How Does the 2012 Budget Affect Me?

As we all know, Finance Minister Mukherjee recently passed the 2012 budget, and there has been a steady outcry ever since. The budget influences every Indian citizen in some way or the other, so let’s take a look at some ways in which the budget can affect you. It will also help you gaugestock market activity so that you ultimately know what shares to buy and what shares to sell.

Change in tax slabs:

There will be no tax for income upto Rs.2 lakh, as against the previous 1.8lakh. The 20% tax slab has been extended up to 10 lakhs. This marginal shift will be beneficial to some.

EPF (Provident Fund) interest cut from 9.5% to 8.5%:

This change affects crores of people. It means that the money that is saved on behalf of your organization (Provident Fund) will now generate interest at 8.5% instead of 9.5%

Income tax exemption for health checkups up to Rs. 5,000 under Section 80D:

According to this, you can claim a deduction of upto Rs. 5,000 spent on health checkups under Section 80D of the Income Tax Act. You can also claim upto Rs. 15,000 for money spent on health insurance under this same Section.

Securities Transaction Tax (STT) reduced from 0.125% to 0.1%:

This reduction, applicable on cash delivery transactions, has not been received with much pomp, as it would benefit only those investors who contribute about 4-5% of the total market turnover.

Service Tax increased from 10% to 12%:

This raise in service tax is proposed to raise Rs 18,660 crore in additional revenue. All services except those in the negative list have been taxed.

For Medical Insurance, senior citizen age reduced from 65 years to 60 years:

Along with this change, the Government has also created a ‘very senior citizen’ category (post 80 years), which will be eligible for higher exemption.

Tax Benefit on Infrastructure bonds removed:

This affects small investors to a great extent.  Under Section 80CCG, an individual cannot seek a deduction from the amount invested into the bonds issued by infrastructure companies.