It has been an extremely boring budget (except for those in the stock markets who saw the market up 0.5% at the beginning and end up 2% down towards the close). Let me first tell you what you want to hear.
Taxes Slashed Across The Board.
That’s what you want to hear. But no.
Some Taxes Slashed? Tax Slabs Expanded? I might pay a little lesser tax? Maybe?
You’re getting closer, but not quite.
So Nothing? No Taxes Slashed? I’ll pay MORE tax?
Yeah! Now we’re talking.
The income tax slabs don’t change at all. It’s that complicated mix of
- Upto 2 lakhs per year, nothing
- 10% of what’s between 2 and 5 lakhs .
- 20% of what’s between 5 and 10 lakhs
- 30% of whatever’s above 10 lakhs.
With the usual caveats of: if you’re above 60, the first slab is 2.5 lakhs, and if you’re above 80, it’s 5 lakhs. Nothing changes.
Ha, but there’s this tiny little thing. Since apparently inflation applies only to the lowest tax bracket, the finance minister has decided that if your income is less than Rs. 5 lakh, he’ll give you a “rebate” of Rs. 2,000. That is: you calculate your tax and pay Rs. 2,000 less than that.
So How Come I Pay More Tax?
Do you earn more than 1 crore? That’s 10 million rupees if you don’t know what crore is. ( Then why would you be reading this? But I digress) If the answer is “no”, and you don’t know anyone else that does, then you can skip this section.
Individuals that earn more than Rs. 1 crore will pay a 10% surcharge. That means if you had to pay Rs. 20 lakh in tax, you’ll pay another 2 lakh as a surcharge. (And the 3% education cesses on top of those)
This applies to Individuals, Firms, Co-operative societies and Local Authorities. And Limited Liability Partnerships.
For companies (Private or Public Limited) that earn more than 1 crore, the surcharge is retained just 5%. But if they earn more than 10 crore rupees – bang, we’re up to the 10% surcharge level.
Foreign companies already pay a higher rate of tax for their Indian income, and their surcharge remains at 2% below Rs. 10 crores, and 5% above that.
In effect, if you’re paying more tax, then you’re probably rich. I want to be sympathetic and face the same problem because heck, I get to be rich.
On a more serious note: this increases the taxes that public companies pay, so you will find companies reporting lower earnings, to the extent of about 10% of taxes paid, in the coming year.
I hope there’s no more bad news.
Currently it’s like this. The lack of good news is bad news. Your costs just went up due to inflation. You get no extra tax relief. So you’re going to have to cut back on those expenses. And there’s stuff that’s getting more expensive.
Smoking. Duty on cigarettes is up by 18% on cigarettes less than 65 mm. Or some such random number which never ever works because ITC’s profits are always going up. And it’s not those potato chips that sell that much.
Okay, but I don’t smoke.
But you use a mobile phone? Bonus points if you’re reading this on your mobile phone, because the bad news is: mobiles get that much more expensive. Mobile phone duty is up to 6% from 2% for stuff that costs more than Rs. 2,000. And everything costs more than Rs. 2,000. (On an easier to understand note: If your mobile phone costs Rs. 15,000, you can expect it to cost about Rs. 600 more.)
Grr. What else?
Okay, I’ll be the bullet point guy.
- Air conditioned restaurants will now charge service tax. Earlier only the ones with alcohol did. Now you can total teas, but you’ll pay the service tax. [Editor: He’s losing it]
- SUVs. Excise duty raised from 27% to 30%. Unless it’s a taxi. I know what you’re thinking. So does the excise tax department.
- Marble tiles in case you wanted a reflooring. The duty is doubled from 30 per sq. mtr to Rs. 60.
- Vehicle Parking get service taxed. This kills my mall mileage.
- Home loans got cheaper for a very select lucky few that get to buy their house for less than 40 lakhs, and will take a loan of less than 25 lakh in the next financial year. They will be so thankful. Meanwhile I rent because what you get for 25 lakhs nowadays won’t even house the equipment this post is being written on.
- Keyman insurance was being misused by having a company take it and then having it assigned to the individual who got the full benefit. This is now gone. I will write about this in detail but it’s a loophole fixed.
- Real estate purchases from builders which is high ticket will get more expensive. Again, detailed post coming, but you will pay 0.62% more (currently 3.09%) if you buy a large house or pay all the money after construction is complete.
- Customs duty on Set top boxes for TV is doubled, to 10%.
- From 1 June 2013: Buy a property worth more than 50 lakh, and you have to deduct 1% tax before you pay the money to the seller. And deposit it with the Income Tax Department. (Yes, I wish I could have kept it too)
- Oh yeah, if you have money in Dividend Paying Mutual Funds, don’t.
Yes, shouldn’t there be? Again, bulletpointing:
- The disabled get to pay upto 15% of sum assured as premium and still get income tax exemptions. (Current upper limit is 10%)
- Baggage allowances (duty free) for jewellery, for a returning Indian after living abroad for a year or more, is raised to Rs. 50K (from 10K) for a man and Rs. 100K (from 20K) for a woman. Crew gets a higher limit of Rs. 1500 (from Rs. 600).
- Hazelnuts are cheaper, with customs duty cut to 10% (from 30%). Hopefully the topping on the coffee will get cheaper too.
- Li-ion batteries for electric cars will get no customs duty. But there’s no power to actually charge those cars at a large scale, so it’s not really all that good.
Why aren’t you telling me about the industrial stuff?
Some of you think it’s relevant that STT was reduced for stock trading, or that bank-owned-trusts get to securitize stuff better, or that there is an amnesty scheme for service tax non-filers. Or that Tax-To-GDP ration is yada-yada, or that expenditure is blah-blah, or that stock exchanges need to create a debt segment.
Hey, that stuff goes in different post. I’m trying to make this particular post for as broad an audience as possible. And you may have some extra kilos, but not that kind of broad.
Sorry about the bad humour but I just had to make it interesting to write. I hope it was interesting to read as well. I accept compliments, and any form of currency or mastercard/visa.