Finance Minister P Chidambaram announced the Annual Budget for fiscal 2004-05 on Thursday. Here is al ist of ten key factors that would affect the common man.
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No tax for individuals whose taxable income is up to Rs 100,000. Tax slabs otherwise remain the same. This measure seems in line with the Kelkar committee recommendations.
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An education cess of 2% will add marginally to your tax liability.
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Long-term capital gains from the stock markets reduced to zero. Short-term capital gains rate is now at a flat 10%.
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However, you have to now pay 0.15% of your transaction value as a levy when you buy any stock. However, when you sell a stock there is no such levy. It will increase your share transaction cost (Rs 150 per transaction of Rs 100,000) while buying.
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Computers may get cheaper as excise duty has been abolished on it.
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All imports of gadgets, equipment etc. for the handicapped will not attract any customs or excise duty henceforth.
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Gifts above Rs 25,000 will be taxed as income if it is received from people other than blood relations. However, gifts received on occasions like marriage will continue to be tax exempt.
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Rates of small savings instruments like PPF, GPF and special deposit scheme to continue at 8%. A 9% Senior citizens savings scheme will also be introduced. LIC's Varishtha Jeevan Beema Yojana howeveer, will be discontinued.
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Service tax has been hiked from 8% to 10%. So, services such as stock broking, travel tours, pandaals, and hotel rates will get marginally costlier.
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Debt mutual funds will have to continue to withhold 12.5% of the income distributed to unit holders. In effect, the effective income in a debt mutual fund individual investor's hand continues to get pruned by 12.5%.
The budget 2004-05 was largely focused on the agriculture and small-scale sector. However, this was not at the cost of the infrastructure focus built up by the previous government (hike in FDI limits in telecom, aviation and insurance). Many forward looking schemes to generate rural India happiness have been announced. However, past record of executing those schemes has found us wanting.
The finance minister tinkered a little here and there, but largely stuck to the ensuring stability in tax rates. Expectations of bold tax reforms based on Kelkar committee recommendations were dashed. But atleast a continuity with the past has been maintained.
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