Views on the Indian Government's Budget for 2009-2010

1. Union Budget 2009-10

2. The “Budget” simplified J.Karthikeyan Director – Research & Consulting Finerva Financial Solutions Pvt Ltd

4. Fiscal Policy

5. Key Features of Budget 2009-10

8. Capital receipts

9. Revenue expenditure

11. Taxes: Income tax, Corporate Tax, Indirect taxes etc

14. Taxes

15. Taxes Meaning : Non quid pro quo transfer of private income to public coffers by means of taxes. 1. Direct taxes- Corporate tax, Div. Distribution Tax, Personal Income Tax, Fringe Benefit taxes, Banking Cash Transaction Tax 2. Indirect taxes- Central Sales Tax, Customs, Service Tax, excise duty

16. Plan and Non Plan Plan: Discussion between Ministries and Planning Commission Non-Plan: Comes from Interest payments, subsidies, salaries, social services, defense spending ,etc.,

17. Fiscal Policy-Meaning The word fisc means ‘state treasury’ and fiscal policy Refers to policy concerning the use of ‘state treasury’ or the govt. finances to achieve the macroeconomic goals. “any decision to change the level, composition or timing of govt. expenditure or to vary the burden ,the structure or frequency of the tax payment is fiscal policy.”G.K. Shaw

18. Fiscal Policy And Macroeconomic Goals Economic Growth: By creating conditions for increase in savings & investment. Employment: By encouraging the use of labour-absorbing technology

19. Contd.. Stabilization: fight with depressionary trends and booming (overheating) indications in the economy Economic Equality: By reducing the income and wealth gaps between the rich and poor. Price stability: employed to contain inflationary and deflationary tendencies in the economy.

22. Effects on the Economy Interest rates PSU Disinvestment Debt Industry

23. Industry wise affects

24. Citizens’ Angle on Budget 2009-10

25. Personal Finance Today Predominantly Tax Planning Investment in Section 80C Instruments and taking a Housing Loan Goal Based Planning hardly heard of Budget awaited for tax benefits

26. Personal Finance - Scope Goal Term Long Term Short Term Mid Term

27. Contd.. Cash Flow Investment Debt Income Tax Asset Management Pension Estate Planning

28. Budget Angle for Students Student Loans Interest get tax benefit under Section 80E for all types of higher education.

29. Budget Angle for Salaried Class Marginal Benefit from Higher Slab for Taxation Rs.10,000 increase in Base Slab (Rs.15,000 for senior citizens > 65 years of age) Benefit to those earning >Rs.10 lakhs from surcharge removal New Pension Scheme to remain in the EET regime. But tax benefits on its income and transactions are a plus.

30. Budget Angle for Salaried Class Wealth Tax limit raised to Rs.30 lakhs from Rs.15 lakhs Section 80C Instruments remain unchanged ULIPs and ELSS for the youth most beneficial Stay away from Housing Loan for tax benefit purpose; as it creates negative cash flow. Retired Defence personnel get benefits under One Rank One Pension Scheme.

31. Budget Angle for Salaried Class Fringe Benefit Tax removed. Better and Meaningful perks can be expected.

32. Budget Angle for Small Business & Entrepreneurs Presumptive Tax Scheme for turnover <Rs.40 lakhs. Income @8% Exempt from maintaining books of accounts Tax Pay-Out only at the time of Tax Returns Filing

33. The Take Aways Budget alone should not influence Personal Finance Decisions Goal Based Planning and Implementation required Maximise Benefits from Tax Breaks; But don’t Break Yourselves Doing It Wealth Creation ≠ Tax Planning