3 Ways The Union Budget Will Affect Your Finances

This year’s Union Budget was announced yesterday with a fair amount of hype – given that it is the government’s first in a coalition setting. The budget has often been viewed as an event that doesn’t affect the bulk of us – but the fact is that our everyday finances are the result of these large moves that the government makes. Here are 3 announcements that I believe will affect you and me the most.

Custom Duty Cuts For Gold, Silver, Platinum & Mobile Phones

If you’ve invested in gold bonds over the last couple of years, you’d know it’s been a bumper season! As gold prices (and consequently, smuggling) skyrocketed over the last six months, the customs duty cut is a welcome step to cool the gold rush and make gold more affordable. Cuts were also announced for silver, platinum and mobile phones. As a result, we can expect price drops across all 4 categories.

Increase in Standard Deduction On Salary

If you receive a salary and file taxes in the new regime, there is a significant saving that you can make on your tax outgo. The standard deduction for salary earners, previously at ₹50,000/- has been increased to Rs. 75,000/-. There has also been a change in tax slabs, so if you opt for the new regime as a salaried employee, you could be saving around ₹17,000-₹18,000/- in tax outgo.

Changes in Capital Gains Taxes

Finally, if you’ve invested in equities either through shares or mutual funds or any other derivative instrument, it’s not good news. Short Term Capital Gains on equity shares and mutual funds have been hiked from 15% to 20%. Long Term Capital Gains (LTCG) Tax on equity shares and mutual funds have also been hiked from 10% to 12.5% and STT (Securities Transaction Tax).

The threshold limit for LTCG Tax has also increased to ₹1,25,000/-. What this means is that you’re not liable to pay LTCG tax unless your gain is in the excess of ₹1,25,000/-.

Overall, if you’re a regular equity investor, now may be the time to be slightly more careful about when you want to sell your assets so you can optimise for tax.

What are your big changes?

These are the 3 big changes that salary earners must be aware of and plan for in advance. What were your key announcements from the budgets? Do you have any compliments or complaints? Let’s talk in the comments!