Budget 2014: The Big Announcements in 10-Point Cheat-Sheet
Finance Minister Arun Jaitly unveiled a reform-minded budget, vowing to lift economic growth to rates of 7-8 per cent by promoting manufacturing and infrastructure and overhauling populist subsidies. This new budget will lead to big saving for income tax payers. According to new budget the basic exemption limit on income tax hiked from Rs. 2 lakh to Rs. 2.%0 lakh and also hike in the cap on long-term investments under Section 80C of the Income Tax Act from Rs.1 lakh to Rs.1.50 lakh.Mr. Arun Jaitly also raised the tax-free cap on interest paid on housing loan from Rs.1.5 lakh to Rs. 2 lakh.The public provident Fund (PPF) ceiling from Rs. 1 lakh to Rs. 1.5 lakh in a financial year. PPF is one of the most popular tax-saving schemes.According to these measures do not only more money in your hand, there will also be more incentive to park in the national savings certificates (NSC), five-year fixed deposit, repayment, of principal amount of home loans, children’s tuition fees, specific mutual funds and life insurance premium among other things.
10-point cheat-sheet to this story:
1. Arun Jaitly told lawmakers that due to weak revenues and subsidy costs he would forced to raise , he uphold the daunting fiscal deficit target of 4.1 percent of gross domestic product inherited from the last government.
2. The Government has hiked the tax exemption limit to Rs 2.5 lakh from Rs. 2 lakh, providing a relief of Rs.5,000. Nearly two crore tax payers are expected to benefit.
3. HE indicated an overhaul of expensive subsidies for food, fuel and fertilizer that cost India’s government some $40 billion or RS.2.40 lakh crore a year.He say the subsidies would be more targeted, doesn’t gave no details.
4.Mr.Jaitly promised that the government would be more than fair in its dealings with India’s states on how revenue would be allocated.The government expects to find a solution to implement the goods and service tax that will unify India’s 29 states into a common market, a measure that economists say will boost revenue and at the same time make it easier to do business.
5.Now Cigarettes, aerated drinks and imported clothes are the costly items. Colour TV and computers will be cheaper.
6. When foreign contractors locate operations in India they had sought a higher threshold to justify sharing technology.The Finance Minister said he would raise caps on foreign investment in the defence and insurance sectors from 26 per cent to 49 per cent, but still bar non- residents from taking majority control in projects to supply the world’s largest arms buyer.
7. Investors have piled into Indians stocks on hopes that Mr.Modi’s leadership and mandate would break a logjam thwarting a host of reforms during the 10-year tenure of his predecessor Manmohan singh, whose coalition government became increasingly divided.
8. Mr.Jaitly said the government could not rely only on spending cuts to reduce the budget deficit and should also work to spur economic growth back to 7-8 per cent, which would result in higher tax revenue. He said that a revival of manufacturing and building of new infrastructure are ways to provide jobs. He announced programs to promote investment in factories roads and ports.
9. The stock markets recovered towards the end of Mr. Jailey’s speech, with the Sensex rising over 300 points and the Nifty gaining over 100 points.
10.The finance Minister said he would set up a high-level committee to review retrospective tax claims blamed for choking off foreign investment after companies such as Britain’s Vodafone were hit with massive demands. The minister ought to reassure investors by promising a stable tax regime and saying the government would not ordinarily create new liabilities retrospectively, but stopped short of scrapping the law.