 2.5 lacs as tax exemption if home loan less than Rs 25 lacs in 2013-14

If you are planning to take a home loan of less than Rs 25 lacs, you can claim an extra deduction of Rs 1 lac in interest, over and above the 1.5 lacs, but only for year 2013-14 , not in all years. And this is applicable on fresh home loans, not on existing loans.

5. Service tax to be levied on AC restaurants of all kinds

Earlier, service tax was applicable for those AC restaurants which served liquor, but now service tax is applicable on all kind of AC restaurants, So your next eating out is going to be more costly!

6. 1% TDS on Real Estate Sale of Rs 50 lacs

For any Real estate transaction (other than Agricultural land) , the seller has to pay the TDS of 1% on the transaction amount if its more than 50 lacs. So if you sell a flat worth Rs 80 lacs, you will have to pay a TDS of 80,000.

7. RGESS first time investors income limit increased to 12 lacs

Earlier, RGESS scheme was only available to those investors whose taxable income is below 10 lacs, but now its increased to 12 lacs. Anyways, I feel RGESS is too complicated.

8. Reduction of STT on Derivatives , ETF’s and Mutual Funds

Trading in Equity, buying ETF’s and mutual funds would be a little cheaper. STT has been reduced in equity futures to 0.01%. MF redemptions from 0.25% to 0.001%. ETF purchases from 0.1% to 0.001% . So you can expect a minor reduction in your costs.

9.  Dividend Distribution Tax on Debt Mutual Funds Hiked to 25%

Earlier only money market debt funds and liquid funds had a DDT of 25% , and rest other kind of non-equity funds had a DDT of 12.5% only, but now its going to be 25% DDT for all kind of debt mutual funds. So, if you have invested in MIP with dividend option, their will be more DDT paid on dividends by AMC and your NAV will down more than earlier . More on Deepak Shenoy’s Blog

10.  Mobiles, High end SUV car’s are expensive

Due to increase in excise duty. you can expect mobile phones, set top boxes and high end SUV car to be more expensive.

What do you think about this budget ?

What do you think about this budget? Did you expect a lot of things from this budget? Apart from these there are lot of other updates as well, but I think these 10 points are enough to know for investors and one more thing . Direct Tax Code (DTC) seems to be taking shape and might be there next year :)

61 CommentsAdd Comment

  1. Shyam

    Hi Manish,
    Wish to thank you for explaining budget key points in such a simple way.I have a question regarding section 80 EE additional interest benefit of 1 lakh on interest paid.i have got my home loan sanctioned on July 2013 for my first property.The total cost of the flat is 38 lakhs.I will be possessing the flat only by Dec 2014.however I have started paying my Emi from August 2013.will I be eligible for availing additional 1 lakh benefit under section 80 EE towards interest payment even though the property is under construction for the current financial year?

  2. Manish Mishra

    Hi Manish,

    My total flat cost is 4,077,478.00 (Sale Tax Included) that includes following components:

    1 Basic Sale Price : 3,978,497.00
    2 POWER-BACK-UP : 22,472.00
    3 IFMS : 22,800.00
    4 Extra Charges : 25,619.00
    5 Dual Meter : 28,090.00

    Can I claim benefit under section 80EE as Flat BSP is less than 40 lacs?

  3. Murugan

    Hi Manish,
    My Housing Loan got sanctioned on 16.03.2013, (loan amount less than 25L, value of flat is less than 40L, no other properties in my name) the disbursement of sanctioned amount, my posession of the flat and first payment of emi happens in FY 2013. Can I still avail 80EE exemption?

  4. Rishi Bhatia

    The budget was truly disappointed….
    Our honourable FM could only indulge his mind in how to destroy the Middle level people… Before preparing the budget he must have a clear vision how to …k low income group & our Economy,
    These people could not able to digest the think how people manage to even eat their two times meal… Their Motto is to reduced it to one time meal ….

    I would not surprised to see such budgets in future as well … As I am a proud citizen of Great India with Super Great Ministers…………



    My total Income is Rs.9 Lac for the F.Y. 2012-13. And my investments & other financial details are mentioned below.

    Home Loan Interest: 86,000.00
    PPF: 50,000.00
    LIC: 45,000.00
    Stamp Duty & Registration for Home Purchase: 210,000.00
    Registration: 31,000.00

    Kindly let me know what would be my Tax Liability for the F.Y. 2012-13.

    Awaiting your reply.


    Jojo Jose

  6. Mustaq M S

    Hi Manish
    I have made my PAN card when Iam in Andhra pradesh and filed my tax returns in Andhra pradesh only. In this Financial year I shited to Karnataka. I want to know that can I use the same PAN card, can I pay tax through (e – Filing) Internet

  7. Sam

    Hi Manish,
    Have a question regarding first home tax exemption this year. I purchased a small house in 2010 (By Cash – No Home loan). I sold it off last month i.e., feb2013 and booked a new flat of 37Lakh worth in the same feb2013. I paid 20% as first payment for flat. Now, I have to pay second installment in Aug2013. If i plan to take a home loan, am i eligible for the new tax exemption? Because, I am purchasing my second home after selling off my first home. But I am taking home loan for the first time in my life.

  8. Hi Manish Sir,
    Thanks for explaining the 2013′ budget in easy words,so that people from non-finance sector can also understand it.
    and woman bank concept is quite strange(sorry but i don’t know what to use the exact word).

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