Union Budget 2014 – Beginning of Acche Din [infographics]

By
Hemant Beniwal
27

It was the first Union budget of the new BJP led government and an important one as there are high expectations from people of all quarters that the government is going to kickstart the Indian economy, create jobs and bring all round development. The budget also indicates the broad path that the government is going to take in managing the country. Let us look at what the Budget offers to the ‘Aam Aadmi’ –

Budget 2014 

Source

Union Budget 2014 from a Personal Finance Perspective

Income

  1. From an earnings perspective, income tax exemption limit raised from Rs 2 lakhs at present to Rs 2.5 lakhs which means one will pay less tax. Approx Tax Saving: Tax Slab 2-5 Lakh = Rs 15000, 5-10 Lakh = Rs 25000, Abpve 10 Lakh = 36000.
  2. For Senior Citizens, income tax exemption limit raised from Rs 2.5 lakhs to Rs 3.0 lakhs.
  3. The monthly pension from EPFO under the EPS-95 scheme is increased to Rs. 1,000. Till now people with monthly wage of Rs. 6,500 can subscribe to EPFO schemes. The monthly wage limit has been increased to Rs.15,000 which means more people can benefit from EPFO’s social security schemes.

Savings & Investments

  1. In terms of investment, Section 80C investment limit has been raised from Rs 1,00,000 to Rs 1,50,000 for tax benefits.
  2. Tax exemption on interest component of housing loan has been raised from Rs 1,50,000 to Rs 2,00,000.
  3. Annual Public Provident Fund PPF ceiling to be enhanced from Rs 1 lakh to to Rs 1.5 lakhs.
  4. On the flip side, from an individual perspective, Long Term Capital Gain tax on Debt Mutual Funds (& even gold funds) is increased from 10 % to 20% and tenure increased from 1 year to 3years. This will have some serious impact on people who are in higher tax brackets, you have to stick with your plans so that you save on taxes.
  5. Your insurer will deduct tax at source of 2 per cent from maturity proceeds of a life insurance policy if the premium paid is more than 10 per cent of the sum assured (or where 10 (10 d) doesn’t apply).
  6. Other investment schemes introduced include
  •           A special small saving scheme will be introduced encourage savings towards education &  marriage of girl child
  •           Kisan Vikas Patra (KVP) to be reintroduced for planned and unplanned savings under small savings schemes
  •           Varishth Pension Bima Yojna to be revived for citizens aged 60 & above.

Management of Personal Finance

  1. There is a proposal to introduce one demat account for all types financial transactions
  2. KYC norms would be standardised across the financial sector
  3. Level of FDI in Insurance is increased to 49%. This means more people will have access to insurance.
  4. Currency notes will have details in Braille (language for the blind) which indicates social inclusion
  5. A unified account will be launched by EPFO so that Provident Fund is easily portable & tracked.
  6. A fund will be kept aside for provision of low cost housing and giving cheaper credit to the poor to buy housing.

Purchasing Power

  1. In terms of purchasing power, items like computers, TVs with <=19” screens, diamond jewellery, packaged food and footwear are cheaper. People wanting to buy these should have a smile on their face.
  2. On the other hand, aerated drinks, tobacco products, cigarettes have become expensive. It is probably good as they are anyways unhealthy. Cigarette smoking is injurious to Health & WEALTH. 
  3. More goods and services will come under the service tax net, so we should be prepared to shell out more money for some services like online and mobile advertising.

Some Developmental Steps that would directly affect the common man 

  1. 5 IIMs and 5 IITs will be set up improving education facilities and allowing more number of people access to premier institutions
  2. AIIMS or similar institution will be set up in many more states which will help people get access to better healthcare facilities.
  3. There are lot of proposals and fund allocation for different sectors like agriculture, SMEs and large companies which will lead to economic development which will ultimately aide the common man in terms of job creation, competitive prices, new products and services and increased quality in goods and services.
  4. There are funds allocated for skill development, smart cities and entrepreneurship. These are steps in the right direction but remains to be seen how they are implemented and it will definitely take some time to have an impact. So we will have to wait and watch.

Did you follow the budget yesterday? How would you rate it? I would love to know which points do you think affect you the most?

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Hemant Beniwal
Hemant Beniwal is a CERTIFIED FINANCIAL PLANNER and his Company Ark Primary Advisors Pvt Ltd is registered as an Investment Adviser with SEBI. Hemant is also a member of the Financial Planning Association, U.S.A and registered as a life planner with Kinder Institute of Life Planning, U.S.A. He started his Financial Planning Practice & TFL Guide Blog in 2009. "The Financial Literates" is a dream & mission to make Indians Financial Literate.

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27 COMMENTS

  1. Kudos to the government for taking time to think about the salaried class which till now has been battered into parting with its hard earned money .
    Only disappointment however is that somehow there is no incentive for working women to save more of the money they make by shuttling between home and office non stop and mostly breathless….

    Mr Jaitley …maybe next time ?

    • That should be taken care by family not by government. Both me and my wife are working in same industry. At home, we have responsibility shared as well. I don’t see any reason of having lesser tax for women in the era of equality.

      • Nice to know that you have a good family Mr. Ramesh.I was however talking of a bigger picture here .

        In a land which has still a curse of female foeticide attached to it like a surname , there should be enough incentives for females to allowed a chance to live and to earn a life of respect.

        That requires a larger vision.Abrupt grants towards the female child kitty are all fine but lets do soemthing that is more concrete and progressive.

        • Ifully agreed with Indu. Our world is still I, ME AND MYSELF. try looking around, its beautiful when you think and care of others around you.

          In our country, where we worship the godess , the female foetus is still a curse, we need to learn to respect a girl child and look upon her as a burden.

        • … and how would the problem that you mentioned be resolved by asking a man to pay more tax than a woman who is earning equal amount? Discrimination, reservation etc can never be a sign of a progressive country. The problems that you mentioned can be rectified only by spreading education, social values and proper implementation of law and order. The only reservation that makes sense is for physically challenged persons.

        • Indu,
          Understandably, being a woman, you are asking for this incentive from FM but please atleast talk sense while putting forward your argument.
          If anybody asks for this incentive, it is ok but to say that it is going to stop/lessen female foeticide has no logic. Even the previous govt. never said something of this sort. You cannot penalize me if somebody somewhere killing a baby.
          Also, I want to ask how you would feel if there is a discrimination in favour of males. Would you tolerate that? if not, please think twice before raising such demands.

          Thanks

        • I am surprised that there are so few seeing the logic here ?
          Do you know why girls are killed whereas boys are not in our country . Because they are seen as money making machines either in the form of dowry or any other way .

          Of course if girls need to live , they have to have economically viable options. And how can that come unless they get incentives?

          Leave alone the higher income bracket women sector, even the lower income women in this country have no financial benefits .

          I guess that just does not matter to most of you guys right?

          Well is this discussion as always drifting towards why women are earning after all ?and if they are then why they should get any benefits ?

          Thankfully there is nothing much that you guys can do from allowing competent women from earning . and sometimes more than there male counterparts.
          probably that is the bitter pill here .

          Mr. Moderator ..I am surprised that you could let the conversation reach this stage.
          I for one take leave from your blog .There are better ones out there .

  2. overall a good budget with a vision for the future…increased infrastructure and facilities will indirectly benefit us and our kids..
    hope this vision soon turns into reality and the projects which have been introduced both in general and rail budget see the light soon..

  3. I was expecting FM to mention and do something about NPS. I understand for people below poverty line, the Govt was contributing some amount but the same is no longer there. Govt could have restated as a social security measure for persons in unorganized sector…

    Many good ideas and hopes, key lies in execution. I hope the govt stays on its path by taking bold timely decision.

  4. Hi ,
    I was a tad disappointed with the budget , as to no clear thrust area or change in the way somethings can be executed .. like was expecting an announcement of say 50-75% of all rural dev funds will be given to states so that they can make their won plans , or some fund to make the local electricity distribution companies more efficient.. basically no policy or programme that would “shift the pendulum” on that issue weather health , or sanitation or better tracking of all subsidies etc., or even a big allocation for judiciary , for more courts/judges to remove the backlog ..
    Also did not see any proposals to look into the whole “ease of doing business” thing of looking into how business can be done in india .. am currently facing such a hassle to get a VAT number !!
    Anyways .. we can only hope that the implementation wud be far superior to UPA .. as that is what finally matters!!!

    • yes you r right, in coalition government it is difficult to take decision, because every party has to be satisfied…..

  5. I was expecting FM to mention and do try to bring down 5% NPS by every quater.
    Also change of tax slab > 50 lkh and above 1 kr to 33% & 35% which is required.

  8. Hi
    As per me growth cann’t come in one night whatever changes that have made is good.
    Good Budget

  9. I liked the budget. All around development in infrastructure, new IITs, IIMs, encouragement for entrepreneurship, smart city, sports, skill development, agriculture etc. The key is implementation. I observed poor implementation of 100 days minimum work programme.

  10. I liked the budget, a good beginning by our new government, the working class is taken care of.

    • ha ha CYNTHIA, working class is taken care of…….. what about the “non-working section” of the working class—— don’t we want a good law to send them to their house, let them sit in their house ?
      then our younger generation will be taken care of in future…am I right ????

  11. The budget is good. But a time frame for all those announcement is very much essential to monitor the progress. Before publication of each budget Govt. should published a progress report of previous budget’s announcement. Nation should know whether the money allocation in budget is effectively used or laying idle.

    If citizen does not know what happened to previous project where so many money is already invested, Govt. need not to announce those project, let them to do what they want to do as we have no power to recall them.

  12. Appreciate Mr. Hemant Beniwal for representing the Union Budget 2014 in such a lucid and simplified manner…nice quick read indeed! Thank you Mr. Hemant!

  14. I was awaiting to hear about bio fuel like ethanol to mix with petrol. But i did not hear any policy in this regard in the 2014 budget.. Using of biofuel will be great saver for the foreign exchange reserve.

  15. 1. From an earnings perspective, income tax exemption limit raised from Rs 2 lakhs at present to Rs 2.5 lakhs which means one will pay less tax. Approx Tax Saving: Tax Slab 2-5 Lakh = Rs 15000, 5-10 Lakh = Rs 25000, Above 10 Lakh = 36000.
    I think saving due to this increase is maximum Rs 5000 (10% of 50,000) for all tax slabs as the tax slabs are unchanged.

  17. Hi

    I like the budget, lot of annoucement , but if govt execute than its good……….otherwise no possbility of growth .

    Why TDS has been intoduce on Insuarnce maturity ?? and worse impact is increse the tennure for long term CG from 1 to 3 year will impact MF investment .

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