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Budget 2013 highlights – Not much for investors this time

by Manish Chauhan · 61 comments

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 :)

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{ 61 comments… read them below or add one }

1 Amol February 28, 2013 at 5:15 pm

Hi manish,

as DTC is not introduced, can ELSS be continued to avail tax benefit?

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2 AMIT February 28, 2013 at 5:59 pm

yes…

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3 Manish Chauhan March 1, 2013 at 8:31 pm

YES !

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4 Siva Mohan February 28, 2013 at 5:15 pm

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

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5 AMIT February 28, 2013 at 5:58 pm

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.

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6 Manish Chauhan March 1, 2013 at 8:31 pm

Thanks .. this rule is just for 1 yr as of now

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7 Bhushan February 28, 2013 at 5:27 pm

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 !!

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8 UMMAR March 1, 2013 at 12:27 am

HI Bhushan
not a ‘credit’ of 2000…. it is ‘credit back’ of 2000 from tax which u will pay

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9 Manish Chauhan March 1, 2013 at 8:30 pm

It has to be TAXABLE INCOME of 2-5 lacs .

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10 Santhosh February 28, 2013 at 5:59 pm

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.

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11 Sam February 28, 2013 at 6:43 pm

I really had hopes on Point 2 & 3. Disappointing budget.

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12 Manish Chauhan March 1, 2013 at 8:27 pm

Thanks for sharing your views !

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13 Ashish L February 28, 2013 at 6:40 pm

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!

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14 Manish Chauhan March 1, 2013 at 8:26 pm

Thanks for sharing your views on this topic !

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15 Arudra Kumar February 28, 2013 at 7:57 pm

I think its a Waste of time talking about Budget 2013. Very dissapointing.

Regards,
Arudra.

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16 Manish Chauhan March 1, 2013 at 8:25 pm
17 CA Karan Batra February 28, 2013 at 8:40 pm

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.

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18 Manish Chauhan March 1, 2013 at 8:22 pm

I am not sure on this .. may be you can only elaborate !

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19 CA Karan Batra March 1, 2013 at 8:51 pm

This problem would surely arise for taxpayers claiming exemption u/s 54.

Expect the Govt to find a solution to this problem in the next budget..

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20 SANJAY LAHA February 28, 2013 at 10:57 pm

Oh! this is very disappointing. I cant imagine there is no good news for honest tax payers.

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21 Manish Chauhan March 1, 2013 at 8:20 pm

Next time :)

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22 P Kumar March 1, 2013 at 8:35 am

Hi Manish,

Thanks for explaining buget 2013 in simple terms.

Keep up the good work.

thanks and regards
P Kumar

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23 Manish Chauhan March 1, 2013 at 8:14 pm

Welcome !

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24 VIVEK KUMAR March 1, 2013 at 10:11 am

Personally am very disappointed with this Budget.

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25 Manish Chauhan March 1, 2013 at 8:11 pm

Thanks for sharing how you felt about it . This time a lot of investors are disappointed by it !

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26 Akshatha March 1, 2013 at 11:52 am

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

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27 Manish Chauhan March 1, 2013 at 8:00 pm

Thats for next year :) .. not this current year !

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28 Kapil March 1, 2013 at 8:34 pm

This clause is applicable for FY-2013-2014. Not for the current one.

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29 Krish March 1, 2013 at 4:10 pm

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.

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30 Manish Chauhan March 1, 2013 at 7:56 pm

Thanks for sharing your views on this budget . I know it was disappointing and people did not get anything ..

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31 Vijay March 1, 2013 at 8:30 pm

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

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32 Manish Chauhan March 1, 2013 at 8:59 pm

I am not sure if they will have a way to find that out or not , but thats the rule !

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33 Sharad March 1, 2013 at 8:55 pm

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

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34 Manish Chauhan March 1, 2013 at 9:11 pm

Good one :)

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35 Satya March 1, 2013 at 11:20 pm

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.

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36 Manish Chauhan March 3, 2013 at 10:19 pm

Thanks for your views Satya !

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37 Satya March 1, 2013 at 11:22 pm

Jago common man..save & save urself

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38 Satyajeet Nayak March 2, 2013 at 9:01 pm

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??

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39 Manish Chauhan March 3, 2013 at 10:00 pm

Satyajeet

Yes. mostly that should be the case, await for the exact wordings !

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40 Sameer March 3, 2013 at 6:04 pm

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

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41 Manish Chauhan March 3, 2013 at 9:48 pm

Yes , thats true !

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42 Mahen Rathod March 4, 2013 at 1:18 am

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.

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43 Manish Chauhan March 13, 2013 at 2:26 pm

True :) .. but the point is we cant do much by discussing it :)

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44 sudeep tiwari March 5, 2013 at 11:42 am

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.

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45 CA in Navi Mumbai March 5, 2013 at 5:11 pm

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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46 Manish Chauhan March 13, 2013 at 1:20 pm

Welcome

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47 Sam March 6, 2013 at 7:40 am

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.

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48 Manish Chauhan March 8, 2013 at 8:16 pm

I think its based on the registration done. if you are registering it in 2013-14 . .you should get it !

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49 Mustaq M S March 6, 2013 at 4:30 pm

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

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50 Manish Chauhan March 8, 2013 at 7:53 pm

Yes

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51 JOJO JOSE March 13, 2013 at 10:21 am

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

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52 Manish Chauhan March 13, 2013 at 10:47 am

You can only deduct 86000 and 95,000 investments out of your income and rest will be taxable

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53 JOJO JOSE March 13, 2013 at 11:21 am

Thank you sir

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54 Rishi Bhatia March 14, 2013 at 3:06 pm

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…………

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55 Manish Chauhan March 19, 2013 at 12:12 pm

Thanks for sharing what you feel about it

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56 Murugan April 19, 2013 at 2:58 pm

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?

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57 Manish Chauhan April 26, 2013 at 2:42 pm

Yes, seems like you are eligible for that

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58 Manish Mishra December 31, 2013 at 2:34 pm

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?

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59 Manish Chauhan January 4, 2014 at 11:40 am

Yes you can . Its the registered amount which will be considered. Have you registered it below 40 lacs ?

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60 Shyam January 19, 2014 at 12:04 am

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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61 Manish Chauhan January 20, 2014 at 6:47 pm

I think YES, you should be !

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