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. Siva Mohan

    Hi Manish,

    Have gone thru many sites to learn how I could be affected by budget. No where have I found clean & clear explanation. Thank you for the article.

    “Claim upto Rs 2.5 lacs as tax exemption if home loan less than Rs 25 lacs in 2013-14″ .. hope this will be extended to couple of years and the max home loan limit (of 25L) be increased.

    Thanks,
    Siva Mohan

    • AMIT

      Hi
      The proposed new section 80EE seeks to provide that in computing the total income of an assessee, being an individual,
      there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him
      from any financial institution for the purpose of acquisition of a residential house property.
      It is further provided that the deduction under the proposed section shall not exceed one lakh rupees and shall be allowed
      in computing the total income of the individual for the assessment year beginning on 1st April, 2014 and in a case where the interest
      payable for the previous year relevant to the said assessment year is less than one lakh rupees, the balance amount shall be
      allowed in the assessment year beginning on 1st April, 2015.
      It is also provided that the deduction shall be subject to the following conditions:- (i) the loan is sanctioned by the financial
      institution during the period beginning on 1st April, 2013 and ending on 31st March, 2014; (ii) the amount of loan sanctioned for
      acquisition of the residential house property does not exceed twenty-five lakh rupees; (iii) the value of the residential house
      property does not exceed forty lakh rupees; (iv) the assessee does not own any residential house property on the date of sanction
      of the loan.

  2. Bhushan

    I am in a dilemma regarding Item #2 (2000 rupees tax credit for less than Rs 5 lakh taxable income). My taxable income is less than 60,000. But tax free interest and dividend all put together is over 8 lakh per year. I am rich, but below tax bracket. So, although I don’t have to pay tax, may be it is a good idea as I get Rs 2,000 free !!

  3. Santhosh

    Hi Manish,

    I was expecting few things.
    1. Change in Tax Slabs.
    2. Increase in tax exemption (1 Lakh to 2 or 3 Lakhs).
    3. Increase in Conveyance, LTA and Medical Bills Exemption.

    Helps salaried employee as they will get more Net Pay and have a chance to invest more amount in MFs via SIP.

    Personally am very disappointed with this Budget.

  4. Ashish L

    No expectations from fraud politicians running so called In-dia!!!

    Crap policies, foolish tax laws and worst facilities ot the citizens.

    Budget day is only for politicians and their relatives to invest in stock market and make money for the entire year.

    In short, there was never a Hope to hope!

  5. Hi Manish

    Did you analyse a confusion created by the Introduction of TDS on Property?

    As per Section 54, a person can claim exemption from Payment of Tax on Long Term Capital Gains if he invests in specified investments.

    So, if a person is claiming exemption u/s 54, his TDS would still be deducted. Although he can claim the refund, but that would cause unnecessary hardships and moreover the amount would be also be high.

  6. P Kumar

    Hi Manish,

    Thanks for explaining buget 2013 in simple terms.

    Keep up the good work.

    thanks and regards
    P Kumar

  7. Akshatha

    Hi Manish,

    In the current financial year I have already paid 3500 Rs as Income tax. (Deducted from my salary) My annual income is less than 5 lacs. Can I claim 2000 Rs. back

  8. Krish

    Seems each budget is only meant to grab pie of our income. As a result I started to dread budget days.

    Much of these annual budgets are only focusing on increase in revenue generation to the government by raising personal taxes, service taxes, excise and customs duties. This time service charges are extended to parking fee and AC restaurants which is going to further dent our pockets.

    Ten more future budgets, am sure people forget the meaning of savings. Most of the middle class Indians are heading for hand to mouth living.

  9. Vijay

    Hi Manish,

    For the home loan, i currently have a home loan i would be closing it soon. Im planning to take a 2nd home loan. is there any way they will find out if im going for first or 2nd home loan provided i close the first and take the 2nd and also from a different bank? , so i can avail 2.5 lac benefit for next year

  10. I recently read a quote on budget:

    After the government takes enough to balance the budget,
    The taxpayer has the job of budgeting the balance…!!!

    cheers,
    Sharad

  11. Satya

    I some how find some positive in negative here in 2013-14 union budget.
    common man has to be very carefull while spending, I can say he has to be much awared now on spending & saving.

  12. Satyajeet Nayak

    Hi
    Regarding the 2,ooo rupees credit,does it mean that we have to file the IT returns and then deduct this amount from our net tax payable.If yes,suppose net tax payable is less than 2,000 rupees,say 1600 rupees,can we claim a net refund of 1,600 rupees??

  13. Sameer

    Thanks Manish for covering union budget in short and simple 10 points.
    Recently me and wife were out for dinner and Total Amount Rs.665+ VAT 14.5% Rs.96.43+ SC@5% Rs.33.25 +ST@4.95% Rs.34.56 and Net Amount came to Rs.828. Read somewhere that ST 4.95 should by taxed on SC amount i.e 33.25 not on Total Amount of Rs.665? is that true?

    Thanks,

    Sameer

  14. Mahen Rathod

    Hi Manish,
    Thanks for summarising union budget 2013.

    what’s your thought on women bank announcement? Does it really make any sense? anybody prefers a bank that is closer to his/her vicinity. In the age of information technology a tech savvy woman can do her banking on line. By the way women would have cherished FM if he could have done something to bring the inflation down and help women save extra bucks on dal, chaval, sabji, and roti.

  15. sudeep tiwari

    Very impressive analysis of budget-2013. You are absolutely right, there is no encouraging factor for investors. Impose of commodity transaction tax is negative for commodity trader and broker. It will encourage dibba trading in commodity trading.

  16. 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).

  17. 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.

  18. 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

  19. JOJO JOSE

    Sir,

    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.

    Regards,

    Jojo Jose

  20. 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…………

  21. 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?

  22. 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?

  23. 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?
    Thanks
    Shyam

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