Money Plants

Tuesday, February 28, 2006

Budget 06: What does the future hold?

While the Finance Minister has not changed income tax rates for individuals, he has made a few important changes on the savings side. Here are the highlights of the budget impact on personal taxes. Details will trickle in the next few posts. If you have any queries, shoot.

-No change in tax rates
-One-by-six scheme for filing tax returns abolished. Now you would have to file tax returns only if you have income over the tax-exempt limit of Rs 1 lakh (Rs 1.35 lakh for women and Rs 1.85 lakh for senior citizens)
-Ceiling of Rs 10,000 per annum for investments in pension policies under section 80CCC removed. You can now invest up to Rs 1 lakh in pension policies. This will give a boost to your retirement planning.
-Investments in fixed deposits of scheduled banks for a term of more than 5 years is now eligible for a deduction of up to Rs 1 lakh under section 80C. So now, along with investments in Public Provident Fund, National Savings Certificates, Insurance, ELSS, you can also invest in bank fixed deposits.
-Cash transaction tax continues on cash withdrawals of over Rs 25,000 from current accounts
-Section 54EC for reinvestment of sale proceeds of capital asset amended. You can now invest the sale proceeds only in bonds of National Highways Authority of India and Rural Electrification Corporation, to enjoy tax-free capital gains, as against bonds of NABARD, NHB and SIDBI allowed earlier.
-Section 54ED, which allowed you to invest sale proceeds of capital assets in listed equities now abolished.
-You will be required to quote your Permanent Account Number (PAN) in more transactions now
-Service tax increased from 10% to 12%. More services brought under the scope of service tax.

6 Comments:

  • Please tell us abt the ATM transactions to be taxed ?.
    Will the trnasactions on ATm will be taxed ot using CC or Debit cards will be taxed ?.

    If these things are taxed, how abt the initiative of using CC instead of cash less transactions. If u carry cash, will it not be harmful to the people who carry it ?.

    By Blogger REFLEX, at 12:00 AM  

  • The FM has made it really clear that this is not a transaction tax. The service tax will not be charged to the customer for using ATM facility.

    The service tax is on ATM maintenance. That means, the vendor providing service to an ATM machine will have to bear the tax.

    By Blogger Money Gardener, at 12:19 AM  

  • Thas great money gardener

    By Blogger REFLEX, at 1:57 AM  

  • Hey Money Gardener
    I have been a regular reader of ur blog now. I am quite interested in the way money works and have been doin some kind of self paced reading to equip myself. Thou i should say i will never be able to put things in such a simple way as you have been doin. I very much appreciate your effort. Well..actually i have something to ask you. I am a s/w pro and i want to be professionally qualified as a financial services domain expert. What options do i have? basically i am looking for some kind of courses/certifications abroad or in India which i can take up part time. plz note that i have absolutely no other background except for some knowledge i have gained from books,magazines and sites etc..
    Do help me out!!

    By Anonymous Anonymous, at 10:21 AM  

  • Hi Anonymous,
    Thanks for the feedback.

    You could check out the course for Certified Financial Planners. That is an international course that you can do from India. It is a good comprehensive course for financial services advisory.

    Look up http://www.afpindia.net/ for details.

    Apart from that, you could do certification programmes with the Association of Mutual Funds India (AMFI) and Insurance Regulatory Advisory Services (IRDA) to be able to be a broker or agent for these two instruments.

    If you need more details mail me on money.garderner@rediffmail.com.

    By Blogger Money Gardener, at 9:11 PM  

  • Enjoyed a lot! »

    By Anonymous Anonymous, at 7:25 PM  

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