The Union Budget 2015 - Analysed

Category
HNI

Positives from Budget

Tax-free infrastructure bonds to be issued for rail, road and irrigation projects.
Gold Monetisation Scheme to allow investors to earn interest by depositing
gold in a metal account.
Sovereign Gold Bond to be developed as an alternative to purchasing
physical gold.
A sector-neutral Financial Redressal Agency to address grievances against
all financial service providers.
Rental income of REITs from their own assets to have pass-through
facility^.
Pass-through status provided to Category 1 & 2 Alternative Investment
Funds (AIFs)^.

Negatives from Budget

Additional 2% surcharge will be levied for individuals whose taxable income
exceeds Rs.1 crore^.
Service tax to be applied on 60% value instead of earlier 40% value of air
transport for non-economy class travel.
Service tax plus education cess increased from 12.36% to 14.00%.

How to beat the Budget

Issuance of tax-free bonds will offer tax efficient investment avenues for the
long term.
Investment in gold can be routed through Sovereign Gold Bond. Also, Gold
Monetisation Scheme can be used to earn income by depositing physical
gold in a metal account.

PAN made mandatory for any purchase or sale exceeding Rs.1 lakh.

Pass-through status to AIFs category 1 & 2 and rental income of REITs

allows for tax to be levied on investors (unit holders) ofthese funds and not
on the funds, thereby eliminating tax ambiguity.

Service tax to be levied on amusement and theme parks. Also, concerts,

pageants, award functions, musical or non-recognised sporting events with
ticket prices exceeding Rs. 500 to come under service tax ambit.

Equity mutual funds continue to retain their long-term tax benefits and can
be beneficial for investors in the category with a long-term investment
objective.

Proposal to reduce corporate tax to 25% from 30% over the next 4 years^.

Service tax plus education cess increased from 12.36% to 14.00%.

Self-Employment & Talent Utilisation (SETU) to be established to support all

aspects of business
Launch of an e-Biz Portal that integrates 14 regulatory permissions at one
source.

Rationalisation and removal of various kinds of tax exemptions and incentives

for corporate taxpayers.

The government has undertaken measures to promote domestic manufacturing

and improve the investment climate.

Undisclosed income from any foreign asset to be taxed at maximum marginal

rate.

Reduction in basic customs duty in parts used in LCD/LED TV and digital

video cameras.
Wealth Tax abolished.

SME owner

Micro Units Development Refinance Agency (MUDRA) Bank to refinance

all micro-finance institutions through a PradhanMantri Mudra Yojana.

For domestic companies with income

>Rs.10 crore:surcharge increased to 12% from earlier 10%
between Rs.1-10 crore:surcharge increased to 7% as against earlier 5%

It has set aside Rs 1,000 crore to setup a Self Employment and Talent Utilisation
(SETU) programme that will help incubate startups, especially in the technology
sector.
The measures will boost entrepreneurship and self-employment in technology
and manufacturing sectors.

Trade receivables discounting system, an electronic platform to facilitate

financing of trade receivables
Rate of incometax on royalty and fees for technical services reduced from
25% to 10% to facilitate technology inflow.
National Skills Mission through the Skill Development and Entrepreneurship
Ministry to be launched to develop employability among youth.

Young salaried
professional

Limit of deduction of health insurance premium increased from Rs. 15,000 to

Rs. 25,000 and for senior citizens from Rs. 20,000 to Rs. 30,000^.

Service tax plus education cess increased from 12.36% to 14.00%.

Additional deduction of Rs. 50,000 for contribution to NPS under Sec 80 CCD^.

Service tax to be levied on amusement and theme parks. Also, concerts,

pageants, award functions, musical or non-recognised sporting events with
ticket prices exceeding Rs. 500 to come under service tax ambit.

Travel allowance increased from Rs. 800 per month to Rs. 1,600.
With respect to Employees Provident Fund, employee will get two options they
may opt for EPF or New Pension Scheme (NPS).
With respect to Employees' State Insurance (ESI), the employee to have option
of choosing either ESI or a health insurance product approved by IRDAI.

Excise duty on cigarettes to be increased to 15-25%.

The budget has offered slew of deductions/exemptions. Additional deductions

like increased limit of health insurance premium, contribution to NPS, higher
travel allowance etc will reduce tax liability.
One needs to watch out ones discretionary expenses considering increase in
service tax.

Non-furnishing of PAN to EPFS (Employee Provident Fund Scheme) for

withdrawal before 5 years would attract deduction of tax at maximum marginal
tax rate.
Excise duty on mineral and aerated waters increased from 12% to 18%.

Issuance of tax-free bonds will offer tax efficient investment avenues for the
long term.

Service tax plus education cess increased from 12.36% to 14.00%.

The Budget has alleviated concerns of senior citizens pertaining to healthcare

and old age costs by providing tax incentives.

Investment in gold can be routed through Sovereign Gold Bond.

Contribution to Sukanya Samriddhi scheme to be fully exempt^.

A sector-neutral Financial Redressal Agency to address grievances against all
financial service providers.
Gold Monetisation Scheme to allow investors to earn interest by depositing gold
in a metal account.
Tax-free infrastructure bonds to be issued for rail, road and irrigation projects.
Postal network to be used for increasing access of people to the formal financial
system will benefit rural people.

Retired
individual

Limit of deduction of health insurance premium increased from Rs. 20,000 to

Rs. 30,000^.
For senior citizens above 80 years (not covered under health insurance) will
get deduction of Rs. 30,000 towards medical expenses^.

Gold Monetisation Scheme can be used to earn income by depositing physical

gold in a metal account.

Deduction limit of Rs. 60,000 for specified disease of serious nature enhanced
to Rs. 80,000 for citizens above 80 years of age^.
Service tax exemption on Varishta Bima Yojana.
Customs duty on artificial heart fully exempted.
A sector-neutral Financial Redressal Agency to address grievances against all
financial service providers.
Gold Monetisation Scheme to allow investors to earn interest by depositing gold
in a metal account.
Postal network to be used for increasing access of people to the formal financial
system.

Home maker

Contribution to Sukanya Samriddhi scheme to be fully exempt.

Service tax plus education cess increased from 12.36% to 14.00%.

Nirbhaya fund allocated Rs 1,000 crore.

Service tax to be levied on amusement and theme parks. Also, concerts,

pageants, award functions, musical or non-recognised sporting events with
ticket prices exceeding Rs 500will come under the service tax ambit.

Gold Monetisation Scheme to allow investors to earn interest by depositing

gold in a metal account.

People can build a corpus for education and marriage of their girl child through
Sukanya Samriddhi scheme which is treated as EEE (Exempt, Exempt, Exempt)
for tax purposes.

Excise duty reduced to 6% from 10% for upper leather shoes exceeding
Rs. 1,000 per pair.
Basic customs duty on organic LED TV panels reduced to nil from 10%.
Plan to create Unified National Agriculture Market to bring in price stability
in agriculture products used for household purposes.

^Effective from April 01, 2016

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