“You say it best when you say nothing at all.” - Ronan Keating
While we can’t say that there was nothing said in Union Budget 2021-22, let’s leave it at the fact that it brought no surprises and neither any shocks.
I guess no news is good news. A week ago, we wrote about what women investors wanted from the Budget unfortunately, that the wishlist remains a wish.
But, on to the good news. The Indian equity markets gained the most on a Budget Day since 1997. The S&P BSE Sensex ended 5 percent higher at 48,600 points, while the NSE Nifty 50 index gained 4.7 percent to end at 14,281 points. The indices gained more than 6 percent each in 1997.
The Budget Day rally brought some respite to investors who had witnessed a short bear run which had left several of us sweating. Less affected by these movements were long-term investors of course.
Things that remained unchanged:
1. Personal taxation was left unchanged
2. Capital gains taxes
3. Tax for higher-income groups
Encouragement for entrepreneurs
The tax holiday extension for startups till March 2022 gives a necessary boost to the new-age economy, where more women are taking the path to entrepreneurship. The capital gains exemption on investments in startups have also been extended to March 2022, incentivising investments.
Senior citizens rejoice
Research has shown that 90 percent of women will have to manage money on their own at some point in their lives and that women typically end up with smaller retirement corpuses than their male counterparts.
The benefits rolled out for senior citizens above the age of 75 are very welcome. Dependence of the elderly on their children for basic necessities are high, especially when their pensions do not meet expenses.
Add to that the expenses on any health treatments. Retirement could be stressful. The finance minister proposed that senior citizens (above the age of 75) earning only pension and interest income from deposits will not be required to file an income tax return.
This reduces the compliance burden for senior citizens who qualify, with one less process to deal with.
What the budget Means for personal finances:
1. Less frictional tax filing: There are processes being introduced to ease tax filing, where your capital gains and other income will get picked up directly. We’d love to see this in action.
2. Interest deduction on affordable housing: You’ve bought a home that comes under “affordable housing” —your first residential property, and you’ve paid stamp duty of less than Rs 45 lakh. In this case, you would get an interest deduction up to Rs 1.5 lakh from the loan if your loan is sanctioned between April 1, 2019 and March 31, 2021. This has now been extended to include loans sanctioned up until March 31, 2022.
3. Gold investments are brighter: Customs duties on domestic gold prices, which are typically correlated to global gold prices, have been decreased. Gold attracts a 12.5 percent customs duty as does silver. This will stand reduced to 10 percent each (7.5 percent customs duty + 2.5 percent agriculture infrastructure & development cess). This will effectively reduce the final price of gold and silver which are typically considered security for women.
4. Not so exciting: In case you are a heavy investor in your employee provident fund (EPF) account, or you’ve purchased ULIPs (Unit Linked Insurance Plans) with large premiums (above Rs. 2.5 lakh), you’re going to see higher taxation on these products.
Experts believe that this is a promising Budget for the future. For women who are considering to start investing now, there has never been a better time.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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