Indian Budget 2005

[Manish Hatwalne]

IMHO, Chidambaram has come up with a decent budget.
Finally Income Tax slabs got revised and hopefully we'd paying less tax.

New slabs -
Upto 1L => Nil
1L - 1.5L => 10%
1.5L - 2.5L => 20%
2.5L+ => 30%

What other features you liked?

- Manish

[Manish Hatwalne]

Can't believe it, nobodys excited about the new budget???

- Manish

[Alan Wanwierd]

Originally posted by Manish Hatwalne:

Upto 1L => Nil
1L - 1.5L => 10%
1.5L - 2.5L => 20%
2.5L+ => 30%

What is 'L'?
Excuse my ignorance - just looked it up L=100,000

As far as I can gather, roughly speaking 1L = US$2300
Which would mean your top rate of income tax kicks in at around US$5700. (Is this right? seems a bit low to me?

compare with Australias top rate of tax (48% that kicks in at just over US$50K, meaning a large chunk of the population i.e. ~15-20% [I'm guessing]pay top rate tax)

..and US (which is unfeasibly hard to find out!) of 30something%? that kicks in if you earn horrendously large sums of money US$350,000??, meaning that virtually nobody pays top rate tax)

Not trying to draw any conclusions - but the difference is staggering!
[ February 28, 2005: Message edited by: Adrian Wallace ]

[Pradeep bhatt]

PPF intersted is taxed. That is bad.
For cash withdrawal of Rs.10,000 , you pay 10 rs. Is that good.
For exemption of Rs. 1 Lakh , most people have to go for ELSS as there others are not attractive because returns are taxed.
No section 80L.

The FM has made small saving unattractive and forced people to invest in stock markets through ELSS. Everything depends on stock market now.

My rating 2.5 out of 5. :roll:

[Pradeep bhatt]

People whose taxable income is in the range of 5L - 10L are the real gainers. others

[Arjunkumar Shastry]

Originally posted by Pradeep Bhat:

For cash withdrawal of Rs.10,000 , you pay 10 rs. Is that good.

This is the most foolish thing I have seen in budget.You have paid the tax,put the money in the bank.You are withdrawing it and you are again paying the tax. .Your fault is you are withdrawing the cash.The reason given by Finance minister is to keep track on cash which gets vanished and can not be tracked.Seems to be rediculous to me.

[Pradeep bhatt]

Originally posted by Arjunkumar Shastry:

This is the most foolish thing I have seen in budget.You have paid the tax,put the money in the bank.You are withdrawing it and you are again paying the tax. .Your fault is you are withdrawing the cash.The reason given by Finance minister is to keep track on cash which gets vanished and can not be tracked.Seems to be rediculous to me.

People who dont pay tax are clever enough to plan their activities so that they withdraw 9,999 Rs / day. Others

[Pradeep bhatt]

This sify link say that PPF returns are not taxed
http://sify.com/finance/budget2005/fullstory.php?id=13682529

but Trash of India newspaper says that returns are taxed. Which one to believe? May be I will but Outlook money mag.

[Arjunkumar Shastry]

I hope bourgeois across the country will oppose this and FM will have to backtrack. .If this gets passed,your salary will be little less as company will not care to bear that tax of depositing your salary in the bank(Check deposit also attract this tax I suppose).Same thing for traders/stock market.People whose daily transactions exceed 10,000 will find some different way to evade this tax.People will keep cash at home and crime rate will increase.
[ February 28, 2005: Message edited by: Arjunkumar Shastry ]

[Pradeep bhatt]

Good link
http://in.rediff.com/getahead/2005/mar/01plan.htm

There is no mention of taxation for PPF returns here.

[Pradeep bhatt]

f this gets passed,your salary will be little less as company will not care to bear that tax of depositing your salary in the bank

Why will your salary get less ? Usually companies deposit salary into your account using a cheque and not cash. The Rs. 10 is only for cash withdrawals.

[sangeeta kapoor]

Originally posted by Arjunkumar Shastry:
I hope bourgeois across the country will oppose this and FM will have to backtrack. .If this gets passed,your salary will be little less as company will not care to bear that tax of depositing your salary in the bank(Check deposit also attract this tax I suppose).Same thing for traders/stock market.People whose daily transactions exceed 10,000 will find some different way to evade this tax.People will keep cash at home and crime rate will increase.

[ February 28, 2005: Message edited by: Arjunkumar Shastry ]

Rs 10 tax is only for cash withdrawls that too in a single day. Not applicable for check transfers.

[Pradeep bhatt]

Arjunkumar

Cheque deposit - there is no tax.

[Manish Hatwalne]

Originally posted by Arjunkumar Shastry:
I hope bourgeois across the country will oppose this and FM will have to backtrack. .If this gets passed,your salary will be little less as company will not care to bear that tax of depositing your salary in the bank(Check deposit also attract this tax I suppose).Same thing for traders/stock market.People whose daily transactions exceed 10,000 will find some different way to evade this tax.People will keep cash at home and crime rate will increase.

[ February 28, 2005: Message edited by: Arjunkumar Shastry ]

Right! Everybody is opposing it and finding it annoying, this will unnecesarrily increase banking infrastructure load. If I need 15K tomorrow, I'll withdraw 6K today and 9K tomorrow!

The tax indeed is for cash withdrawals only!
I don't think PPF interest is taxable now, but I need to confirm this.

Good point is 1L investment is directly deductible rom taxable income, so taht could save ta upto 30k instead of current 15K.

C'on Pradeep, stop grumbling man!
Look at the posiives, this IT revsion is as good as it gets!!!

- Manish

[Pradeep bhatt]

Yes, there are postives that is way I have rated 2.5 / 5. The stock market was up yesterday (down today though ). What about mobile phone ? Has the price come down. Some one pls reply.

[R K Singh]

Originally posted by Pradeep Bhat:
What about mobile phone ? Has the price come down. Some one pls reply.

Now you can get a mobile in 2-3K, how much more lower you want prices to go ?? :roll:

AW finance is a thing which I dont understand so no comments .. if I ever get time then I will learn how to manage money.

[Pradeep bhatt]

Originally posted by R K Singh:


Now you can get a mobile in 2-3K, how much more lower you want prices to go ?? :roll:

AW finance is a thing which I dont understand so no comments .. if I ever get time then I will learn how to manage money.

Some one stole my mobile phone.

[Pradeep bhatt]

If I need 15K tomorrow, I'll withdraw 6K today and 9K tomorrow!

My question , why do we have to withdraw in installaments? Why the headache of 6 + 9 k ?

[Manish Hatwalne]

Originally posted by Pradeep Bhat:


My question , why do we have to withdraw in installaments? Why the headache of 6 + 9 k ?

Because FM thinks taht 10K is blak money....
Yep, that's bad!!! Hopefully this will get revoked as almost everbody is opposing it.

- Manish

[Pradeep bhatt]

Originally posted by Manish Hatwalne:

Because FM thinks taht 10K is blak money....
Yep, that's bad!!! Hopefully this will get revoked as almost everbody is opposing it.

- Manish

FM is ready to reduce it to Rs.5 /-,rather than rs.10.

[Srinivasa Raghavan]

What happens when i issue a self cheque for amount > 10000 ! and not withdraw money thru ATM
[ March 01, 2005: Message edited by: Srinivasa Raghavan ]

[Arjunkumar Shastry]

Originally posted by Pradeep Bhat:

Some one stole my mobile phone.

217 IT, telecom and electronic components will bear zero-customs duty.Does cell phone comes into it?
budget

[Pradeep bhatt]

Originally posted by Srinivasa Raghavan:
What happens when i issue a self cheque for amount > 10000 ! and not withdraw money thru ATM

[ March 01, 2005: Message edited by: Srinivasa Raghavan ]

ofcourse you have to pay 10 Rs.

[Pradeep bhatt]

Originally posted by Arjunkumar Shastry:

217 IT, telecom and electronic components will bear zero-customs duty.Does cell phone comes into it?
budget

I dunno.

[Pradeep bhatt]

It is confirmed. PPF returns are taxable.

[Prakash Dwivedi]

I was planning to buy Honda City and due to budget it is cheaper now

Honda cuts City, Accord prices

[Sadanand Murthy]

Originally posted by Pradeep Bhat:


FM is ready to reduce it to Rs.5 /-,rather than rs.10.

This press report says the he is willing to change 10k to 50k. The news headline was misleading though; it said that the FM may rollback the transaction tax.

http://in.rediff.com/money/2005/mar/01bud41.htm

[Ashish Chopra]

Guys read about the fringe benifit taxes!!! I guess our employers will reduce the perks now.....

[Manish Hatwalne]

Originally posted by Prakash Dwivedi:
I was planning to buy Honda City and due to budget it is cheaper now

Honda cuts City, Accord prices

WOW! Honda ity!!! Lucky you!!!
My dreams are not so big though, I have been dreaming about a house for long; looks like it will be more expensive now.

- Manish

[Manish Hatwalne]

Originally posted by Pradeep Bhat:
People whose taxable income is in the range of 5L - 10L are the real gainers. others

That's not really true!
Calculate this -

(1) Assue sal = 2.5L, with older tax stucture
Upto 50K -> Nil
50K - 60K -> 10%
60K - 1.5L -> 20%
1.5L + -> 30%

So tax on 2.5L would be 49K
With newer tax it would be - 25K, so almost 50% less tax.

(2) Consider sal 5L, with older structure tax would be 1.24L
with new strcture it would be 1L, so approximately 20% less.

- Manish

[Manish Hatwalne]

BTW, I watched Cidambaram's interview yesterday on NDTV, he mostly talks sense!

- Manish

[Pradeep bhatt]

Originally posted by Manish Hatwalne:


That's not really true!
Calculate this -

(1) Assue sal = 2.5L, with older tax stucture
Upto 50K -> Nil
50K - 60K -> 10%
60K - 1.5L -> 20%
1.5L + -> 30%

So tax on 2.5L would be 49K
With newer tax it would be - 25K, so almost 50% less tax.

(2) Consider sal 5L, with older structure tax would be 1.24L
with new strcture it would be 1L, so approximately 20% less.

- Manish

http://in.rediff.com/money/2005/mar/03bud3.htm

People with salary of 9 L are real gainers.

Rating for the buget is 1.5/5. It is much worse than I expected.
Senior citizens are crying a lot.

[Pradeep bhatt]

(2) Consider sal 5L, with older structure tax would be 1.24L
with new strcture it would be 1L, so approximately 20% less.

You have not considered sec 80 L and also previous nvestments in NSC have become liability. PPF is taxed. Many more services included in tax net. .
[ March 03, 2005: Message edited by: Pradeep Bhat ]

[Manish Hatwalne]

Originally posted by Pradeep Bhat:


http://in.rediff.com/money/2005/mar/03bud3.htm

People with salary of 9 L are real gainers.

Rating for the buget is 1.5/5. It is much worse than I expected.
Senior citizens are crying a lot.

Read the article creafully! The title itself says - Everyone will actually save tax now!

8.5L - 10L arereal gainers because they were really heavily taxed before, when you and I paid 30%, they had to bear additional 10% surcharge. So that's OK.

- Manish

[Manish Hatwalne]

Originally posted by Pradeep Bhat:


You have not considered sec 80 L and also previous nvestments in NSC have become liability. PPF is taxed. Many more services included in tax net. .

[ March 03, 2005: Message edited by: Pradeep Bhat ]

Yes, ther are changes in savings now. ut earlier while you only got 15K benefit for 1L savings, now entire 1L savings (which could go anwhere, not necessarily PPF, and other u/s 88 savings) gets deducted from taxable income giving around 30K tax benefit.

If we see things in entirity rather than picking up a single thing, it lookspreety fair. There are changes, but then it's impossible to please everyone.

- Manish

[Pradeep bhatt]

Originally posted by Manish Hatwalne:


Read the article creafully! The title itself says - Everyone will actually save tax now!

8.5L - 10L arereal gainers because they were really heavily taxed before, when you and I paid 30%, they had to bear additional 10% surcharge. So that's OK.

- Manish

Yes there will be gains but dont forget there will be more service tax,ppf taxed,no 80 L etc so we(rather I) will have to pay less tax but more money for other things like buying house,eating in restuarants and many more. It is possible that the budget is good for you but it will mean less money for me. The budget has come as bad news for me but it is possible that others may be really happy. I hope that they have calculated the gains correctly.

[Manish Hatwalne]

Right! The gains will vary for everyone, but then everybody will gain!
The big tax payers are big gainers.. that's fair!! (There was this story here some time ago at 4 men and restaurant)

The reason most are happy because Income Tax affects one and all, and reducing it is some comfort. Prices of the rest of the stuff always increase...

Take builders for example, one builder quoted price of flat 1050 per sq feet in one exhibition (PBAP exhibition 14th-17Oct 2004) few months ago, last month before budget the *SAME* flat was being quoted at 1400 per Sq Ft by same builder when not a single nail was changed there!!!

Prices of commodities change (usually they increase) but they offer variety and you have choice, as for tax, you are bound to pay what govt decides.
So lesser, the better!!!

Just as an example, imagine you pay 3L to buy Maruti car (my dreams are small), if post-budget calculation change this, you may pay 3.25L to buy the same car or pay 1.25L and buy second-hand car or pay 50K and buy a new 2 wheeler or you may choose to buy nothing. When tax reduces by 24K (for most of us here) you have that much more money with you and you can decide what to do with it!!!

- Manish

[Arjunkumar Shastry]

Originally posted by Manish Hatwalne:

Take builders for example, one builder quoted price of flat 1050 per sq feet in one exhibition (PBAP exhibition 14th-17Oct 2004) few months ago, last month before budget the *SAME* flat was being quoted at 1400 per Sq Ft by same builder when not a single nail was changed there!!!

Thats becoming problem everywhere in country.Here in one area,where even not a stray dog used to visit few years back,price for 2 Bedroom apartment varies from Rs 8000 to 10,000 per month(+10 months deposist,so thats 80,000).For purchasing 2 BHK anywhere in Bangalore,you require minimum Rs 20 Lakhs.Only rich can afford.

[Ashok Mash]

I think various state governments should learn from others and follow the infrastructure building models that involve a private firm doing the work based on profit share or toll etc � similar to how they executed Cochin International Airport project. Apparently, the accountability and enthusiasm was so high, the project didn�t run over budget, and they finished it before time!

Cities like Banglore badly needs better major roads and properly planned satellite townships built with proper and efficient commuting facilities � In fact, when it comes to executing a project, India should find the easiest considering the amount of cheap man power and technical expertise available at almost no notice!

[Marianne Robinson]

I am still not clear. Is PPF interest taxable now? And then what about GPF?? If it is so, it is a pity.