Budget 2017 – Where do we go from here
The post-budget announcement is usually followed by a rush to analyze how various proposals impact the individual and economy. It’s no different with Budget 2017.
What Budget 2017 has in store
While the budget announcement is one extended exercise with a ton of technical and complicated details, there is some help from the experts in unravelling it for the individual.
Here are some of the key proposals – remember they are proposals at this stage until the Parliament clears the budget:
- Property investments to have holding period of 2 years, from 3 years at present, for the purpose of calculating long-term capital gains tax. This means 2 years after buying a property, it can be sold and the profit will be treated as long-term capital gains.
- The government will enhance the scope of Section 54EC investments in tax-saving bonds to help reduce long-term capital gains tax liability of upto Rs 50 lakhs from transfer of property. This will give investors a lot more variety to park their surplus.
- The base year of indexation to be moved from April 1, 1981 to April 1, 2001 for long term capital assets. Factoring in a more recent inflation number could result in lower tax outgo.
- A 10% surcharge on the tax outgo on individuals with annual taxable income between Rs 50 lakh and Rs 1 crore. Clearly, this is a killjoy as it will increase tax outgo and lower disposable income for the said category
- No cash transactions above Rs 3 lakhs. This is another step in the cashless system being mooted post-demonetization.
- Existing rate of taxation for individuals with income in the Rs 2.5-5 lakh range reduced to 5% from 10%. This means lower outgo leaving additional disposable income in the hands of the said category
How do we rate the budget?
Does it matter?
While the experts are making their cold, calculated assessment of the budget, individuals ought to go back to what they have been doing all along.
This means they need to revisit their bucket list that itemizes all life stage goals like children’s education and marriage, retirement and buying a house, to name a few. They need to plan for these goals and invest religiously in a savings and investment plan.
Equally important for them is to get a protection plan like a term insurance plan, which allows the insured to opt for a larger cover at relatively affordable premiums. Go for term plans that allow the insured to enhance the life cover through riders like critical illness riders, for instance.
So while the budget is important, obsessing over it beyond a point isn’t productive. Your own budget and financial game plan is more relevant to you than the Union Budget.
So come budget, monetary policy or any other policy announcement, the individual must continue to chart his financial future, while the Union Budget does the same for the country.