The only specific benefit for the salaried class in the budget is the scrapping of Fringe Benefit Tax. Companies may now be a bit more liberal with the perks offered to their executives. We can expect more on the ESOPS and Superannuation front as now they are free from the implications of the FBT. A look at the tax implications on the various components of the Indian economy due to the Budget 10-11 There are taxes and there are taxes and then there are more taxes. Luckily unlike Mr. Chidambaram who had the   knack of coming up with unorthodox (synonym for painful) and fancy taxes like the FBT, STT and CTT, Mr. Pranab   Mukerjee seems to have other ideas. He has decided to abolish the CTT and FBT. This article gives a clearer perspective of the tax   implications of the Budget presented on 06 July 2009. Individual Income Tax Disappointing increase in the tax slabs There has been an increase in the income tax slab of Rs.15, 000/- for senior citizens and Rs.10,000/- for others. This means that the starting slabs become Rs.1.6 L for male taxpayers, Rs.1.9 L /- for female tax payers and Rs.2.4 L for senior citizens. This increase is very low compared to the pre-budget expectations. But then, something is better than nothing. Welcome deduction of the surcharge The surcharge of 10% on income tax for tax payers who have income over Rs.10 L has been removed. This will benefit high income citizens of India. Increase in Section DD deduction limit The limit for deduction under Section 80DD for medical expenses to support dependents with severe disability has been increased to Rs.1 L from Rs.75, 000 earlier. This is a welcome measure as hospital and medical expenses have been increasing quite heavily. Small Business Owners The corporate tax rates remain unchanged. Relief for businesses with a turnover of less than Rs.40 L There is a good amount of administrative relief for small businesses which have a turnover of less than Rs.40 L. These businesses have an option to declare income at 8% of turnover and can be exempted from maintaining books of accounts. Also there is no need to pay advance tax. The tax payable can be paid along with the income tax returns filing. This could be a boost for all those small and medium businesses and budding entrepreneurs for whom maintaining accounts is a burdensome process. Salaried Class Abolishing of Fringe Benefit Tax The only specific benefit for the salaried class in the budget is the scrapping of Fringe Benefit Tax. Companies may now be a bit more liberal with the perks offered to their executives. We can expect more on the ESOPS and Superannuation front as now they are free from the implications of the FBT. Senior Citizens Ex-servicemen get some benefits under the One Rank - One Pension Scheme. The benefit can be substantial if they have retired before 1st January 2009. The basic idea being that people who retired earlier than 1997 will be getting lesser pension as compared to those who retired post 97. The more logical idea which has been mooted is to have a Rank based Pension scheme. Students Interest during the moratorium period has been fully subsidized for students from the economically weaker sections. This is for loans from scheduled banks for approved courses in technical & professional streams from recognized institutions in India only. All fields of study including vocational courses after schooling get the benefit of deduction of interest for loans paid for pursuing higher studies under Section 80E. Earlier this was available only for specified fields of study. Home Managers The budget leaves a mixed feeling for the home managers of India. - The duty on set-top-boxes goes up. But the duty on LCD TVs comes down. - Duties on tea & coffee go up. That cup of Coffee/tea could be more costlier! - Critical care expenses will come down as certain (10 in number) life saving drugs will cost less. Also certain heart related devices will cost lesser. - But to make ourselves more beautiful by surgery is going to be much more costly as cosmetic and plastic surgery come under the service tax net. This will also negatively affect those who need to do plastic surgery due to accidents and burn wounds. - Gold and Silver will cost higher for purchases in India and also if imported as part of personal baggage. Some respite is the lesser tax on branded jewellery. Some things left unchanged are - Food items like biscuits, sherbets, cakes and pastries - Pressure cookers - Electric Bulbs costing less than Rs.20 and - CFLs (Compact Fluorescent Lamps) - Dress materials made from both man-made and natural fibers are going to be costlier. Common to All The New Pension Scheme though will continue in the Exempt- Exempt-Tax regime have been given some internal operational benefits. Its income will not be taxed. - The dividends that it receives will not be subject to Dividend Distribution Tax. New Tax Deduction for investment in infrastructure bonds: The good news is that Budget 2010 has proposed a new Sec. 80CCF that will offer a deduction of up to Rs. 20,000 next year onwards for investment made in infrastructure bonds. The still better news is that this Rs. 20,000 is over and above the Rs. 1,00,000 Sec. 80C limit. The details as to the term of these bonds, the lock-in period, the issuing institutions etc. are yet to come out. People who are buying cars and multi utility vehicles above 2000cc engine capacity will get a discount of Rs.5000/- Peanuts probably for white elephants. This would apply for cars like the Scorpio, Sumo etc All-in-all the budget was very way off what was expected in terms of tax reforms. But, at the same time one must agree that the Finance Minister has at least set the ball rolling in the right direction towards simpler tax structures. Tax exemption under section 80 IB for developers of affordable housing projects : The urban development ministry has sought removal of service tax on rental income from commercial properties arguing that renting of space is not a service and due to a court stay on the proposal there has been no loss to the government exchequer. On its part the housing ministry has sought a three year extension in tax exemption under section 80 IB for developers of affordable housing projects. Change in gift tax provisions : Under the existing provisions of section 56(2)(vii), any sum of money or any property in kind which is received without consideration or for inadequate consideration (in excess of Rs. 50,000) is taxable in the hands of the recipient. Of course, receipts from relatives or on the occasion of marriage or under a will are outside the scope of this provision. Nonetheless this law is only applicable to an individual or an HUF. Therefore, transfer of shares of a company to a firm or a company, instead of an individual or an HUF, without consideration or at an inadequate consideration escapes the tax net completely. In order to prevent the practice of transferring unlisted shares at prices much below their fair market value, it is proposed to amend section 56 to also include within its ambit transactions undertaken in shares of a company either for inadequate consideration or without consideration where the recipient is a firm or a company. Also, in several cases of immovable property transactions, there is a time gap between the booking of a property and the receipt of such property on registration, which results in a taxable differential. It is, therefore, proposed that Sec. 56 will only apply if the immovable property is received without any consideration and to remove the stipulation regarding transactions involving cases of inadequate consideration in respect of immovable property. NPS (New Pension Scheme) The NPS has not taken off as expected. Now the Government proposes to contribute Rs.1,000 per year to each NPS account opened in the year 2010-11. This initiative, "Swavalamban" will be available for persons who join NPS, with a minimum contribution of Rs.1,000 and a maximum contribution of Rs.12,000 per annum during the financial year 2010-11. The Budget 2010 has made the following important amendments relating to Renting of Immovable Property Service: ‘Renting’ activity itself regarded as taxable service (Retrospectively amended from 1 June, 2007) » Renting of vacant land for construction of building /temporary structure at later stage for furtherance of business or commerce regarded as taxable service. » Renting of Immovable property per se has been made subject to Service tax by retrospective effect to overcome the judgment of Delhi High Court. What's cheaper/costlier: Expense: Cars >>Costlier Expense: Medical equipments >> Cheaper Expense: Microwave oven >> Cheaper Expense: Mobile phones >> Cheaper Expense: Jewellery >> Costlier Expense: Watches >> Cheaper Expense: Tobacco>>Costlier. Expense: Refrigerators >> Cheaper Expense: LED lights >>Cheaper Expense: Toys>> Cheaper Expense: Long pepper and Asafoetida >> Cheaper Expense: Digital Cable Transmission >>Cheaper Expense: Petrol & Diesel >> Costlier Expense: Gold and Platinum >> Costlier Expense: Televisions >> Costlier Expense: Cement >> Costlier Expense: Air Conditioners>> Costlier Expense: Gaming software’s >>Cheaper Expense: CDs>>Cheaper Ref: July 8th, 2009, www.BankBazaar.com, moneycontrol.com   Top | Back                     What happens if you have not taken out a mediclaim, but have expended a substantial sum on a family member's medical treatment? Nobody knows when sickness strikes, thus it is very important to keep provisions for such unforeseen expenses.   But in a family set up where the breadwinner is perpetually struggling with mounting expenses, this aspect many-a-times   remains ignored. We often skip taking medical insurance, which is of utmost important considering the present scenario. It not only   leaves you prepared to face medical emergencies, but also makes you entitled for tax benefits. The Income-Tax Act provides benefits for expenses incurred — such as for insurance premium — in respect of medical expenditure which might have to be incurred in future as well as for expenses actually incurred on medical treatment of certain persons. But what if you have not taken a mediclaim and have actually incurred substantial expense on sudden medical treatment for a member of your family? Still, all is not lost Deduction for expenses incurred Your employer can give you medical reimbursement up to Rs 15,000 for medical treatment of you and your family members. The amount is tax free under proviso (v) to Section 17(2) of the income-Tax Act. In respect of any expenditure incurred for medical treatment, training or rehabilitation of a dependent person with disability, a deduction of up to Rs 50,000 is allowed under Section 80DD on the Income-Tax Act. In case of severe disability, the amount of deduction goes up to be Rs 75,000. In case you have incurred expenditure for medical treatment of a dependent person for specified disease, a deduction up to Rs 40,000 is allowed under section 80DDB. This deduction rises to Rs 60,000 in case the person treated is a senior citizen. This section covers treatment of very critical diseases which are extremely expensive, such as neurological diseases, malignant cancer, full blown AIDS, chronic renal failure and hematological disorders, etc. In order to claim this deduction, a certificate from a specialist doctor working in a government hospital and as prescribed has to be obtained and kept in records. The amount of claim under incurred has to be reduced by any amount received in respect of any claim received from the insurance company or reimbursement received from employer. Benefit for premiums paid If you have a mediclaim, then payment up to Rs 15,000 in respect of insurance premium paid in respect of yourself, spouse and dependent children can be deducted from total income under Section 80D. In addition to the above deduction, up to Rs 15,000 in respect of mediclaim insurance premium paid in respect of parents, whether dependent or not, also be claimed under Section 80D. The amount of deduction under Section 80D will go up to Rs 20,000 in case the person to be covered is of 65 years or more of age. The deduction in respect of mediclaim under Section 80D can be claimed for two categories of relatives separately. Thus, the aggregate deduction can go up to Rs 30,000 in case family members and parents are covered and will be higher if the person to be covered is a senior citizen. Section 80DD also allows deduction in respect of any money paid to Life Insurance Corp or any other insurer or any specified company under specified scheme for maintenance of such a dependent. The aggregate deduction in respect of treatment, maintenance as well for payment of money under the scheme approved can not exceed Rs 50,000 in case of disability other than severe disability, and Rs 75,000 in case of the dependent having severe disability. So, get your family a mediclaim policy — be not only free of worry, but save also on your tax bill.   Top | Back                     In this difficult economy, you probably find it harder than ever to cope with challenges on the job. Both the stresses you take with you when you go to work, as well as the stress that awaits you on the job are on the rise – and employers, managers, & workers feel it all the time. While some stress is normal, it can interfere with your productivity and reduce your physical and emotional health when it becomes excessive. So it’s important to find ways to keep it under control.   What you eat & drink at the workplace has a significant impact on your health. Most people eat at least one   What you eat & drink at the workplace has a significant impact on your health. Most people eat at least one meal at work   each day with some planning & out of the box thinking, you can make an eating plan that supports your optimal health. Here are some simple tips to maintain healthy & stress free lifestyle: Eat light meals and snacks during work hours. Choose small amounts of easily digestible food. This promotes alertness & reduces digestive concerns. Drink water and herbal teas; limit caffeine and sugary drinks. Choose foods that are not fried, and look for hidden fat in snacks. Choose snacks that contain fibre, such as nuts, vegetables, dried and fresh fruits. Do not work non-stop, especially if you have a desk job. Get up at least once an hour. If you work on a computer, wash your eyes every 30 to 45 minutes to give them sufficient rest. Also, blink your eyes several times. Take the stairs instead of the lift or escalator. This will keep your system in good shape. Stress at work is new phenomena. The nature of work has changed over the last century & is still changing. Work related affects the health of organization. One way to reduce stress is to focus on your breathing for 5-10 minutes a day. This will relax your body and strengthen your mind. Maintaining physical and mental stamina at work is important. Long-term stress avoiding tips: Avoid giving in to alcohol, smoking or other substance abuse while under stress Develop a positive attitude towards stressful situations. Give up negative tendencies such as; fear, anger, revengeful attitudes that actually germinate stress. If you practice all of this, you will remain healthy & stress free.   Top | Back                     The basic needs of man are food, clothing, shelter and entertainment. Today, most of us have graduated from needs to luxuries. When the newspaper headlines were screaming inflation at 11.9 per cent, it became a topic of worry. Today, the challenges are not just high standard of living, high commodity prices, and its job loss too. How do you deal with meeting your basic requirements with less means to buy them? 1. Eat at home   Eating out can be expensive. If you are spending Rs 200 on eating out compared to Rs 50 at home, you would be   surprised to know the kind of amount you are spending. A systematic investment plan of Rs 150 (200-50) a day saved for 30 years   can give you returns in excess of Rs 5 crore! 2. Know what you are buying Plan your shopping. If you fill your cart with everything that catches your eye, chances are you will be spending a lot more. Instead, plan your meals for the week ahead and make careful note of what you need to buy. Purchase only the items on the list, avoid the rest. 3. Wear your blinkers Stores are designed to make you go through a long walk to reach for your most basic items. Reason -- you can trick into buying what you don't really need. Most basic commodities are found towards the end of the store. So, the next time you go shopping, you could skip the other outlets and move towards your destination. 4. Shop on a full stomach When you're hungry and shopping, you may end up buying lot of things that look like food! You might also pick up what you don't really need. On the other hand, you can easily avoid unnecessary shopping when you're a full stomach. 5. Do you really need bottled water? You can take a bottle of water when leaving home rather than buying when you're out. 6. Shop sans the kids Hungry, tired, cranky kids increase the amount of time it takes to get your shopping done. Kids can really bug you into buying things which are bad for your health and for your purse. Leave them at home when you go out shopping. 7. Buy in bulk You can save a significant amount of money if buying in bulk. Pay attention to the prices and pick up the family size package if the per unit cost is lower. However, you need to realise that bulk buying has a dark side too! If you are not a big user of any particular product, it could mean wastage. 8. Use store reward cards If you visit a particular store often, you can sign up for their reward card. In some cases, stores raise their prices when they offer reward cards, and without the card your bill will certainly be higher. If the card offers other benefits, such as a preferred (or free) parking, free schemes, etc., be sure to maximize your benefits before they expire. 9. Buy local products Buy local products for instance; fruits. Whenever I step into a big branded store, I was pushed into buying 'American grapes'. I fell for it once, and realized only on billing that it was Rs 400 a kg! The Indian variety is normally available for Rs 40. Locally grown or produced food is often available at a cheaper price because you don't pay for long transportation costs. Stick to them. 10. Choose unbranded goods There is a huge cost difference between a branded product and an unbranded one. Even in case of 'expensive' items like dry-fruits, if you buy it from a wholesale-retail shop you will find a 20 per cent price difference. Some branded foods like cornflakes, are more expensive than dry fruits on a per kilogram basis. If you thought potatoes were selling at Rs 12 a kg, you are correct, but when it gets converted to branded chips, it becomes a little expensive, about Rs 300 a kg! 11. Men are bad shoppers It is not so much of a gender issue. But the truth is men do not have much patience and that shows while shopping. So, if you are a man, realize that shops know and understand this. So things are arranged in such a way that when you are in a hurry you will end up buying the most expensive items. Look around to find cheaper items. 12. Compare prices and stores I personally do not compare prices and stores but my wife has a degree in this! She knows which shop is good to buy vegetables, branded goods, unbranded goods. And she plans her shopping accordingly. 13. Shop less frequently The lesser the number of trips to the shop, the lesser you will buy! So, if you are making more trips to the store, it is time you reduced them. 14. Pay in cash When you buy your day-to-day requirements with your credit card, you run the risk of paying your credit card dues late. So, for all the saving you have been doing, you may give it away in the form of interest. Cash is a good option. Besides, you tend to be more careful when making cash payments. 15. Check your bill You should check all the statements which have a financial implication be it your credit card statement, mutual fund statement or your groceries bill. Scanners are fine, but there are possibilities of mistakes. So, you must see the bill before you pay. 16. Buy leather goods in monsoon and umbrellas in winter! Buying goods in off season will cost you less. If it's monsoon, check out for sale on leather goods and umbrellas in winter.   Top | Back                     Personal loans enable you to take care of your immediate requirements without much of a hassle. For instance you do not have to give any kind of security, collateral or even guarantees to avail this loan. Moreover you can utilize the loan amount for any purpose (except speculative purposes). The amount of loan will depend on your eligibility based largely on your income or net take-home salary. The loan is repayable in equal monthly installments or EMIs and loan tenure varies from one to five years. Since personal   loans do not require any security or hypothecation of assets, the rate of interest charged by banks is higher compared to   any other secured loans which are taken against the security of an asset like your home, car, gold or even equities.   Is it easy to get a personal loan, since there is less paperwork, the bank does not have to verify any asset as it does in the case of home loans. No, as there are stringent income criteria to qualify for a personal loan. But once you make the grade it takes only about three four days for you to get a personal loan -- a lot less time than a home or car loan. So how can you go about getting a personal loan? Here is a step-by-step process to be followed for the personal loan application process: Get in touch with a lender after finding out which bank is offering the best rates and best services. You can compare interest rates by visiting any reputed price comparison sites. After short listing a handful of them, you can get in touch with as many lenders as possible and get them to make loan offers to you. Then negotiate with them to get the best interest rate. Also try to know if there are any special offers. After you have got all the banks to make their offers, select your lender based on the information you have in front of you. After finalizing the lender, the lender's direct selling agent will visit you and collect documents supporting proof of income, residence proof and identity. You may be required to produce copies of IT returns, salary slips, bank statements, ration card, passport, driving license and other relevant documents. These requirements vary from lender to lender. After submitting the documents, a field investigator will visit your home to double check the facts provided in the documents, such as your place of residence, tenure at your workplace and so on. It is essential that you are present during this visit; otherwise the investigator could report that the facts you provided do not actually add up, thus forcing the lender to reject your loan application. Once the lender is satisfied with the veracity of your documents, the loan is approved. The lender then disburses the amount through cheques or demand drafts (DD). Now you might think that a credit card might do the trick. So how does cash withdrawal on your credit card fare vis-a-vis personal loan? Firstly, withdrawing cash using a credit card can turn out to be very costly if you do not repay it quickly. Interest rates on credit card cash withdrawals can range from 20 per cent to 40 per cent on an annual basis depending on the type of card you use. For most credit cards, the interest rate on cash withdrawals and credit outstanding for purchases made is the same. But here is the kicker -- for the purchases you make through your card you get an interest-free period to pay back. Cash withdrawals on your card have no such benefits; interest is charged from the moment you withdraw the cash. And do not forget the transaction charge -- this is a charge levied on the withdrawal at the ATM. Still, personal loans have a slightly longer application process whereas cash withdrawals offer easy access during emergency. But, personal loans also have lower interest rate than credit card cash withdrawals. Apart from the higher interest rate, you will also have to pay a one-time transaction charge. Coming to interest rates, the average interest rates charged for personal loan is in the range of 12-22 per cent, whereas the average rate for interest is around 20-40 per cent for withdrawal from credit card. Therefore, unless you are in a very real emergency where you need instant cash, it is advisable to not withdraw cash on your credit card. Remember you also have to repay it as early as possible to avoid prohibitive interest payments. If you have some time, it is always better to opt for a personal loan. It is the fastest of all retail loan products and the interest rates are a lot lower than those on credit card cash withdrawals.   Top | Back Please do not reply back to this mail. This is sent from an unattended mail box. Please mark all your queries / responses to webmaster@bharatparekh.com Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. www.bharatparekh.com and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. www.bharatparekh.com, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.