February 21 2020
Budget 2012 affects your earning, investments & spending
19 March 2012

It didn't announce any bold reforms, nor hand out any big tax cuts. Even so, Pranab Mukherjee's budget for 2012-13 is good news because it is another baby step towards the Direct Taxes Code (DTC). 

The crucial reform, which promises to overhaul the direct tax regime, has been delayed once again, but some provisions have found their way into the tax structure. Take the budget proposal that a life insurance policy must offer a cover of at least 10 times the annual premium for tax benefits. 

Perhaps, in the next few years, this will be raised to 20 times, as proposed by the DTC. This change is necessary to make insurance buyers focus on the risk cover instead of tax savings and investments. 

There are not too many tax changes this year, but some are quite significant and useful. Check out ' How much tax will you save ' to know how the budget proposals will impact your tax outgo next year. Our calculations assume that the Section 80CCF benefit for infrastructure bonds will continue, although some tax experts believe that since there was no mention in the finance minister's speech, the deduction has been scrapped. 

The budget also attempts to broaden the capital markets by bringing in more investors. The Rajiv Gandhi Equity Savings Scheme will offer a tax deduction of Rs 50,000 to new investors in direct equities. The problem is that these 'first-time' investors will be sitting ducks for unscrupulous intermediaries out to missell services. Check out ' Post-budget stock picks ' to know how the budget proposals will impact the markets and the stocks to buy now. 

The raising of the service tax is a sore point with consumers. The budget has raised it from 10.3% to 12.36%. Even essential services like insurance and banking have not been spared. This will not only dent household budgets, but also fuel inflation as services become costlier. Check out the ' Service tax & home budget ' to see how it impacts your household budget. 

report by Ronak Shah - www.yavum.com



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