Budget 2013-14 and Personal Finance

budget 2013-14

Today Mr Finance minister has presented Budget 2013-14. Before starting Budget 2013 speech Mr P Chidambaram, laid it very clear that this budget will be more oriented towards country’s growth, as without growth there will be neither development nor inclusiveness. But since the growth needs finances and country is in high fiscal deficit, so he tries to encourage private investments, and restricts public money participation towards the social sectors like education and healthcare only. He also points out few loopholes which need to be plugged to increase the tax revenues. All said and done, though budget has always been a big event especially for financial sector, but like all budgets this budget 2013 was also only an accounting exercise and not a policy decision. Many things have to be discussed in the parliament and then decided on to be a policy.

Let me share with you some of the announcements related to personal finance in Budget 2013.  Also I would like to add that all this is as per my immediate understanding and if there’s any ambiguity will be clarified and updated as and when some clarity comes.

1. No change In Income tax slabs, but tax credit of Rs 2000/- has been introduced for people with taxable income up to Rs 5 lakh. Now, whether this tax credit will work as a refund or reduction out of total tax payable will be known in a due course of time.

One Tax Administration Reforms Commission (TARC) will be set up, which will keep its eye on the tax laws internationally and keeps on recommending the changes in Indian tax structure.

2. Super Rich Tax – A surcharge of 10% has been introduced for people having taxable income of Rs 1 crore or more.

3. Special tax incentive announced for people taking first home loan up to Rs 25 lakh in FY 2013-14. In this scheme additional interest deduction of Rs 1 lakh is offered only for one year. If one could not exhaust the full Rs 1 lakh in 2013-14, then he can carry forward the balance to next year. For e.g. if someone takes a loan of Rs 25 lakh in April ’13 @ 9.80% p.a rate. Then tentatively he’ll be paying interest of Rs 2.43 lakh in the whole financial year. Rs 1.50 lakh can be claimed as deduction u/s 24 and balance i.e. 93 thousand can be claimed in this provision. Also the balance left i.e. Rs 7000/- can be claimed next year.

As pointed out, this provision is over and above section 24 deduction.

4. To increase the insurance penetration, Banks are permitted to become Insurance brokers. Every city having population of 10000 or more will be having one LIC office and one public sector general insurance office. Also to address grievances, Public sector general Insurance companies will hold adalats to answer and solve the same.

5. TDS @1% on sale of immovable property valuing Rs 50 lakh or more is announced. This was announced last year also, but lost somewhere. Now again Mr Finance Minister has felt that this is where most of the black money transaction happens and want to have a check on it.

6. A New public sector bank is announced which will cater to only women, having women staff, customers. So women should start preparing for Bank PO exam as ALL Women Bank will bring lot of jobs along with

7. RGESS (Rajeev Gandhi Equity saving scheme) has been modified. The eligibility income Limit has increased from Rs 10 lakh to Rs 12 lakh. Also eligible candidates are allowed to spread their investments over 3 years instead of one year as of now.

8. Duty free import limit on gold has been increased. Now women can bring Rs 1 lakh of gold jewellery and men can bring Rs 50000/- worth of gold. So pack your bags….this year for DUBAI J

Other announcements in Budget 2013, which may affect your investments:

  • Government will approve Rs 50000 crore of Tax free bonds in FY 2014.
  • RBI will come up with Inflation Indexed bonds and National Securities certificate will be announced by June’13. These bonds will be intended  to protect your value of money being eroded from inflation.
  • Group insurance schemes will now be available for Self-help groups, domestic workers association,Teachers in schools, Nurses in hospitals etc.
  • Dividend distribution Tax surcharge has been increased from 5% to 10%. This will affect the dividends taken from debt funds.


All in all, it is a normal budget 2013-14 speech with no excitement or special incentives.


    • Sanjay, If whatever Mr FM said works the same way as percieved and our country’s fiscal deficit comes down, than you will find many indirect benefits . I think we as citizens now should start looking at the bigger picture. Rather than asking for the benefits or tax exemptions, we should not ask or keep a check on government to spend the tax collections wisely. The overall development of country will definitely help us too.


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